Today\’s Ritchie

Yes, it\’s our favourite retired accountant again.

It has been commonplace for tax to be charged in accordance with “law”. For example, it was decided in a legal opinion given in the House of Lords in the United Kingdom in 1869[1] that:

If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. In other words, if there be admissible, in any statute what is called an equitable construction, certainly such a construction is not admissible in a taxing statute.

This principle remains enshrined in most British tax law (in particular)and appears to heavily influence taxation thinking in general.

OK, established principle of British law, been there a century and a half at least but Ritchie wants that to change. Got to say he doesn\’t lack ambition at least. But why? Why change it?

But the profession will hate it. They want certainty. We need principles to ensure tax is fair.

Well, apparently tax shouldn\’t actually be certain: shouldn\’t be about what the law says it is, it should be about whatever the taxman decides on the day it should be. Bugger all that rule of law stuff, that democracy (you know, the bit about having to go through Parliament?) shtick is simply too, too, old fashioned.

Tax should be what ever is demanded and pay up quick Sonny Boy.

Fuck that for a game of soldiers quite frankly. And the horse it rode in on.

Rather than that sort of dictatorship of the bureaucracy we\’d be better off scrapping corporation tax altogether (for of course the vast majority of all of this is about that very corporation tax). And there\’s no particular reason to think that there would be much revenue loss to the Treasury if we did as well: given tax incidence (yes, even St Cable of Vince is on board with this one) the money not collected in corporation tax would pop up elsewhere, almost certainly in dividends (and capital gains….and yes, part of the change here would be to equalize CGT with income tax rates at the same time as abolishing corporation tax) to shareholders and higher wages for workers: both of which are taxed and at or above the marginal rates of corporation tax (40% for higher rate payers for example).

But wait! There\’s more!

Yes, we should slap the banks with loads more tax so that they have less capital and thus can lend less! Truly, the work of a genius in the middle of a credit crunch, don\’t you think?

And I am quite convinced it is the right thing to do. Banks have to repay society. Banks are liquid now – using government money. If they need new capital they should raise it, not save it. And HMG needs the tax – plus to cost of doing business for banks has to increase.

Interestingly, when Lloyds\’ announced plans for a rights issue (you know, that raising more capital bit) Ritchie was against that too.

There is a sadness here as well as the hilarity. There really are people in The Treasury who listen to this guff without guffawing in laughter. Sadly so.

10 thoughts on “Today\’s Ritchie”

  1. The principle goes back further than 1869. In fact it is constitutional, it was actually reconfirmed as such in the jugement Bowles v. Bank of England, [1913] 1 Ch. 57, 84-85

    By the statute 1 W. & M., usually known as the Bill of Rights [1689], it was finally settled that there could be no taxation in this country except under authority of an Act of Parliament. The Bill of Rights still remains unrepealed, and no practice or custom, however prolonged, or however acquiesced in on the part of the subject, can be relied on by the Crown as justifying any infringement of its provisions. It follows that, with regard to the powers of the Crown to levy taxation, no resolution, either of the Committee for Ways and Means or of the House itself, has any legal effect whatever. Such resolutions are necessitated by a parliamentary procedure adopted with a view to the protection of the subject against the hasty imposition of taxes, and it would be strange to find them relied on as justifying the Crown in levying a tax before such tax is actually imposed by Act of Parliament.

  2. Perhaps we should operate an anti-corruption office on the basis of Ritchie’s Rules: levy arbitrary fines on him and all the other leftie wonks who’ve unjustly enriched themselves over the past decade.

  3. The man’s ambition is matched only by his unstinting self belief in his non existent talent. In the days when I tutored law undergrads, he would be the first year student who would be quietly taken aside by a kindly member of faculty and asked, for his own good, whether he had considered switching to another discipline.

    Not that he can manage to say it, but he is demanding a purposive tax code (he would probably say equitable but that’s because he thinks they are interchangeable). At some point he will wise up to the fact that a purposive code would shift power to the unelected judiciary, being the same judiciary which he claims to be corrupt and criminal. When he catches up with his own argument, he will stop.

  4. Brian, follower of Deornoth

    Ritchie, you aren’t paying enough tax. Clearly that isn’t fair, because I say so. So we’ll hold you up by the ankles and shake until no more money falls out. Then we’ll sell your house and your car and your wife into sex slavery (nookie is a taxable benefit, Ritchie). After all, you are receiving benefits from the Government, aren’t you? They aren’t taking everything you have, are they? That’s a tax GIVEAWAY.

  5. I still don’t agree on corporation tax. It’s the second least bad tax we have, and if your claim that it is all passed on to somebody else is true, then why scrap it?

    Far better to have a flat rate of corporation tax/income tax and get rid of all the crap like Value Added Tax, Employers’ NIC, stamp duty, higher rate tax, capital gains tax etc.

    Look at it this way, the purpose of a corporation is to maximise profits for shareholders. If we imagine the taxman as a shareholder who just collects 28% of the profits then it doesn’t affect corporate decision making at all.

    Secondly, the rate of corporation tax is way down the list when businesses decide where to locate (except captive finance/insurance subsidiaries) but this scam only works for very small countries with no real industries of their own, i.e. tax havens.

    What is really important is salary levels and the cost of business rents, stable legal system, transport and communication links etc. Corporation tax in China and India is well above 30%, but it’s still worthwhile having goods manufactured there because their salaries are relatively low.

  6. Dickie says: “Banks are liquid now – using government money.”

    TAXPAYER MONEY! The Government doesn’t have any money.

    It’s a jolly wheeze isn’t it. Huge gobs of TAXPAYER money gets spent by HM Government. A fair slice of this TAXPAYER money actually comes back in taxation through VAT, NI, Income tax etc – so long as it is spent in this country that is. Have we exported too much taxpayer money with off-shoring, out sourcing and letting foreign firms in?

    There is another issue though. If you slap a windfall tax on banks propped up by taxpayer guaranteed borrowings what is that in effect doing? It is funnelling the money said to be for saving the world into the Treasury. At which point it will be pissed up the wall by God knows who. Presumably throwing our money at the banks then telling them to buy Government bonds didn’t bring in enough. They are cutting off our noses to spite our faces and pouring salt on the wound. Again.

  7. Brian, follower of Deornoth


    I quite agree. But the change wouldn’t fall out of his pockets if we did that. But I suppose we could sell off the corpse for organ donations; that’d probably raise more than he usually has about his person.

  8. Brian, follower:

    On the sex slavery bit: there would be a fair split of what got taken in by the fair split and then, he could pay proper tax on his (and her) share. Not really slavery, really,–and, besides, Ritchie’d get his for nothing (and probably worth every penny).

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