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 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 toheavily 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.