So, well, no, we\’ll subcontract this one out shall we?

Yes, Ritchie forgot double taxation relief. No, Ritchie won\’t admit to having done so.

Quite why he cannot simply admit to an \”Ooopsie Moment\” I don\’t know. We all have them sometimes and most of us realise at some point that the best response is to simply declare \”Ah, yes, sorry, Ooopsie Moment there. Sorry, try harder next time\”.

But I have to say further that what I really love about this is that Ritchie\’s own plans, those country by country reporting ones, would lead to a much larger double taxation relief. And thus, by the measurements he uses, a larger tax gap in the UK.

Bear with me here a moment. The aim of country by country reporting is to make sure that companies are properly tax compliant.

Tax compliance – the duty of the taxpayer

For the individual taxpayer tax justice is about tax compliance. This happens when the individual seeks to pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions they undertake coincides with the place and form in which they report them for taxation purposes.

What this means for large, international, companies is that they should be paying tax where the economic substance of the transaction takes place. Profits made from oil in Angola should be taxed in Angola. From flogging mustard in Poland in Poland. Country by country reporting is an aid to making sure that this happens.

I\’ve not misrepresented his views here: this is absolutely what he is campaigning for.

Excellent: now we come to double taxation relief. The money that BP makes in Angola should be taxed. righteously, in Angola. Mustard sales in Poland by Tesco\’s should be taxed in Poland. But of course BP and Tesco\’s should not be taxed in the UK on such profits because the economic substance of the transaction is not in the UK. And thus, under Ritchie\’s preferred tax and information scheme, double taxation relief will rise.

And thus, given that Ritchie uses the existence of double taxation relief as proof perfect that there is a tax gap, the tax gap will rise. That very tax gap which Ritchie is campaigning to close.

6 thoughts on “Yes, him”

  1. oh man. So the tax gap, as he calculates it, and deplores, is actually (partly) the result of something he advocates.

    If he was anything other than a raving lunatic, this discovery would prompt him to revise his views/calculations. As he is a raving lunatic, it won’t make the slightest impression on him, other than perhaps to reinforce his belief that members of the “extreme right” are trying to undermine his work.

  2. Tim,

    Everything he advocates can be traced back to 2 objectives only:

    1. More work for (unionised) public sector workers.

    2. More for power for unions.

    Country-by country reporting and tax gaps means more work for more tax officials. The fact the 2 objectives are inconsistent is irrelevant. They both create work for unionised workers – that’s all that counts.

    His Tax Manifesto (or whatever he calls it) is all about creating more mindless tasks for more tax officials. More inflation means more regular wage negotiations. More public spending means more jobs for unionised public sector workers. Notice that his wish to expand deficits only applies to spending increases, which creates public sector jobs. We never hear him asking for tax cuts which might result in spending on nasty non-unionised private sector workers.

    As with all these things, we need to follow the money. The unions pay him. And he supports his sponsors.

  3. Except that Murphy’s on the record as saying we should revisit double taxation. Just like he wants to revisit it for individuals, actually. Can he make his mind up?

  4. Well, country by country reporting is clearly the right way to go – it’s transparency, meaningful transparency, and low-cost transparency, in light of the benefits. Or would you rather poor countries send as much money as possible to rich countries? (you may do – I’m just wondering.) If so, please say so. If not, say why you oppose transparency.

  5. “low-cost transparency, in light of the benefits”

    Preparers don’t agree with you on that, given that the benefits – even if you believe Ritchie’s made up tax evasion/avoidance numbers – don’t accrue to them.

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