March 2011

Ms. Laurie Penny and reality

Connections are there none:

Laurie Penny in “You Say You Want a Revolution”: “There can be no question that the conditions are right for a youth movement. The young people of Britain are suffering brutal, insulting socio-economic oppression. There are over a million young people of working age not in education, employment or training, which is a polite way of saying “up shit creek without a giro”.

If you are not in education, employment or training, if you are a NEET, that is exactly when you do get a Giro, isn\’t it?

Ritchie on GE\’s taxes

Quite remarkable, he entirely fails to note the most important point that GE itself makes about its taxes.

We just said you spend a lot of money make sure sound public policy accords with GE’s view of what sound public policy should be.

And we questioned the ethics of that.

And the fact it meant you paid no tax in the US in 2010.

Yes, yes, blather, blather.

The actual important point is:

Significant losses at GE Capital during the financial crisis, largely in the United States, reduced GE’s overall tax rate below historic levels the past few years. Those losses and the subsequent reduction in taxes owed is not a “tax avoidance” strategy. Taking out GE Capital makes GE’s effective tax rate 21% over the past several years. GE’s consolidated (or overall) effective tax rate prior to the financial crisis was in the teens to more than 20%.

They made losses. Losses are offset against profits, either immediately (as, say, The Guardian does, offsetting the losses made by The G against profits from other parts of the company, GMG) or over time.

Wouldn\’t matters be clearer if one of the country\’s leading tax experts could bring himself to note such points?

Scrapping the Fukushima reactors

Slightly odd:

Japanese officials have conceded that the battle to salvage four crippled reactors at the Fukushima Daiichi power plant has been lost.

The plant\’s operator, Tokyo Electric Power [Tepco], said the reactors would be scrapped,

Hasn\’t everyone known that since they started using sea water in the reactors?

On this difference between the races thing

I know, I know, we\’re not really supposed to mention these things, are we?

It\’s just about acceptable to point out that those of West African descent have a higher liklihood of sickle cell anaemia but carry on and point out that almost all modern sprinters share such ancestry and almost no modern competitive swimmers do and you\’re getting close to saying unfashionable things.

But this is a point that rather made me sit up straight:

But the record books suggest ethnicity is far from superfluous. The subject may be taboo, but the fact remains that the last white man to win an Olympic 100m final was Scotsman Allan Wells in Moscow in 1980.

Even more astonishingly, in the seven Olympic Games since, not a single white athlete has reached the eight-man final. In Beijing in 2008, no white sprinter made it past the second round.

I think the use of the word \”white\” there isn\’t quite right, for it\’s obviously being used as the antonym for \”black\”, which isn\’t right really. I\’m pretty sure it should be \”West African descent\”, not skin colour, which is the point.

In much the same way, it\’s not \”blacks\” which dominate (to a lesser extent) long distance running, rather East and North Africans, isn\’t it?

The Bribery Act

This is going to be amusing folks:

The Serious Fraud Office will pursue UK-listed, foreign companies if they engage in bribery despite their apparent exemption from the Bribery Act.

I can think, immediately, of one FTSE 100 company that is entirely screwed then. Entirely notorious in the industry they are…..

This is even more fun:

The guidance on the Act also appeared to soften the treatment of facilitation payments – bribes to facilitate routine Government action. The guidance recognises such payments are endemic in certain parts of the world and remain a long term problem.

Something of a gaping loophole really. For bribery to get a government or government officer to do what they wouldn\’t normally do is rarer than you might think. Not non-existent of course, but not the majority of bribery attempts, certainly.

Paying them to do what they\’re already supposed to do: issue the permit, grant the export licence, them charging the firm a rent really, that\’s what most of it is.

As to \”endemic in certain parts of the world\”. My own experience is that there are places (no names, no pack drill) where the very first question I would ask is \”who do I have to pay?\” and the second \” how much?\”. There are other places (the UK among them) where the idea of paying a bribe, doucer, sweetner, wouldn\’t even cross my mind and I\’d be outraged if it were ever even intimated that one might be welcomed.

The rally against debt

Rally Against Debt

A well mannered, polite rally for civilised people who don\’t wish to see their hard earned money being spent on pointless government initiatives and instead would like government spending to actually fall and our national debt to be cut.

We don\’t think that it\’s fair for us to continue borrowing money to live a lifestyle that we simply can\’t afford – burdening our children with unnecessary debt that they will have to pay back.

Any visits to Fortnum and Mason\’s by protestors will only be to marvel at their selection of quality goods and perhaps make the occasional purchase.

Bonfires will be strictly forbidden: it\’s out of season anyway

Trips to see Vodafone and other high street chains will result in congratulations to the company for providing jobs and growth in the UK.

This is only a planning group at the moment and all subject to change.

Offical hashtag #RallyAgainstDebt or #RAD

Is this a Laffer Curve I see before me?

I think it could be, yes.

It comes after smaller companies such as Valiant Petroleum warned that they are re-evaluating new projects, since the Chancellor increased tax by 12 percentage points to more than 62pc.

Statoil, the Norwegian state-controlled company, said on Tuesday it will \”pause and reflect\” on the future of its Mariner and Bressay fields to the south east of Shetland.

There have also been reports that oil majors have withdrawn plans to sell billions of pounds in North Sea fields nearing the end of their lives, leading to fears they will be abandoned with oil still in the ground.

Whether this will actually lead to a decline in tax revenues overall is moot at this point: it certainly won\’t lead to a reduction in short term revenues. But it will definitely lead to a reduction in the amount of oil pumped up over the decades and so is quite likely to lead to a reduction in the long term tax take.

And do note that no one is trying to dodge a tax, no one is trying to pass it on. It\’s simply that the imposition of a tax has made previously viable activity now non-viable. We\’re, in that long term, poorer because of the tax.

Don\’t forget to include the taxes!

They suggested that a £9.99 air ticket could end up costing £100, once credit card fees and baggage costs are included – a practice known as ‘price dripping’.

The study by Which? suggested price dripping shows no signs of stopping and warned that no-frills airlines have “plenty of tricks up their sleeves” to make sure that the price consumers actually end up paying keeps creeping up.

I looked through this piece and nowhere could I see a reference to taxes. Looking at one airline site that would be £12 on a short haul flight and I believe it can be as much as £40 on a long haul.

Worth mentioning, surely?

£50 billion each?

Pull the other one!

The Government has given provisional approval to the building of at least 10 new nuclear reactors, costing around £50 billion each,

That\’s £50 billion in total dear.

Blimey, don\’t journalists have editors? People with at least a rough idea of relative sizes and costs?

As to this:

The Lib Dems had long opposed nuclear power but agreed in Coalition negotiations last year that existing power stations could be renewed as long as no public funds were involved. They demanded that energy firms no longer benefit from generous public subsidies and be self-funding.

They\’re lying, of course. For they\’re entirely happy for renewables to be subsidised massively: £6 billion a year coming on the Renewables Obligation alone.

What they\’ve done is a piece of politician doublespeak. Nuclear cannot have direct taxpayer subsidy: OK. But nuclear also isn\’t allowed to have the indirect, from customer bills or from obligations or from carbon prices, subsidy either. Indeed, nuclear still has to pay the climate change levy.

This only works because they can, hand on heart, say that renewables aren\’t getting direct taxpayer subsidy. The subsidy is built into energy bills.

So they\’re lying cunts the politicians. But then I repeat myself.

Johann Hari tries economic history

And fails, badly.

Here’s what we learned during the Great Depression, when our view of economics was revolutionized by John Maynard Keynes. In a recession, private individuals like you and me, perfectly sensibly, cut back our spending. We go out less, we buy less, we save more. This causes a huge fall in private demand, and with it a huge fall in economic activity. If, at the very same time, the government cuts back, then overall demand collapses, and a recession becomes a depression. That’s why the government has to do something counter-intuitive. It has to borrow and spend more, to apply jump-leads to the economy. This prevents economic collapse. Instead of spending a fortune on dealing with mass unemployment and economic break-down, with all the misery that causes, it spends the money on restoring growth. Keynes called it “the paradox of thrift”: when the people spend less, the government has to spend more.

Wherever it has been tried, it has worked. Look at the last Great Depression. The Great Crash of 1929 was followed by a US President, Herbert Hoover, who did everything Cameron demands. He cut spending and paid off the debt. The recession grew and grew. Then Franklin Roosevelt was elected and listened to Keynes. He ramped up spending – and unemployment fell, and the economy swelled. Then in 1936 he started listening to the Cameron debt-shriekers of his day. The result? The economy collapsed again. It was only the gigantic spending of the Second World War that finally ended it.


No, Herbert Hoover did not cut spending and he most certainly did not pay off the debt. He ran budget deficits as he massively increased federal spending. It\’s true that Roosevelt did more of this than Hoover had done but it just isn\’t true that Hoover balanced the bedget and most certainly isn\’t true that he either reduced spending or paid pof a single penny of the national debt.

However, there is another example from the 30s that could be used. The UK experience. Here there was no large public deficit, in fact, taxation and spending were kept broadly in line with each other. According to the Keynesian prescription, this should have meant that the UK had a deeper recession than the US and a longer one.

The thing is though, it didn\’t. The recession in the UK was shallower than that in the US, was shorter, recovery came sooner and so did economic growth surpassing that of the previous peak.

What the UK did do is come off the gold standard and allow the pound to depreciate. What the UK government is currently doing isn\’t actually all that far from what the UK government of the 30s did. Devalue, (at least try to) keep some close connection between tax and spend, so as not to run huge defiits and thus increase the national debt.

One of the things you need to know about economic history is that there is indede this lovely Keynesian theory. It\’s just that when you look at the economic history of the 1930s, there doesn\’t seem to be any empirical support for it. The US, which followed the prescriptions of the theory, had an entirely shite time of it, the UK which rejected the theory had a dreary but OK time of it.

We were bust when we beat the Nazis. We were bust when we built the NHS.

Quite true. But having gone bust beating the Nazis and while building the NHS, Major Atlee was running budget surpluses. One of the very few times we really have actually been paying off the national debt, as opposed to just not increasing it very fast…..

Young Johann is of course quite free to make his comments…..but facts are sacred you know.

In which I agree with Mehdi Hassan

Saturday to protest against the coalition\’s spending cuts and \”march for the alternative\” – the Robin Hood Tax, green investment in education and jobs, reform of the banks and a crackdown on tax justice.


We really must crack down on this tax justice nonsense. There are a number who will be up against the wall come the Revolution….

Jail the bankers!

But not a single banker has been arrested for trashing the economy.

They could be. There is a criminal offence of “fraudulent trading” contrary to s993 Companies Act 2006.  This occurs where a person (usually a director) is “knowingly party” to the business of a company being carried on “with intent to defraud creditors” or “for any fraudulent purpose”. Fraudulent trading necessarily involves dishonesty. The maximum penalty for fraudulent trading is 10 years imprisonment.

Our main banks were, we now know, known to be insolvent in 2008. Their auditors had to seek government assurance that there would be a bail out to ensure they could sign off the accounts as going concerns. They have admitted this in the House of Lords.

And the government promise of a bailout meant that they were not insolvent, doesn\’t it?

Before that assurance was given the banks had the liabilities about which the auditors sought assurance. They were therefore trading during that period knowing they could not meet their obligations. That resulted in their creditors being defrauded – we paid the bill as a country and the government was undoubtedly a creditor at the time. The government could rightly bring the charge against the directors involved, in my opinion.

But they have chosen not to do so. Why?

Because the crime is knowingly trading while insolvent. And as we know, the banks actually thought they were doing just fine. Up until the day they realised they weren\’t.

Stupidity, ignorance and or error are not crimes.

I do wish R. Murphy could add 2 and 2 to get 4

Ritchie is whining about the evils and perils of tax competition today.

What amuses is that all of this is the other side of the tax incidence coin. You know, that tax incidence coin that Ritchie vehemently denies the existence of?

To accept, even if to complain about, the way in which peeps can move stuff around over tax jurisdictions to reduce their tax bill is exactly the same point as noting that the effects, the incidence, of a tax will change dependent upon how much peeps can move stuff around over tax jurisdictions to reduce their tax bill.

You simply cannot accept one without logically accepting the other.

Yet Ritchie does.

Polly\’s very strange argument

The arts are very profitable so we should subsidise them.


This is far worse:

Instead of investment, the government looks to philanthropy. Last week Vivien Duffield gave an admirable £8.2m to her chosen arts venues. As she did so, she commanded another 20%, or £2m, in tax relief. Charity is a fine thing, but the state – or in this case the Arts Council – is a more trustworthy distributor of taxpayers\’ money than the whims of wealthy donors. The budget offered a further bonus of inheritance tax relief to anyone leaving 10% to charity in their will: Duffield\’s pet arts schemes command our cash too; hardly a democratic distribution.

I\’m pretty sure she\’s got tax law wrong here anyway: the money comes from a charitable foundation and so was never subject to tax in the first place. Thus no Gift Aid is payable (please, as ever, correct me if I\’m wrong).

But what\’s truly appalling is the implicit argument there: that the State spends money better than people do themselves.

Gift Aid isn\’t \”government money\” which then follows the desires of donors. It\’s an admission that we don\’t want to tax people who give away their money to charities. So, when people do give money to charity we put into the pot the tax they\’ve already paid on that dosh.

But Polly is equating this with taxes being raised upon us all being spent upon the desires of those rich folks: which just ain\’t true.

Worse, she\’s then going on to say that having bureaucrats allocate the money is better than people doing it for themselves. Really, a rather foul view of human freedom.

And having had a look, yes, given that the donations come from the Clore Duffield Foundation I\’m near certain that there would be no gift aid added to them. Because there\’s been no tax paid there will be no tax repaid, will there?

Not unless charity law is even more screwed up than even I think it is……