Ritchie\’s ambitious plan on taxation

I have just noted what David Cameron had to say yesterday on tax avoidance by multinational companies.

I’m delighted he has said he will tackle this issue, and on the scale that he has indicated. But let’s be clear what precisely he has to do to achieve his stated goals. At a minimum:

I wonder what he\’s going to say, eh?

1) He has to abandon his government’s policy of territorial taxation since this is a tax avoider’s licence to abuse this country

That\’s fun, isn\’t it? By taxing only profits made in the UK this gives people the opportunity to not pay UK taxes on profits not made in the UK.

Quite why this is abuse of the UK tax system I\’m not sure. Aren\’t profits supposed, in a Courageous State, to be taxed where they are made?

2) He has to invest heavily in HMRC to give it the resources it needs to really tackle tax avoidance and tax evasion

Not really a surprise from one sucking from the tax mans\’ union teat.

3) He has to change the law and OECD tax treaty standards on company residence and change all UK double tax treaties to comply

He\’s got to change every international tax agreement we\’ve got plus the entire standard of international taxation that everyone else has agreed to.

I have to admit I think that\’s a rather ambitious thing for a British Prime Minister to try to do really.

5) He has to move to unitary taxation

Under EU law that\’s not something we can do unilaterally. You\’d have to change EU law which is again rather ambitious for a British Prime Minister to attempt.

6) He has to pesuade the OECD to abandon arm’s length transfer pricing

Bit ambitious: change the laws that the 30 richest nations on the planet have agreed amongst themselves.

7) The EU has to change many tax directives and potentially allow tax withholding at source on inter-EU payments

That over turns the basis of the Single Market. The root and heart of the entire EU project in economic terms. And political too really. Those tax withholdings for example: they are specifically and exactly declared to be illegal (for royalties and interest payments for example) under those very Single Market rules.

So Ritchie\’s solution demands that the entire heart of the EU project be ripped out. Which I agree with of course, but it does sound rather ambitious.

8 ) He has to re-establish the controlled foreign company rules he has just been dismantling

Cameron hasn\’t killed the CFC rules. The EU did that, in Cadbury. This just isn\’t something that is in the power of the British Government to change.

9) He requires a proper General Anti-Tax Avoidance Principle Bill

As I\’ve said before I\’m all in favour of Michael Meacher\’s bill. So badly written that it relaxes, massively, the controls against tax avoidance.

10) He needs to tackle the UK’s tax havens as the starting point of a demand for global transparency, automatic information exchange and proper recording of the beneficial ownership of companies

Meh. Ritchie seems to have forgotten that colonialism is somewhat out of style these days. Dusky foreigners are allowed to go their own ways these days, not subject to dictats by white peeps in England.

11) He needs to ensure companies are properly regulated in the UK, which is far from the case now, if he is to get any more than 34% of UK companies to pay corporation tax, which is the number that do so now.

Quite why companies that don\’t trade, or that don\’t make a profit, should pay corporation tax I\’m not sure.

12) He will, of course, need to adopt country-by-country reporting

Entirely unneccessary if we\’ve unitary taxation. For cbyc supposedly will tell us where the profits are made. But if we\’ve a formulary approach to apportionment then we don\’t need to know where the profits are made: we\’ve a formula, see?

Ritchie simply cannot see that his latest obsession makes redundant his own invention.

13) He needs to re-appraise the tax gap and the way HMRC measure it – which currently excludes all the tax avoidance he finds so repugnant

But the tax gap is tax that should be paid but isn\’t. And if people have legally structured themselves so as to owe no tax then it\’s not part of the tax gap, is it?

What\’s really so fun about this is that Our Retired Accountant From Wandsworth is not in fact calling for some clean up of the UK\’s corporate taxation system. He\’s calling for a wholesale rewrite of the entire international system. Including the abolishment of the EU\’s Single Market. And every single one of our bilateral tax treaties. Note, do, that bilateral means the other peeps have to agree as well.

Can\’t fault him for ambition but that\’s all rather out of the power of the UK Prime Minister, isn\’t it?

And then there\’s this of course:

14) He needs to get some proper advice from people outside the FTSE 100 and the 100 Group of Finance directors funded Oxford Centre for Business Taxation on just what an appropriate tax policy for the UK might be

15) He has to replace those people who are heading H M Revenue & Customs who have had ties with tax avoidance and whose influence may explain HMRC’s lax attitude to the issue.

Don\’t listen to them, people who disagree with my plans, listen to ME! Oh, and head of HMRC will do nicely thank you.

I\’m almost tempted to recommend him for Dave Hartnett\’s old job. Would be most fun when the EU, the OECD and 120 or so sovereign nations tell him to fuck off.

29 thoughts on “Ritchie\’s ambitious plan on taxation”

  1. I seem to remember it was Monty Python’s John Cleese who made the comment “I think we should tax all foreigners living abroad”.

    That’s about the only item missing from Ritchies list. Roll on the ‘Korajoes Stayte’. Stalin would be proud.

  2. 10) He needs to tackle the UK’s tax havens

    Ritchie seems to have forgotten that colonialism is somewhat out of style these days. Dusky foreigners

    Nah, these are undusky foreigners. You know, Jersey, Guernsey, Isle of Man & Gib. These bits which are very much not part of the UK, however ‘British’ they may be, or consider themselves to be.

  3. Good luck trying to explain the difference to Murphy between the UK, Britain and the Crown. He thinks it is all one and the same. Ignorant twat.

  4. @Phil:

    No. He doesn’t THINK they are all the same, he just doesn’t CARE about the differences legal or otherwise. Like any mugger he just wants the money for his own statist ends.

  5. Cameron’s lying through his teeth pretty much constantly now, having fully adopted his hero’s policy of “just tell each person what they want to hear”.

    Yesterday, he was going to make taxes fair instead of legal, today he’s going to stop all the nasty immigrants.

    Richie, poor sap, appears to think that Cameron actually means it. Sigh.

  6. Instead of all that messing about, Cameron should just use some of those oppressive laws that Ritchie is so fond of (other people being put under) to declare the Tax Justice Network a banned organisation and Ritchie himself a wanted man. It would be interesting to see how far he’d get. Of course, if he had some cash stashed overseas he might have a chance…..

  7. My rag bag of useless information seems to tell me that the Foreign Office have some 14,000 different treaties.

    Quite how many of these are related to taxation I am not sure. Still, I expect there are enough to provide useful consultancy work for our RAfW until ( and possibly beyond )his retirement.

  8. Dennis The Peasant

    When it gets to the point that you can’t tell a Cameron quote from a Ritchie quote, I’d say you Brits are well and fucked.

    You’re well and fucked.

  9. These are arguments are facile, the bottom line is not who we tax but how we would spend it omce we’ve got it, for the problem is public spending not income. This is something both public-sector-union-man Richie and dodgy-election-mandate Cameron are loathe to address, so gumph like this serves only to distract attention.

  10. you have to take this tax avoidance stuff with a pinch off salt. Tax avoidance is how the government implements a large amount of their policies. Things that they do want people to do are taxed low and things they don’t want people to do, they tax high.

  11. So these tax treaties, if we negotiate to have more the other country gets less, yes? Can’t quite see any country being that daft.

  12. @Runcie Balspune:

    This is something both public-sector-union-man Richie and dodgy-election-mandate Cameron are loathe to address, so gumph like this serves only to distract attention.

    Completely agree about Cameron just making noise to create a distraction. Maybe he should just go the whole hog and invade the Falkland Islands…

  13. Martin (#11) said “if we negotiate to have more the other country gets less, yes?”

    Not necessarily. The likely scenario is that we get more (and they get less) from their companies when they sell stuff here, and they get more (and we get less) from our companies when they sell stuff there.

    Who overall gets more and who less depends on the balance between our lads selling there and their lads selling here.

    (‘selling’ being shorthand for all sorts of stuff)

  14. “That’s about the only item missing from Ritchies list. Roll on the ‘Korajoes Stayte’. Stalin would be proud.”

    One more: haul people who don’t pay their “fair share” in front of a People’s Court for summary judgement. Ritchie on the prosecution, of course.

  15. If y’all haven’t seen THISbefore – Abbey Forwarding are the exception to the rule – usually the recipients of similar HMRC attention (and there are quite a few… are devastated beyond recovery.

  16. @TomO ‘If y’all haven’t seen THIS before’

    Yes, but look at them, with their antique carriage clock, faithful dog and aristo style of seating themselves. These people clearly deserve to suffer.

  17. Tim,

    Thanks again for an interesting review. This stuff is just nonsense though and while it is interesting to read, it is so off the wall (as you rightly point out). This guy is selling a journalist soundbite, not formulating serious policy.

    Particularly, point 2) makes it clear that this fellow has an unconventional view of “investment”.

    Point 14 (14!) is very sensible, but he is unlikely to get the result he wants.

    The British government is pretty sensible regarding corporate taxation. The percentage of the tax take of “corporation tax” is less than 3.5% of GDP, in the UK as well as the EU 15:

    (Back of the envelope alert!)

    http://en.wikipedia.org/wiki/File:U.K.-Corporate-Tax-Revenues-As-GDP-Percentage-%2875-05%29.JPG

    In an economy spending over 50% of GDP, that is a pretty low contribution to the revenue. The multiplier effect of the existence of companies acting as VAT collectors, PAYE collectors, vehicle lessors, business rate payers and as employers outweighs the benefit of confiscation through tax. Lowering the headline corporate rate is a cheap way to gain a competitive advantage: Luxembourg, Holland and Ireland have the right idea here.

  18. Interested

    I suppose they could have photographed outside a warehouse in front of a fleet of trucks… if they actually still had them. The thugs at HMRC must be wondering what they missed that allowed these people to bite back.

    My point is that these people managed to survive being mugged by HMRC and their associated ghouls unlike literally dozens of businesses that have been arbitrarily liquidated by HMRC and their crowd of Louise Brittains.

    I’m exercised by this after seeing what happened to a local agricultural contractor who had an agreement in place with one department of HMRC and was then mugged into liquidation by another department . Another local business arranged with one HMRC office to pay their taxes by installment (and did) and were then fined for not paying the full amount by another department – HMRC advice was “pay the 3 * £250 fines and then appeal them” -FFS!

    This is within 10 miles and personal contacts.

    The national picture must be appalling.

  19. Superb stuff Tim

    No doubt you may have seen this morning that he is coming out with his latest Brainwave: ‘Over here and undertaxed’ which is his take on the Amazon/Starbucks/Google affair – I, as no doubt many of the others on here, am breathless with anticipation.

    Couple of points:

    1/ Arnald must be ill or busy – Long may it continue

    2/ In the wake of the Newtown shootings and Murphy’s unprovoked attacks on you and Chris Snowdon re: them, perhaps it’s time to look at how, as a society we treat the mentally ill. Based on this wishlist, it’s quite evident to me that the man is seriously mentally unhinged, and quite literally one of the most dangerous men in Britain, if not the world.

  20. Dennis The Peasant

    “Arnald must be ill or busy – Long may it continue.”

    Don’t overlook the happy possiblity that he may in fact be dead. It’s entirely possible that he slipped on a dropped hamburger and fell into the fryer… thus ending his twittery while simultaneously ruining a perfectly batch of McDonald’s fries.

    Tim adds: Dennis, if I may, call you out on that?

    This comments section is indeed anything goes but please, some manners. Whether Arnald is simply confused, mentally ill, ignorant or a socialist, there’s a limit. And death is one of them. To hope that Arnald becomes unconfused, recovers his mental health, becomes wsier (not difficult from his starting point) or weeps bitter tears for the hundreds of millions of deaths that socialism hath wrought, that’s fine.

    But to be “happy” about his demise is, well, it’s impolite.

    It is true that I regulalry call for the public execution of all sorts of people. But those fuckers deserve it.

  21. Interested

    yeah … I saw the sarc 🙂

    Whenever tax and HMRC pop up and they roll out the expensive tax evasion propaganda etc., etc. the incompetence and nitpicking, nasty poisonous deeds perpetrated by some their goons are by and large ignored. T’aint right.

    HMRC are legally obliged to behave themselves – and apologize and make amends for mistakes or malfeasance on the part of their officials.

    They’re not – and dick heads like Ritchie egging them on to pastures new just pushes me over the edge 🙂

  22. @Dennis the Peasant:

    I doubt that there are many hazards in the Finance Department of the Guernsey Housing Trust where Arnald works, so I suspect he will have a long and fruitful life annoying us unless he has a “Road to Damascus” experience.

    I for one am not missing Arnald, but I do get a great deal of fun from trolling him, he’s like one of those clockwork toy robots from the 1970’s, just wind Arnald up and let him go.

    Yes, I know the rule about “Don’t feed the Trolls”, but sometimes its fun…

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