Clearly we can\’t do this because Ritchie would not approve

Current circumstances require a combination of carrot and stick. The government should announce a temporary increase in corporation tax, putting it up to a punishing 50% for a strictly limited period, say three years. Then it should announce that 150% of all investment within those three years can be written off against tax.

But this would increase tax avoidance so it cannot be allowed to happen.

Recall The Murph\’s analysis of nPower? The bastards invested a lot of money in new plant and then had the temerity to claim the investment allowances. This resulted in no tax being paid upon their operating profits: tax avoidance, clear as day, obviously.

Tsk, doesn\’t everyone know that the retired accountant from Wandsworth is the ultimate arbiter of how much tax should be paid?

21 thoughts on “Clearly we can\’t do this because Ritchie would not approve”

  1. Paying a commercial rate of interest to a German company or indeed a German BANK is also tax avoidance in Ritchie’s book. May I repeat that in case we all think we must be dreaming: paying a commercial rate of interest to a parent company in a higher rate tax jurisdiction is tax avoidance.

    Two further thoughts; 1. What effect would moving the CT rate around like that at short notice have on future investment? 2. Why do these idiots only ever focus on CT? They say they despise tax avoidance; well the most abusive schemes are in individual tax, the biggest tax loss was caused by the missing trader VAT fraud. Why isn’t Ritchie focusing his attention there? Lack of knowledge?

  2. Tsk, doesn’t everyone know that the retired accountant from Wandsworth is … autistic ?

    Seriously, what else would explain his compulsive inability to NOT get the point, and to argue both sides of many discussions at even the same time ?

    Alan Douglas

  3. Surreptitious Evil

    Alan,

    Most people with ASD make consistent sense. For, possibly a slightly sideways view on life. The LHTD? Rarely either – even assuming the view of life of a leftist extreme statist.

  4. So Much For Subtlety

    Alan Douglas – “Seriously, what else would explain his compulsive inability to NOT get the point, and to argue both sides of many discussions at even the same time ?”

    Borderline Personality Disorder.

    I do not think he is autistic. Autistic people tend to be quick logical and consistent. A little too much so in fact. BPD with delusions of grandeur and paranoia seems more likely.

  5. By quoting that idiotic spoof of mine, you are setting up a straw man to beat.

    Nobody but an arch neoliberalist would suggest that companies should receive an effective subsidy of 25% of the cost of an investment on top of corporation tax relief!

    Adding the 50% corporation tax relief means that The State is paying 75% of the cost of the investment that the evil corporation gets to keep in full. What sort of evil Corporatist would suggest that?!?

    This is just the ultimate form of tax competition, paying MNEs to come to the UK to invest and it is morally bankrupt. Whoever suggested this obviously wants to win the race to the bottom and they should be denounced as a neoliberal sophist.

  6. Candidly, it is the above Murphy Richards who is the neoliberalist spoof

    Because as any fool knows I write in very short sentences

    And I never use full stops

    Full stops are merely another example of the rotten neoliberal sophistry which, candidly, has wreaked so much damage

    On us all

  7. Nonsense! It is you, “Richard Murphy”, who are spoofing that spoof Richard Murphy.

    He only uses short sentences and doesn’t punctuate in his own comments section to give the impression he doesn’t like his time being wasted by being questioned on trivial matters of factual inaccuracy or the like.

    And if you were indeed Richard Murphy you wouldn’t be able to resist the opportunity to lampoon me by mentioning your book being for sale on Amazon or posting a link to an old post on an entirely unrelated subject.

    I dare you to make these slanderous accusations on my blog where I can moderate them properly!

  8. Surreptitious Evil

    But this would increase tax avoidance so it cannot be allowed to happen.

    Actually, I think it would simple be tax avoidance, according to the LHTD. And, therefore, illegal. So the government would be making legal something the LHTD has declared illegal. So all the government should be thrown in jail.

    The unfortunate corollary to that somewhat inviting scenario is that Millibland and Ballsup would then take charge, with advice and assistance from various egregious Murphys.

  9. Does anyone have a view on the proposal itself, (rather than what they think Murphy would think about it)?

  10. @SE

    Sorry.. I think I missed a meeting.. LHTD? What does it stand for, and what happened to WGCE?

  11. Murphy Richards, you are crass

    I am Richard Murphy, as my name clearly suggests

    You, candidly, are not

    Yes, since you mention it, I wrote a book called The Corajeoas Stait – what of it?

    There may be other Richard Murphys – I don’t know – perhaps you should address your criticisms to them

    I shall not engage further

    You will not be allowed to post on this blog in future since, candidly, all you do is engage in neoliberal sophistry

  12. Surreptitious Evil

    LHTD – “Lord High Tax Denouncer”. Awarded in response to his appointment to a committee that actually has official status.

    WGCE is still in use but, although it describes his competence entirely, it doesn’t really speak either to his self-importance or his overweening ambition.

  13. Surreptitious Evil

    Does anyone have a view on the proposal itself, (rather than what they think Murphy would think about it)?

    There’s an unwarranted assumption that British business’s would spend money, necessarily, with other British businesses. And nearly all of the Murphiesque complaining has been about business who use existing capital and expense allowances to reduce their headline UK profit figures.

    Frankly, they’d do better by raising the personal allowance and running income tax, and both NIs in together – households will pay off debt but they will also spend. And household spending is more likely to land mostly in the UK.

    And the evil bastard bankster loving Cleggalition are doing the first, at least.

  14. Luke @ #11:

    My view is that it’s a very bad idea. Tax avoidance comes primarily from mismatches between the commercial result and the tax rules (or between the tax rules in different jurisdictions). By deliberately introducing a blanket super-deduction like this you’d distort the business hugely.

    Just following through the maths: if we assume that a company has profits of 100, it would currently pay tax of 20. With no investment it would pay 50 under these rules. To get the tax rate down to the current level it would need to get an extra deduction of 60, so it would need to invest 40, which is half the post-tax profits.

    But note that even if you did invest the 40, that means your 100 pre-tax profit has now gone to 40 post-tax (after 20 of tax and 40 of investment). You’d be better off in cash terms not investing, as you’d pay tax of 50 and keep 50.

    So my SME clients who currently get by on 80 post-tax profit would be obliged to cut that to 40 or 50. That would drive a lot of them out of business – you can’t take a 50% pay cut for 3 years lightly.

    The other problem is that you can’t keep up that level of investment continuously for 3 years. For one thing we’d need to have a run-up to it so people can decide what they’re going to do and buy the appropriate plant and so on, which can have lead times of a year easily.

    Secondly, there’s only so much you can spend on plant: to get these high levels of investment we’d need to get into property, which currently gets no relief – so the 150% is an even bigger distortion.

    And thirdly, what happens when every company in the country is simultaneously gearing up for massive investment? Demand outstrips supply, prices rocket, and people still can’t get the investment done anyway becuse the goods just aren’t there. And then we have massive overcapacity which sits idle because there’s no increased demand for goods (other than plant, anyway).

    You can’t just put money into “investment”. You have to invest in something tangible.

    So: its a huge distortion in the marketplace that would drive small companies out of business while failing to achieve anything useful.

    I’d get a lot of fees out of it, to be honest, and the work would be quite interesting; but I’d much rather my clients had nice simple steady tax affairs that let them get on with building their businesses in their own way.

  15. Sorry to pendantualise, but LHTD for Lord High Tax Denouncer…

    Wouldn’t Lord High Tax Avoider Denouncer be more appropriate? LHTAD?

    Anyway, I think I prefer Tireless Warrior Against Tax-avoidance.

  16. Pellinor, thanks. A couple of queries.

    *So my SME clients who currently get by on 80 post-tax profit would be obliged to cut that to 40 or 50. That would drive a lot of them out of business

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