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November 2013

Rentaquote Ritchie

Tax accountant Richard Murphy, who helped expose tax avoidance by Starbucks, said: ‘The reality is that much of this will never be paid.

‘They are never going to stop spending money on infrastructure, which means they will probably never pay tax. Companies like this have to say when and if they will ever pay tax.’

This in response to this information from Thames Water:

Thames Water sparked fury yesterday when it announced it will not pay corporation tax for up to a decade.

Well done. Murph’s response to a company stating when it will pay tax is to demand that a company must state when it will pay tax.

Slightly missing the point here George

Monbiot is complaining about the IEA being tobacco funded which leads to the head of the IEA stating this on the radio:

Here’s what Mark Littlewood said on the Today programme: “The evidence out of Australia, who, in their extreme unwisdom in my view, have offered to be the guinea pigs for planet earth on whether this policy works, having had plain packaging or standardised packaging in place for a year over there, the early evidence suggests no change at all on smoking prevalence. And, lo and behold, the black market in cigarettes has jumped markedly.”

George rejects this because of who is saying it. But the important point is actually whether it is true or not.

And of course it is true. No matter who says it or how they’re funded.

It’s all rather Soviet really, similar to that idea that only those with the proper proletarian background could produce art or philosophy or politics……

George also has a pop at ASI funding and just to make it clear I have absolutely no idea at all where such funding comes from. Not a clue.

OK, fair enough, but why are you doing it this way then?

The answer should be a no-brainer – insulate. And there have been a series of, admittedly inadequate, programmes to help the poor to do so, culminating in the current Energy Company Obligation (ECO), under which suppliers are required to carry out efficiency measures. It is this that Mr Osborne is intent on cutting, by spreading its two-year programme over four. If he does so, spending on energy efficiency in England will have dropped by 62 per cent since the Coalition took office.

More than 140 organisations – ranging from Barnardo’s to confused.com, from AgeUK to the TUC – have written to him in ECO’s defence. Insulating houses saves families an average £400 a year. It is job-intensive, now employing some 136,000 people. It provides one of the highest returns on investment; £350 million spent under ECO will save a total of £4.2 billion. And it helps avoid energy shortages. No wonder David Cameron this year hailed it as “right for the economy”, pledging “to make Britain the most energy efficient country in Europe”.

I’m not entirely sure that it’s quite as simple as that given that there are many houses that it’s not possible to insulate (like all those Georgian houses in Bath). But let’s take it as being true.

Who could possibly be against it? Most energy companies, because it depresses their sales.

So which fucking cretin organised that it would have to be the energy companies that ran the insulation schemes then?

And then look at the trickery with numbers:

Now the Chancellor looks like capitulating. If he cuts the programme as expected, calculates the Association for the Conservation of Energy, the Big Six will avoid spending £1.3 billion on ECO measures, and sell £360 million worth of extra fuel to the uninsulated houses. Six hundred thousand families will pay hundreds of pounds extra annually, and at least 10,000 jobs will be lost. All for some £50 off the average bill of nearly £1,300.

Quote the costs as gross numbers, the benefits as per household. With 24 million households £50 each is £1.2 billion isn’t it?

This is mildly fun

At some point in the next 15 minutes or so my blog at Forbes will go past 10 million visitors since I started it.

They’ve also paid me significantly above €100,000 for writing it in the last 2.5 years as well.

Rather glad I noted Ritchie telling us all how he was going to get paid for writing for Forbes and then phoned them up. On the grounds that if they were going to hire him then they ought to hire me too.

Yes, a good idea that phone call.

Ritchie actually gets some economics right!

As many know, I don’t buy all the arguments of the standard economics repertoire, especially as now interpreted by mainly mathematical economists. But some of the ideas they have abused are very obviously right. One is the diminishing marginal utility of income.

The idea of this is very simple. What it says is that the first £1 you earn is worth more than the second, and so on. Actually, the evidence may well be that there’s almost no tailing off for quite a long time – new research suggests until about £22,000 of income is reached – but thereafter there’s no doubt that each individual pound (or yen or dollar or euro) is relatively worth less than the one before.

Until you reach the point Nigella Lawson reached where you don’t check or notice that your staff have spent £600,000 of your money because there’s so much that simply passes unnoticed.

There is, however, an important point in this. The fact is that if each pound is worth less as your earnings increase then each pound of tax paid also imposes less strain. The declining marginal utility of income also means that the marginal cost of tax falls as income rises too – so hat a greater part of marginal income can be paid in tax without imposing a greater real burden on the taxpayer.

This is, I think, economic fact.

It’s why we need a progressive tax system in the UK.

Yup, that’s all absolutely correct. That’s also why we have a progressive income tax system in the UK. Which is where Ritchie goes wrong, of course.

We don’t have one right now.

We don’t have a progressive tax system, no, but we do have a progressive income tax system. And our progressive income tax system is exactly based upon that idea of the declining marginal utility of income. And, as we’ve seen with the 50p rate, we’ve got that tax system as progressive as we can make it. Or if you prefer the Saez and Diamond calculations, including employers’ NI, around the peak of the Laffer Curve at 53 to 54% of income with a 45 p purely income tax rate.

We do desire a progressive income tax system. And we have one. As progressive as we can have it without reducing revenues by making it even more progressive.

This isn’t tax avoidance, damnit!

The Treasury will discuss the tax exemption of spread betting after peers including the Archbishop of Canterbury raised concerned about “extraordinary tax avoidance” on the trades.

Lord Newby, the Treasury spokesman in the House of Lords, said he agreed ministers “ought to look” at the apparent “loophole” that allows spread betters to avoid income tax, capital gains tax and stamp duty on transactions.

The concern was raised by Lord Eatwell during the second day of the debate on the Financial Services (Banking Reform) Bill. The Labour peer said spread betting “is a really extraordinary form of tax avoidance within the financial services industry.”

Betting is a private wager and is not subject to income or capital gains tax. This is true of horse racing, footie, and, yes, betting on financial markets.

Because it’s betting, d’ye see?

Wasn’t there a campaign about this?

Co-op Bank is suffering a customer exodus after a tawdry sex and drugs scandal and revelations about its parlous finances.

In a surprise statement to the stockmarket the bank admitted yesterday that there has been an increase in customers ditching their current accounts.

The self-proclaimed ‘ethical’ lender acknowledged ‘recent events may have caused some brand and reputational damage’.

I’m sure there was. Some sort of campaign to get people to move their accounts away from those horrible capitalist bastards, the major high street banks, and into nice cuddly mutuals or summat.

You know, nice cuddly mutuals like the Co Op?

The solar panels on the Moon idea

The great thing about this idea is that it’s entirely achievable:

A Japanese construction firm is proposing to solve the well-documented energy problems facing Japan – and ultimately the entire planet – by turning the moon into a colossal solar power plant.

Tokyo-based Shimizu Corp. wants to lay a belt of solar panels 250 miles wide around the equator of our orbiting neighbour and then relay the constant supply of energy to “receiving stations” on Earth by way of lasers or microwave transmission.

The “Luna Ring” that is being proposed would be capable of sending 13,000 terawatts of power to Earth. Throughout the whole of 2011, it points out, the United States only generated 4,100 terawatts of power.

Please note that I don’t say that it will necessarily be economic but it could certainly be built.

Do we actually have any Tories left these days

The Big Six energy firms have been asked to freeze prices by the Government until the middle of 2015, it was reported last night.

The Government is calling for energy firms to commit to an immediate freeze on prices as part of a deal that could cut bills for families across the country.


Twats.

The country is looking for £100 billion to be invested in the energy generation and distribution system over the next couple of decades. And the idiots are calling for price freezes?

As I’ve said before, I’m responsible for this

New parents will also be able to divide their time off into as many extended breaks as they want as long as their employers agree, after a Coalition tussle over the plans.

The reforms will also extend parents’ existing right to request flexible working to all employees in an attempt to reflect the increased role of grandparents and other carers in looking after their grandchildren.

Nick Clegg, the Deputy Prime Minister, said the changes would help to stop women feeling they have to choose between having a career or a baby.

The Government is publishing the final details of a significant shake-up which will cater for a growing desire by men to play a more hands-on role in a baby’s first year.

The traditional 52 weeks of maternity leave, other than the first fortnight for a new mother’s recovery, will be able to be shared between the parents from April 2015.

Not exactly the solution that I would have chosen myself but there we go.

And the responsibility comes from something I did over at the ASI (and here as well). My insistence that we don’t in fact have a gender pay gap while we do indeed have a motherhood pay gap. That being caused by career breaks to have and raise the babbies. This convinced a Lib Dem activist, who saw that shared parental leave would, while not entirely, at least partially spread the effect of those career breaks to fathers as well as mothers. Thus making a parents pay gap not a mothers pay gap. Which they see as rather fairer.

That’s gone up the Lib Dem policy making system and so there’s the announcement from Cleggy.

From small acorns great oak trees grow etc.

My preferred solution to the perceived problem would be to just shrug and accept it.

Fairly high maintenance here

Charles Saatchi paid annual credit card bills of £1.2 million run up by his ex-wife Nigella Lawson and five aides for “personal spending” on his family, a court was told on Thursday.

He paid the bills in full by direct debit each month without scrutinising where the money was going, even though employees were sometimes spending more than £5,000 on designer clothes in single transactions, it was disclosed.

One assumes the Charlie was being paid for in cash.

And one can also see why the bloke might have got just a little ticked off about all of this too….

War on Want really are cretins aren’t they?

In 2007, Alliance Boots left the FTSE 100 by becoming a
privately held firm in Europe’s largest ever leveraged
buyout (LBO). The transaction was led by US private
equity firm Kohlberg Kravis Roberts & Co. L.P. and the
company’s Executive Chairman Stefano Pessina, a
billionaire resident of Monaco. The LBO was financed
largely with £9 billion in borrowings, more than 12 times
the company’s EBITDA (earnings before interest, tax,
depreciation & amortisation).
By taking on this level of debt, private equity-backed
firms like Alliance Boots have the potential to erode the
tax base in the country where they locate their
borrowings. Profits are, in effect, shifted abroad.

While Alliance Boots operates in 25 countries, largely
through its wholesaling business, its more profitable
retail business is mostly in the UK. Because all or almost
all of the LBO debt was located in the UK, Alliance Boots
has been able to deduct its finance costs from taxable
income in its most profitable market. During the
six-year period since the buyout, we calculate that the
company was able to reduce its UK taxable income by an
estimated £4.2 billion compared to what it would have
paid had it not carried any debt, resulting in a tax bill
reduced by an estimated £1.12 to £1.28 billion in taxes.

There is no evidence whatsoever that the tax bill has been reduced by one red penny. It could actually have increased.

It is true that profits are taxed at the company level. Interest paid is taxed at the level of the recipient. That the company is no longer paying tax on profits means, here, that the recipients of the interest are paying tax on that. There is thus no, I repeat absolutely none, evidence that the total tax bill has gone down.

It’s the Wonder Of The World it is

A shocking catalogue of hospital failings, including the case of an anorexic teen left to starve to death and former RAF pilot who was not told he had a brain tumour have been revealed in an in-depth study by the Patients’ Association.

The charity’s annual report said too many parts of the NHS have “lost their way” leaving patients to suffer from a lack of basic care, which compromised dignity and comfort, and put lives at risk.

It outlines detailed failings in the care of 14 patients, aged 19 to 94, with failures to diagnose and treat those suffering from life-threatening illness, and to provide food, drink or help getting to the toilet for the vulnerable elderly.

A shining vision of Jerusalem on the hill I tell you. No need to reform of change it in any manner whatsoever.

 

Timmy elsewhere

At the ASI.

Aren’t we lucky to have the Resolution Foundation telling us the blindingly obvious?

You mean that people who remain in low skill low productivity jobs don’t start to earn higher wages while those who move to higher skill higher productivity jobs do indeed earn more?

Nigella? Coke?

Seriously?

But yesterday Isleworth Crown Court heard details of a witness statement given by Mr Saatchi on Monday.

‘During our marriage I was unaware that Nigella took drugs,’ the statement said.

‘It is only during the break-up that I became aware she had been taking drugs whilst we were married – although I was not aware of the scale of the problem.

‘I believe it was in about June 2013, at the time of the well-publicised incident at Scotts restaurant – around the same time I was told about her drug use by my daughter Phoebe.

‘It was confirmed by other people in the household.’

Great beauty, domestic goddess, single and a coke fiend? Anyone got her number?