Ritchie on budget surpluses

Most amusing:

Oh heaven help us is all I can say. The last thing this country needs right now is a budget surplus.

The trouble with George is he has never studied either economics or accountancy.

So, let us turn our minds to the Keynesian macroeconomics that the Murphmeister is so fond of.

In a recession allow that deficit to balloon out so as to offer fiscal stimulus. OK, we’ve done that.

So, what happens when the economy comes back on track? Some might say that you need to run a budget surplus to pay back all that was borrowed in the recession. But that’s not actually the Keynesian point. Instead, you’re supposed to be doing macroeconomic management. And a roaring boom is just as bad a thing to have as a recession is (not least because roaring booms tend to produce recessions at some point).

And thus during a boom you have to be practising fiscal austerity. That is, run a budget surplus. Not because you need to pay the debt back but because you need to be cooling the economy as part of your macroeconomic management.

And this is utterly absurd. First we do not need a surplus: when the government has control of its currency it can run a deficit equivalent to debt multiplied by the interest rate and sand still – so £30+ billion a year of deficit is balance right now.

You can see what he’s doing here. He’s setting up the argument that we should use Keynesian economics in the recession, spend lots of cash on his friends, then we should abandon Keynes in the boom so that his friends still get lots of cash spent on them.

Daniel in the lion’s den

Quite. This country has been distinguished for more than three centuries by uncensored newspapers. Here are some more defining traits: equality before the law, without regard for birth, wealth or ancestry; the mass franchise; universal education; jury trials; regular elections. There are few places on Earth of which lefties should be prouder.

It’s entirely true: but asking for it a bit to say it in The Guardian.

And this is a great quote:

As Billy Bragg, a rare champion of leftist nationalism, puts it: “If there is a single trait in our character that has set us apart from other nations, it is our determination to limit the authority of those who rule over us”.

Which is why we can describe ourselves as lefties for opposing the Courageous State.

All hail the Courageous State

You know, these people who know what they’re doing and are able to calculate the right price for good things:

The Department of Energy and Climate Change set out plans to guarantee new solar farms built in 2017-18 a price of £110 for every ‘megawatt-hour’ (MWh) unit of power they generate – about twice the current market price.

The figure was £5 less than it had initially offered in draft plans, but the industry said it was still unnecessarily generous.

But the STA said it had told the government it only needed £99/MWh in 2017-18 – meaning DECC’s proposals will leave consumer paying 10 per cent too much.

Subsidies for 2018-19 were 9 per cent more generous than the industry had asked for while those for 2016-17 were 4 per cent too high.

It’s not just that telling everyone what to do is unnecessarily fascist it’s that the people who staff the State are just too damn dim to be given that sort of Courageous power over the rest of us.

Is this a tax crackdown that Ritchie will support?

There have also been suggestions that thousands of UK professionals, including lawyers, surveyors and estate agents, face a tax hit over a plan to clamp down on National Insurance exemptions for partnerships.

Treasury officials are said to believe that some firms are “disguising” employees as partners to avoid employer’s National Insurance contributions.

It is thought that partners could be stripped of their self-employed status unless they can prove they have put their own capital at risk in the business – a move that could affect many smaller law and accountancy firms as well as estate agents and surveyors.

Bill Dodwell, head of tax policy at Deloitte, said: “If they don’t deal with this properly then I do think it’s fairly damaging for the smaller part of Britain’s professional partnerships, which covers sectors like high-street accountancy firms or estate agents. They will potentially be asked for more tax.”

He added: “There is clear evidence that there is a gap here that has been exploited, and so I can understand why it’s right to shut that down. I just hope there isn’t collateral damage.”

An increase in the taxation of high street accountants……

Don’t people do history any more?

Scientists have solved the longstanding mystery of a Japanese submarine missing since 1946 after stumbling across it in the Pacific Ocean off the coast of Hawaii.

The Sen-Toku I-400 submarine – one of the largest pre-nuclear underwater vessels ever built – was discovered lying 2,300 feet beneath the surface of the ocean off the southwest coast of Oahu.

The whereabouts of the 400-foot long mega-vessel has been the subject of widespread academic debate since its disappearance in 1946 when it was preparing to attack the Panama Canal before being scuttled by US forces.

You what?

A Jappo sub attempting to attack something in 1946? A year after surrender?

Err, no, not really.

The wreckage was identified by its distinct aircraft launch ramp, deck crane and stern running lights, with its aircraft hanger broken off, the likely result of the three US Navy torpedo blasts that sunk it in 1946.


So, there was indeed a plan for that sub and a few others to attack the Panama Canal. But that was in 1945. At the end of the war the sub and crew surrendered and was taken to Hawaii. Where, in 1946, the Americans scuttled it with those torpedoes in order to stop the Soviets getting a good look at it.

People need to be seriously ignorant of history if they think that the Japanese Navy was sending subs across the Pacific in 1946.

And George gets it wrong on trade again

They have good reason to ask. The commission insists that its Transatlantic Trade and Investment Partnership should include a toxic mechanism called investor-state dispute settlement. Where this has been forced into other trade agreements, it has allowed big corporations to sue governments before secretive arbitration panels composed of corporate lawyers, which bypass domestic courts and override the will of parliaments.

This mechanism could threaten almost any means by which governments might seek to defend their citizens or protect the natural world. Already it is being used by mining companies to sue governments trying to keep them out of protected areas; by banks fighting financial regulation; by a nuclear company contesting Germany’s decision to switch off atomic power. After a big political fight we’ve now been promised plain packaging for cigarettes. But it could be nixed by an offshore arbitration panel. The tobacco company Philip Morris is currently suing Australia through the same mechanism in another treaty.


All it is about is making sure that governments also obey the law. If you nationalise something you’ve got to pay compensation, that sort of thing. And yes, that really is all it is.

On the Amazon Octocopter

Imagine ordering a television or your groceries online and having them delivered to you by an unmanned aircraft. Even Amazon chief executive Jeff Bezos admitted it sounds “like science fiction” when he announced that the company is experimenting with a project to do just that.

The delivery drones, which will be offered to customers in four or five years’ time, could transform Amazon’s already slick delivery network.

The company hopes to deploy an armada of flying “octocopters” carrying products weighing under five pounds to users – around 86pc of items they deliver – within 30 minutes of an order being placed.

A video posted on its website showed a prototype drone with eight small helicopter rotors and four tall legs. Powered by an electric motor, they will operate autonomously and use GPS to locate homes of customers within a 10-mile radius of Amazon distribution centres.

It is one of a handful of off-the-wall projects known, in Silicon Valley parlance, as “moonshot ideas”: examples of technological developments so ambitious that, before they appear, most people rule them out as impossible.

I suppose it could be a moonshot idea.

Personally though I took it to be a very good bit of PR in the American prime shopping season.

Ritchie’s New Report!

For the TUC this time. Talking about tax “abuse” and tax avoidance.

New TUC research (undertaken for us by Richard Murphy of Tax Research) shows how weak the government’s latest anti-avoidance measure really is. You might think that an initiative labelled as an ‘anti-avoidance’ rule would make some inroads to the UK’s tax dodging industry. But in fact the Government’s own estimates show that its General Anti -Avoidance Rule will, at best, limit one per cent of the estimated £25bn that we lose each year through tax avoidance measures.

How has something that sounded so promising gone so sour? The devil, it turns out, really is in the detail. As our report sets out, there are six key problems with how the General Anti-Avoidance Rule will work:

The Rule’s definition of tax abuse is far too narrow – none of the big scandals that have recently hit the press (including companies such as npower, Google, Amazon and Starbucks) would have been stopped by the its provisions.

Well, yes. Starbucks didn’t abuse any tax laws at all. It merely failed to make a profit and thus did not owe any taxes on its non-existent profits. And Google and Amazon are not, as HMRC has pointed out, abusing any tax laws nor doing any tax avoiding:

Non-resident trading companies which do not have a branch in the UK, but have UK customers, will therefore pay tax on the profits arising from those customers in the country where the company is resident, according to the tax law in that country. The profits will not be taxed in the UK. This is not tax avoidance: it is simply the way that corporation tax works.

The Murphmeister can stamp his tiny little feet and insist that this is tax abuse all he wants. It ain’t.

I’m afraid that I missed the npower one so cannot comment.

From the report and making much the same point:

The first four elements of this Guidance still offer hope that the General Anti-
Abuse Rule might be useful, but the last abruptly curtails it, for reasons noted
below. However, this is not the sole constraining factor because it is also made
very clear in the Guidance that the abuse must be exceptional, and the securing of
a reduced tax bill does not mean that any arrangement is by definition abusive.
This is most clearly noted with regard to international tax arrangements where
the Guidance Notes say:
Many of the established rules of international taxation are set out in
double taxation treaties. These cover, for example, the attribution of
profits to branches or between group companies of multi-national
enterprises, and the allocation of taxing rights to the different States where
such enterprises operate. The mere fact that arrangements benefit from
these rules does not mean that the arrangements amount to abuse, and so
the GAAR cannot be applied to them. Accordingly, many cases of the sort
which have generated a great deal of media and Parliamentary debate in
the months leading up to the enactment of the GAAR cannot be dealt with
by the GAAR.

Given that these things are not tax abuse and nor are they tax avoidance then a rule meant to counter tax abuse and or tax avoidance is not going to cover them, is it?

The basic problem that Ritchie has here is that no one else is using his definition of tax abuse. His definition being, recall, whatever it is that he thinks someone should be paying in tax, well, if they’re not paying that then this is abuse. As opposed to the actual tax system which says that if you do this, here, then you pay tax, if you don’t then you don’t.

You know, this rule of law thing.

And then we’ve got something for which I think he, the TUC and all who sail in this tax abuse ship should be hung for:

d. The burden of proof that an arrangement is abusive rests with
HM Revenue & Customs and not with the taxpayer
Given all the obstacles put in the path of HMRC using the Rule it would logically
be presumed that once they had overcome these hurdles the burden of proof that
an arrangement was not abusive would rest with the taxpayer, but that is not the
case in the Rule. Instead the burden of proof that an arrangement is abusive falls
upon HMRC. As the Guidance notes on procedure for the Rule say6:
In proceedings before a court or tribunal in connection with the GAAR,
the burden of proof is on HMRC to show that:
 there are tax arrangements that are abusive; and
 the counteraction of the tax advantages arising from the
arrangements is just and reasonable.
This is different to most tax appeals (apart from some penalty appeals) where the
burden of proof in an appeal is on the appellant.
No satisfactory explanation for this reversal of normal practice, where it is
customary for the taxpayer to be required to show that they have complied with
the law, and not vice versa, has been provided. What is certain is that it places yet
another obstacle in the path of HMRC using the Rule in practice. We believe that
it is for a taxpayer to show that they did not intend to commit tax abuse by
adopting a course of action rather than for HMRC to show that they did. The
latter is a substantially more difficult standard to meet given that the taxpayer
will hold all the evidence.

Note the sleight of hand there. Yes, on appeal, if you’ve lost in the first round then the burden of proof is upon you. This applies to both sides of course: if HMRC loses in the first round (say, Vodafone) then the burden of proof falls upon HMRC. But what is being claimed here is that the first time it gets to court, in the primary case, the burden of proof must be on the taxpayer.

Which is appalling: our legal system is based upon the very simple idea that the accuser must prove his accusations.

Hang them, hang them all.


German politician Peer Steinbrück – one of the fiercest critics of Ireland’s tax regime – used Irish letter box companies when finance minister to try to balance the German budget through financial engineering.

They stuck the pensions contributions into Irish companies which they then lent to Dexia bank which then went bust…..

Just too, too superb.

Neil Clark again

The decline of the state pension began in 1980 when Margaret Thatcher’s government severed the link between the state pension and average earnings, introduced by Labour’s Barbara Castle in 1974. Thatcher’s dream was to wean people off the state and onto private provision in the same way she wanted to wean people off council houses. Although an earnings link has been restored by the coalition, the damage has already been done by successive governments since Thatcher. The new flat-rate pension of £144 a week planned for 2016 will still be below what it would have been in 2008 had the earnings-link been maintained.

That pensions / earnings link is a dark tale.

Previously the pension was linked to general inflation. Which was rather roaring in 1974. So, link it to wages, which were falling behind general inflation. Then, later, earning were rising faster than inflation, so switch it back. And of course now, earnings are behind inflation. So back to the link to earnings again.

Oh, and that final statement that if the link to earnings had been maintained then the pension would be higher. That’s proof that earnings have risen faster than inflation, isn’t it?

It’s The Wonder Of The World it is

More than 2,000 people have died of dehydration or malnutrition while in a care home or hospital in the last decade, according to figures published by the Office for National Statistics.

No, this isn’t the LCP or anything like that.

The figures show the “underlying cause of death” in 2,162 recorded cases since 2003 was dehydration or malnutrition.

Just shitty care.

Wonder Of The World.

And this is bollocks and all

Britain’s road signs could be replaced by warnings used in France and German as part of a plan to develop new technology to cut deaths on roads in Europe.

Traditional no entry and speed signs in Britain could be replaced by standard European signs which could be read by ‘intelligent’ cars that will be able to communicate directly with drivers.

The changes have been proposed to the European Commission and could also involve introducing standard road markings, which campaigners fear could cost taxpayers millions.

Some cars, such as Volvos and Fords, are already capable of reading road signs and the European Road Assessment Programme (EuroRAP) said that all EU countries will need to use the same signs for the system to work.

No, not that intelligent signs are necessarily bollocks. Or even a good idea. The idea that they all need to be the same is bollocks.

If you’re going to make a car that is intelligent enough to read the road signs then there would be no problem with having more than one set of signs that it could read.

It’s just that mania for “more Europe” again.