June 2014

He doesn’t understand, does he?

Thirdly, Ed Balls is looking at an “allowance for corporate equity” as part of reforms to encourage more long-term attitudes in business. I admit that this one does cause me concern. There can be no doubt that the UK’s very generous tax relief for interest paid by companies has been significantly abused. We have seen takeovers of football clubs, like Manchester United, funded almost entirely by debt which has been loaded onto the companies themselves, with the result that massive tax subsidies have been given to the buyers. The same is true of mainstream companies. Indeed, this is the whole allegation about tax avoidance at Boots. What worries me about the approach that Ed Balls is looking at is that instead of tackling this abuse it seeks to give an equivalent tax allowance to those companies that fund their activities using shareholder money instead of borrowings.

I have three problems with this approach. Firstly, it does not tackle the problem of excessive debt funding or the tax relief given upon it. Secondly, it simply creates another corporate tax giveaway, and big business has enjoyed a whole raft of these over recent years meaning that this is the one sector of the economy as a whole that has enjoyed tax cuts. Thirdly, this is another arrangement that favours big business over small enterprise. No small company has significant shareholder funds so this relief is going to leave them almost unaffected whereas large companies do, however much their debt, tend to have a significant value of shareholder funds. That means they’re bound to get this tax relief, so upsetting the balance between small and large business yet again, with the bias being, once more, against small business.

Tax relief on interest is not a tax subsidy. It’s simply a determination of who is legally responsible for paying the tax.

Corporate profits are taxed at the level of the company with (in effect) and extra rate applying to higher rate taxpayers who receive dividends.

Interest is not taxed at the company level: it is taxed when it reaches the recipients. Who is legally responsible for the payment of that tax doesn’t particularly matter. It’s still being taxed. The so called “relief” is simply a determination of who, legally, has to pay said tax.

As to what Balls is suggesting: that looks like a desire to tax economic profits rather than accounting ones. An “allowance for shareholder funds” would mean that, or at least could mean in one formulation, that you measure the normal rate of return to capital (aka “the cost of capital”) and ignore that for tax purposes. Only companies making in excess of this, making those economic profits, would be charged tax on only the portion of profits that is above that normal rate of return.

This is, of course, a thoroughly good idea and is one of the recommendations of the Mirrlees Review.

So how can they punish Wonga now

When the government is doing the same thing?

Warnings sent by ‘Smith Lawson and Company’ to graduates for the last nine years carry a banner in red stating ‘Do Not Ignore This Letter’, with a demand for payment within seven days and a threat of legal action.

They gave the impression of a separate company with the line: ‘We are instructed by our client, in connection with the sum outstanding shown above.’

But the supposed firm does not exist and is little more than a masthead designed to intimidate.

The Student Loans Company (SLC) is a subsidiary of the Government and reports to Vince Cable’s Department for Business, Innovation and Skills.

The firm said it introduced Smith Lawson as a ‘cost-saving exercise’ because the use of conventional debt collection agencies required payment of commission.

Last week City watchdog the Financial Conduct Authority (FCA) revealed Wonga would have to pay £2.6million compensation to 45,000 people sent letters from two invented debt recovery firms.

Bit tricky that, isn’t it?

It seems that we need to cut Perrier prices

An investigation by Channel 4’s Dispatches found three supermarket chains selling lager cheaper than sparkling Perrier water.

Tesco sold multipacks of Fosters, Carlsberg and Carling lager at 69p a pint and Strongbow cider for 65p a pint. This compared with Perrier mineral water costing 73p a pint.

In Asda, the same beers could be bought for 72p a pint, compared with 76p a pint for Perrier.

And at Sainsbury’s, 20 cans of Fosters lager was 72p a pint while 15 cans of Strongbow cost £8, equating to 69p a pint, 7p less than a pint of sparkling water.

Clearly the bastards are profiteering.

Seems fairly obvious really

Children conceived through fertility treatment like IVF are one third more likely to have psychiatric problems such as autism or schizophrenia than those born naturally, research suggests.

Although the increased risk was described as “modest” researchers found it persisted throughout childhood into adulthood.

However researchers believe that it is not fertility procedures that are to blame but rather mothers who struggle to get pregnant are passing down faulty genes to their offspring.

Dr Allan Jensen of the University of Copenhagan said fertility doctors needed to be aware of “the small, but potentially increased risk of psychiatric disorders among the children born to women with fertility problems.”

However, this knowledge, he added, “should always be balanced against the physical and psychological benefits of a pregnancy.”

For some, at least, of the women who struggle to become pregnant the problem will be that the genes they’re trying to become pregnant with aren’t very good. So, if extra care is taken to make sure that they do become pregnant then one might expect more faulty genes along the way.

“It is known, for example, that psychiatric disorders to some degree have a genetic component.

“It is perhaps thus likely that that these damaged genes coding for psychiatric diseases are overrepresented in women with fertility problems, and, if transferred to their offspring, this may at least partly explain the increased risk of psychiatric diseases.”

Juncker the Drunker

The newspaper Letzebuerg Privat (Luxembourg Private), has referred to him as the country’s ‘drunken stupor premier’.

Last year it ran a front-page report, accompanied by a photo of him guzzling drinks, in which it was alleged that he quaffed ‘a Campari, three glasses of wine and three Sambucas in only two hours’.

Sounds like a reasonable dinner party that. Might be a bit much for lunch unless there’s a serious siesta planned tho’

The cost of the Royals

Catherine Bennett tells us all that the Royals are simply too, too, expensive.

And yet nowhere does she consider the contrary. What would be the cost of moving to a Presidential Republic?

The palaces will all still exist, they will all still need to be maintained. Elected politicians require security and transport. State banquets will still happen.

I’ve heard but cannot confirm that the Italian presidency (a purely ceremonial one, as we would get, rather than an executive one like France) is actually more expensive than our own dear Royals, the whole damn family of them.

It’s not immediately obvious that changing the system would cost less cash.

And this is all to ignore what I regard as the essential point of it all. That symbol of the nation thing. Which I boil down to: who gets to pin the VC on that occasional hero that we produce?

Can anyone at all imagine the world being a better place if Beharry received his from a grinning President John Prescott?

I rest my case.

How can you out someone who is out?

That’s when co-host Simon Hobbs piped up, saying, ‘I think Tim Cook is fairly open about the fact he’s gay at the head of Apple, isn’t he?’

For a moment, a deafening silence filled the studio as the hosts look awkardly from one to the other before Stewart, shaking his head in disapproval, responds with a succinct, ‘No.’

Hobbs tried to recover, ‘Oh, dear, was that an error? I thought he was open about it.’

It’s true that we’ve not had one of those 12 steps moments. “Hi, I’m Tim Cook and I’m gay”.

But he has agreed that he is indeed gay publicly.

Ritchie doesn’t get macroeconomics, does he?

But the implication is obvious , and is that within 18 months or so of a new parliament the more than 9 million households with mortgage debt will be seeing their average monthly outgoings increase by about £200 a month. That is, to put it in context, about £22 billion of consumer spending that will not be happening each year as a result – which is the equivalent of increasing VAT by more than 4%.

So the simple question to any potential Chancellor is how are you going to keep any recovery going in the face of this?

You’re only going to raise interest rates if aggregate demand is rising by more than that £22 billion, obviously.

£22 billion is about 1.4% of GDP. So, if immigration and economic growth (and you can play around with inflation as well if you want) are increasing demand by more than 1.4% then you can raise interest rates.

Current estimates of real UK GDP growth are 3.2, 3.3 %.

This isn’t even a difficult part of macroeconomics.

False accusations of rape are very rare you know

Brooker’s former partner Paul Fensome, a railway signalman, was held behind bars for 37 days after she accused him of a string of rapes and assaults. While in custody, Fensome was held in a secure wing after rumours went around that he was a paedophile. He has since received £38,000 compensation.

Alibis, evidence from Fensome’s phone and his work shift patterns undermined Brooker’s accounts. Injuries were judged to have been self-inflicted and the police dropped their investigations into Fensome and turned their attention on Brooker.

Brooker initially told police she had made false accusations. But when she was charged with perverting the course of justice she retracted her confession. She was found guilty of 12 offences relating to false allegations of five rapes, six assaults and one false imprisonment.

That’s not a disagreement over consent or not is it? That’s a number of attempts to get an innocent man jailed. And quite rightly she’s going to serve some time for having tried that.

But there’s always some:

The support and campaign group Women Against Rape (WAR) was among more than a dozen organisations and lawyers who wrote to the judge arguing that a harsh sentence would put women off coming forward to report rapes for fear they would not be believed.

They wrote: “The prosecution was not in the public interest. A prison sentence will put even more women off reporting, enabling even more attacks from violent men. The resources spent on prosecuting Ms Brooker should have been put into prosecuting rapists and other violent men.”

She tried to get an innocent jailed! Of course she should have been prosecuted.

Have a nice independence then Scotland

British spies may have orchestrated the abusive messages sent to JK Rowling after she spoke out against independence, a leading SNP politician has claimed.

Christina McKelvie said the torrent of online attacks aimed at the Harry Potter author could have been the work of “secret service plants”.

I’m sure you’ll enjoy being run by complete loons like this.

That Juncker’s a piss artist isn’t a problem

Jean Claude-Juncker’s drinking habits have been discussed at the highest levels by European leaders who privately have concerns over the lifestyle of the continent’s president-in-waiting, it has emerged.

With David Cameron facing defeat in his attempt to prevent Mr Juncker being confirmed as president of the European Commission, it can be disclosed that a series of allegations about his alcohol consumption have been the subject of top-level talks.

His views, beliefs, career, method of being chosen, the very existence of the job he’s in the running for, all these might be problems. But booze? No, that’s not a problem.

Hell, we beat off the German socialists with a leader who breakfasted on champagne. Quite a good tactic for dealing with Martin Schultz you might think.