The central planks are to close the tax gap (the money Murphy identifies is lost through tax avoidance and evasion by high-net-worth individuals and corporations),
No, The vast majority is the little £10 and £20 fiddles of the grey economy. There’s almost no tax evasion at the top of the economy, there’s an awful lot own at the bottom. And no one at all is going to like the sort of rules and monitoring that would be necessary to collect that evaded tax.
and claw back some of the £93bn currently spent on “corporate welfare”;
Not even the Murphmonster’s idea. That particular piece of idiocy comes from Farnsworth.
(“I did a quick Google search,” he says, “and discovered that I could get 500 courses in accountancy, and none in tax. Why is something that is so important so little researched and only taught as an adjunct to accountancy? Why aren’t we researching the sociology of tax, the philosophy?”)
That’s been done. The conclusion being that it’s a cost, a sad amount that has to be handed over to pay for the government we want.
Murphy is famous for having been the first person to calculate the tax gap, the difference between what the treasury is owed and what it actually gets.
Murph’s tax gap is not what the Treasury is owed. It’s what the Treasury would be owed if Murphy had set the tax laws. It includes, for example, avoidance, which is money the Treasury says is not owed but Murph says is.
Country-by-country reporting – the idea that transnational corporations should be asked for a better breakdown of accounts, so that you can tell when profit is drained out of one country and paid tax on in another – was something he dreamt up in 2003, thinking only three people were interested.
Nope, pre-dates that by a number of years. They even had a conference on it before Murphy “thought it up”.
And this opens up the space for him to suggest a wealth tax, in his imaginary budget. “It was inconceivable in the past. But as a result of the work that the Tax Justice Network has done opening up the world’s secrecy jurisdictions, now if people move their assets offshore, we can find them again.” He has other specific proposals – a tax to replace national insurance, which was designed around jobs that don’t exist any more, and “we would need to explore new taxes for the 21st century, which are largely untried. A progressive consumption tax, so people with very few transactions would have very low tax. We have to discourage conspicuous consumption, which is eating up our planet.”
I’ll comment on this elsewhere, tomorrow.
The first immediate accusation was that he was threatening the Bank of England’s independence: it is fine for a government to initiate QE without threatening that autonomy, but not to determine the purpose of that money. “I’m deeply frustrated, I’ve been engaging with some of this country’s best economists. Am I threatening the Bank of England’s independence at the moment? Yesterday I was told, ‘I don’t have to justify Bank of England independence to you, it’s an a priori assumption.’ So what you’re telling me is that you think you’re right. I don’t agree with your a priori assumption, I want you to give me an evidence base.”
That it’s a requirement of being in the EU is a reasonable evidence base. That making the BoE independent dropped the interest premium on sterling another….
The second charge from his critics, mainly in the media, was that printing money causes inflation. “I say to them, have you bothered to work out how the world really works? Have you actually looked at how quantitative easing really worked? Have you understood? Central bankers have currently pumped in $6.5tn, and the net result is 0% inflation. So how am I, with a very modest amount of new council housing, broadband in rural areas, going to manage to do what the rest of the world doesn’t know? Central bankers around the world want to know how to create inflation. I haven’t found this magic solution.”
Oh well done. Quote the global number then compare it to your own leetle one in just one economy. And QE has produced inflation: it’s stopped deflation. And printing M0 to spend into the real economy is rather different from fiddling around with financial asset swaps. As absolutely everyone who knows even the first thing about monetary economics has been saying.
But I don’t get the impression Murphy cares very much about the mainstream. He is a moral man who is perhaps not going through his most modest life phase – “I’m well aware that there is one treasury minister who is now referring to me as the Right Honourable Lord Murphy.”
You heard it here first folks…..