Quite right solo professore

As the Scottish government says:

The headline estimates of Scottish public sector expenditure and revenue in GERS embrace two key principles:

1. Public sector revenue is estimated for taxes where a financial burden is imposed on residents and enterprises in Scotland

2. Public sector expenditure is estimated on the basis of spending incurred for the benefit of residents and enterprises in Scotland

I added the italic, bold emphasis.

GERS compares tax paid in Scotland with spend for Scotland. That earns the following are ignored:

Scottish income taxed outside Scotland e,g. rents, interest, profits, royalties and maybe more, all of which can be significant;

Well, yes. Suppose it does. And as an independent country Scotland won’t be able to tax those incomes accruing to people outside Scotland. So it seems a perfectly reasonable basis upon which to base the economics of an independent Scotland, no?

12 thoughts on “Quite right solo professore”

  1. Well, most tax treaties allow for taxation of rents where a property is based and trading profits where there is a permanent establishment in the country. It’s also possible that withholding taxes could apply to interest and royalties.

    But (and this is the same argument Spud misses when he wails about taxing Amazon, Dell etc) if Scotland taxes such things, then so will England. And taxes currently paid in Scotland might end up being paid in England

  2. In Spudland

    “Pilgrim Slight Return says:

    This blog is an act of pure public service as far as I am concerned.”

    It’s certainly true that the more time Spud wastes on his meaningless analysis of data (starting at the conclusion and smashing his way backwards through facts and misunderstandings) the more of a service he does to the public as it stops him from doing anything harmful.

  3. According to today’s Telegraph, apparently, there is a £2,000 a head Union dividend for Scotland. Public spending is about £1,600 a head more, and taxation about £400 a head less, than in the rUK. With an ongoing deficit of 6.8% where the EU requires a deficit below 3%, how the hell can the SNP square that circle?

  4. I am a visiting professor at Anglia Ruskin University Global Sustainability Institute and at the University of Sheffield Business School. Neither position is paid unless grant funding is secured.

    So it seems the Due or Solo Professore is now an “unpaid intern”

    “Black with two sugars please Richard, there’s a good chap. And after, I’ve some shredding that needs to be done thanks.”

  5. KWAKU, the group I am a member of, is to be honoured when Spud give a talk. This is his stated bio for anyone interested:
    Richard Murphy is a Visiting Professor at Sheffield University Management School and Anglia Ruskin University Global Sustainability Institute following five years as Professor of Practice in International Political Economy at City University of London. Richard is a UK chartered accountant and political economist whose main areas of research relate to taxation and its impact on local, national and international economies and the relationships within and between them.

    He was a practising chartered accountant and corporate director for more than 20 years before becoming one of the co-founders of the Tax Justice Network. He combines his current role with directorships of Tax Research UK and the Corporate Accountability Network, and writes a daily blog on these issues.

    Richard’s work has been widely used by politicians and regulators. He was the creator of the country-by-country reporting concept that became one of the OECD’s recommended bases for reporting the taxable income of multinational corporations in 2014 in an attempt to beat profit shifting and tax avoidance by those companies.

    Richard has made regular news appearances on BBC1, BBC News Channel, Newsnight, Channel 4 and ITV.

    He was the “creator of country-by-country reporting” was he?

  6. “He was the “creator of country-by-country reporting” was he?”

    No. CBCR as a concept has been around since the 1970s.

    “a UN Commission for Transnational Corporations was set up in 1975. Within this commission, a Group of Experts on international Standards of Accounting and Reporting (GEISAR) was convened to increase financial transparency of transnational corporations. It was consensus that public reporting requirements should shed more light into the multinational corporate networks and finances. Their first advances towards CBCR were made in 1977. GEISAR proposed a set of concrete recommendations which required the publishing of detailed financial reports for each company within a multinational corporation, including information on intra-group trade.

    In March 1980, the International Accounting Standards Committee presented a draft for a standard (IAS 14) for financial segment reporting per geographic area, which resembled CBCR, at least in principle.”

    The above being an extract from a November 2017 report written by the Tax Justice Network.

    IAS 14 remained in existence until 2006 when it was replaced by International Financial Reporting Standard 8 which watered things down a bit.

    What Spud did was come up with his own proposed IAS for CBCR in 2003. At a time when IAS 14 had been in existence for 23 years. The current OECD version of CBCR reporting bears few similarities to Murphy’s proposed IAS.

    Murphy’s claim ought to be “I proposed a new version of an existing concept but the OECD ignored my proposals”

  7. It won’t be long before Murphy claims credit for inventing the concept of MMT, or significant parts of it, as well. He’s not a respecter of intellectual property as a concept, regularly breaching copyright of others when it’s in the “public interest”.

  8. “Richard’s work has been widely used by politicians and regulators.”

    His calculation of the tax gap in 2010 as being £120bn was described as “deeply and systematically flawed”, involving “an element of double counting”, including an estimate of £25bn tax lost “due to avoidance” which includes “the use of legitimate reliefs promoted by the Government” and also (laughably) included £28bn of tax debt owed to HMRC when in fact £25bn of that was subsequently collected.

    Murphy assumed that the size of the tax gap would be the same across all taxes – and chose VAT as his model – and so applied that gap to PAYE, adding an extra £30bn to the total. International research suggests the VAT tax gap is invariably the highest and 9 – 10 times higher than the tax gap for payroll deducted taxes.

    His “methodology uses a variant of a ‘currency demand’ model to estimate the size of the hidden economy. The use of ‘currency demand’ models for this purpose has been comprehensively and
    extensively criticised in unusually strong terms by other academics and national statistical bodies”

    Murphy’s figure of £120bn was described as “dangerous if not countered by HMRC’s published estimates … partly because they give a misleading view of HMRC’s effectiveness and the amount of uncollected revenues. But also because they encourage the perception that deliberate non-compliance in the UK is the norm—a perception which could encourage further non-compliance.”

    His calculation of the tax gap was funded by the union representing rank and file members of HMRC. Murphy argued that his calculations proved more rank and file staff were needed at HMRC.

    file:///C:/Users/Andrew/Downloads/CBP-7948%20(10).pdf (page 13 onward)

  9. @ Andrew C
    In mid-1971 when I started reading accounts professionally, Segmental Reporting required all UK companies to report separate data for any country (or division) that accounted for more than 10% of turnover or profits or capital employed for 1970/1 and 1969/70 and it the prior year balance sheets included 1968/9 figures as comparators for 1969/70 so I am *very* confident that CBCR dates from the 1960s or earlier, not just the 1970s.
    The UN may not have latched on until the 1970s but LSE and UK GAAP were on the ball before that.

  10. @ Andrew C
    I do agree with most of your comments.
    One reason why the VAT gap is larger (which is why Murphy chooses that as a basis from which to extrapolate) is that many very small businesses choose not to register for VAT because the hassle is far greater than the benefit and a smaller number do not register because they thereby legally avoid paying tax. The latter group reduce VAT paid compared to the theoretical amount due by more than the VAT evaders. The tax gain from those who lose by not registering is relatively small because those who would lose a lot put up with the hassle of VAT returns.

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