Government Tax Advisor quits

[Guest MattP]

I like how every person in the country who likes to try and save a bit of tax is a self serving immoral criminal spending it on champagne dinners and holiday homes in the Sychelles (do they even exist, sure you can't build on the Islands if you aren't from there) whilst people sat on their arse doing nothing have the moral highground as they are 'legally entitled to it'.

 

What a fcuk up this country has become.

[Captain...]

I like how every person in the country who likes to try and save a bit of tax is a self serving immoral criminal spending it on champagne dinners and holiday homes in the Sychelles (do they even exist, sure you can't build on the Islands if you aren't from there) whilst people sat on their arse doing nothing have the moral highground as they are 'legally entitled to it'.

 

What a fcuk up this country has become.

 

Nobody thinks like that Matt, but in terms of the damage being done to the economy the unpaid tax bill is much higher than the welfare bill, but the government is focussing on squeezing the little man for a few more pennies when big businesses are getting away with not paying billions in tax. The focus is all wrong that is my problem with it.

[Jon the Hat]

I like how every person in the country who likes to try and save a bit of tax is a self serving immoral criminal spending it on champagne dinners and holiday homes in the Sychelles (do they even exist, sure you can't build on the Islands if you aren't from there) whilst people sat on their arse doing nothing have the moral highground as they are 'legally entitled to it'.

 

What a fcuk up this country has become.

 

Indeed.  It is a joke and based on envy.  Sadly we still have a situation where the masses like to blame someone else for everything.

[Jon the Hat]

Nobody thinks like that Matt, but in terms of the damage being done to the economy the unpaid tax bill is much higher than the welfare bill, but the government is focussing on squeezing the little man for a few more pennies when big businesses are getting away with not paying billions in tax. The focus is all wrong that is my problem with it.

 

The problem is there is no unpaid tax bill.  You cannot take the corporation tax rate and say that should be paid on revenue - which is what the media like to do.  This is nonsense.  Business is complex, and the common man's understanding of tax is non-existent.

[leicsmac]

Indeed.  It is a joke and based on envy.  Sadly we still have a situation where the masses like to blame someone else for everything.

 

You do your argument no favours with ad hominems like this.

 

The problem is there is no unpaid tax bill.  You cannot take the corporation tax rate and say that should be paid on revenue - which is what the media like to do.  This is nonsense.  Business is complex, and the common man's understanding of tax is non-existent.

 

Then kindly elaborate. You seem to know more about it than many, so please explain how the big businesses go about their tax business and why the mass media is wrong.

[Guest MattP]

Nobody thinks like that Matt, but in terms of the damage being done to the economy the unpaid tax bill is much higher than the welfare bill, but the government is focussing on squeezing the little man for a few more pennies when big businesses are getting away with not paying billions in tax. The focus is all wrong that is my problem with it.

 

Come on Captain behave!

 

As for the rest, Jon has answered it, no matter what the media like to portray, isn't actually an unpaid tax bill. Legally they don't have to pay it.

[Captain...]

Come on Captain behave!

 

As for the rest, Jon has answered it, no matter what the media like to portray, isn't actually an unpaid tax bill. Legally they don't have to pay it.

 

I probably should have said uncollected tax, I meant avoided, evaded and unpaid, and there is a substantial amount unpaid, look at vodaphone, had a 6 billion tax bill and were allowed to pay 1.2bn, that £4.8bn would have paid for JSA for over 2 years. That is one high profile case but there are many other cases of tax not being paid, Pompey owed £10million in tax, Ramsey was done for a 7 figure unpaid tax bill.

 

Legal tax avoidance is one thing, and it is on the government to close these offshore loopholes and work with the rest of the world to ensure that tax is being paid fairly, the problem is when you let one company get away with it, others follow suit, if they didn't they would lose a competitive advantage.

 

This sums it up:

 

The Daily telegraph is very vexed today that there are £1 million of benefit payment errors a day in the UK.

To put this in context, that’s 0.16% of all benefit payments.

Now let’s note that tax avoidance and tax evasion in my estimate (£25 billion of avoidance and £70 billion of evasion a year, figures embraced by the EU) cost the UK just over £260 million a day.

So that’s more than 260 times as much in absolute terms.

- See more at: http://www.taxresearch.org.uk/Blog/2013/09/13/benefit-errors-cost-1-million-a-day-tax-avoidance-and-evasion-cost-260-million-a-day/#sthash.87pQd2N1.dpuf

 

The telegraph article: http://www.telegraph.co.uk/news/politics/10307615/Benefit-errors-cost-taxpayers-1-million-a-day.html

 

Now it is disgusting that we are losing £1 million a day on wrongly paid benefits, and it needs to be tackled, this is down to incompetence in the civil service, and we are not tackling the incompetence, almost encouraging it, but it is 260 times as disgusting that we seem to be making very little effort to deal with all this lost tax revenue.

[MooseBreath]

Taxresearch.org - funded by trade unions on behalf of the labour government. Surely a reputable unbiased source that we can all trust.

[Jon the Hat]

You are completely missing the point here Captain.  Our tax system has a number of deliberate incentives to encouraged companies to do things which the giovernment believes are favourable.  We need to do this becuase companies have options - whereas most people are not in a position to leave and work in another country to reduce their tax burden - companies can do this, and they take this into account in every decision about where to develop intellectual property, where to manufacture, where to base their offices.  All these incentives are taken into account when we set the corporation tax rate - this favours big businesses vs small businesses again becuase small business is less mobile.  This is becuase the one off impact of losing a major taxpayer / employer is significant both politically and economically, and to put it simply, we dont want to piss off a Vodafone when they have other options and are under pressure from their shareholders to deliver higher returns.

So - The corporation tax rate is set higher than it needs to be is everyone pays it, and we use incentives to lower the effective tax rate to businesses which meet certain criteria.  This is a messy business though, and sometimes the law of unintended consequences means that the government misses something which the tax lawyers don't, or they have a different view.  In this grey area, sometimes the government wins the argument and sometimes companies do.  The idea that you can run an incentive based tax system and avoid this grey area is unrealistic, so this will always occur.  The trick is to get the balance between the level at whcih you set corporation tax, what you incentivise and what you choose to fight in the grey area, to ensure you raise the right amount of tax while maintaining your competitive place in the world of trading nations, atracting and retaining business.

Company tax is not like personal tax - you dont guarantee an income by increasing rates - in fact you can have the opposite effect.  This is why the comparisons between benefit fraud and "unpaid tax" is nonsense (unless you draw the line at companies which go out of business owing VAT).  This is a game of supply and demand, not of a firm and understood tax entitlement against which you can measure your tax revenues.  It is a nonsense created by the media to whip up fervour about a story.  Of course sometimes the government gets it wrong, sometimes companies get it wrong, but all in all we are weaving a little along a line which probably earns the treasury about the right amount.

[leicsmac]

You are completely missing the point here Captain.  Our tax system has a number of deliberate incentives to encouraged companies to do things which the giovernment believes are favourable.  We need to do this becuase companies have options - whereas most people are not in a position to leave and work in another country to reduce their tax burden - companies can do this, and they take this into account in every decision about where to develop intellectual property, where to manufacture, where to base their offices.  All these incentives are taken into account when we set the corporation tax rate - this favours big businesses vs small businesses again becuase small business is less mobile.  This is becuase the one off impact of losing a major taxpayer / employer is significant both politically and economically, and to put it simply, we dont want to piss off a Vodafone when they have other options and are under pressure from their shareholders to deliver higher returns.

So - The corporation tax rate is set higher than it needs to be is everyone pays it, and we use incentives to lower the effective tax rate to businesses which meet certain criteria.  This is a messy business though, and sometimes the law of unintended consequences means that the government misses something which the tax lawyers don't, or they have a different view.  In this grey area, sometimes the government wins the argument and sometimes companies do.  The idea that you can run an incentive based tax system and avoid this grey area is unrealistic, so this will always occur.  The trick is to get the balance between the level at whcih you set corporation tax, what you incentivise and what you choose to fight in the grey area, to ensure you raise the right amount of tax while maintaining your competitive place in the world of trading nations, atracting and retaining business.

Company tax is not like personal tax - you dont guarantee an income by increasing rates - in fact you can have the opposite effect.  This is why the comparisons between benefit fraud and "unpaid tax" is nonsense (unless you draw the line at companies which go out of business owing VAT).  This is a game of supply and demand, not of a firm and understood tax entitlement against which you can measure your tax revenues.  It is a nonsense created by the media to whip up fervour about a story.  Of course sometimes the government gets it wrong, sometimes companies get it wrong, but all in all we are weaving a little along a line which probably earns the treasury about the right amount.

 

Cheers for the explanation Jon, makes things a fair bit easier to understand that. 

 

From what I can tell then, the big issue is the threat of the big companies withdrawing their labour from this country if they are taxed too punitively due to globalisation. This causes an unstable system whereby corporation taxes cannot be guaranteed income for a government like personal income tax is. This not only affects the general corporation tax rate, but also the gathering of tax under the current rate due to the implied threat of relocation.

 

I think that point has been made before...sounds like they really do have governments over a barrel then. Who really runs the world?

 

I suggested a global tax rate as a solution to this - no tax havens, nowhere to hide your money. It would work fine, but it's totally impractical to apply of course.

[ADK]

It's the problem with globalisation and large multinationals. They hold more power than governments in some instances. It's another area where being part of the EU could be a bonus.

[Guest MattP]

You are completely missing the point here Captain.  Our tax system has a number of deliberate incentives to encouraged companies to do things which the giovernment believes are favourable.  We need to do this becuase companies have options - whereas most people are not in a position to leave and work in another country to reduce their tax burden - companies can do this, and they take this into account in every decision about where to develop intellectual property, where to manufacture, where to base their offices.  All these incentives are taken into account when we set the corporation tax rate - this favours big businesses vs small businesses again becuase small business is less mobile.  This is becuase the one off impact of losing a major taxpayer / employer is significant both politically and economically, and to put it simply, we dont want to piss off a Vodafone when they have other options and are under pressure from their shareholders to deliver higher returns.

So - The corporation tax rate is set higher than it needs to be is everyone pays it, and we use incentives to lower the effective tax rate to businesses which meet certain criteria.  This is a messy business though, and sometimes the law of unintended consequences means that the government misses something which the tax lawyers don't, or they have a different view.  In this grey area, sometimes the government wins the argument and sometimes companies do.  The idea that you can run an incentive based tax system and avoid this grey area is unrealistic, so this will always occur.  The trick is to get the balance between the level at whcih you set corporation tax, what you incentivise and what you choose to fight in the grey area, to ensure you raise the right amount of tax while maintaining your competitive place in the world of trading nations, atracting and retaining business.

Company tax is not like personal tax - you dont guarantee an income by increasing rates - in fact you can have the opposite effect.  This is why the comparisons between benefit fraud and "unpaid tax" is nonsense (unless you draw the line at companies which go out of business owing VAT).  This is a game of supply and demand, not of a firm and understood tax entitlement against which you can measure your tax revenues.  It is a nonsense created by the media to whip up fervour about a story.  Of course sometimes the government gets it wrong, sometimes companies get it wrong, but all in all we are weaving a little along a line which probably earns the treasury about the right amount.

 

Terrific post.

 

 

I probably should have said uncollected tax, I meant avoided, evaded and unpaid, and there is a substantial amount unpaid, look at vodaphone, had a 6 billion tax bill and were allowed to pay 1.2bn, that £4.8bn would have paid for JSA for over 2 years. That is one high profile case but there are many other cases of tax not being paid, Pompey owed £10million in tax, Ramsey was done for a 7 figure unpaid tax bill.

 

It's easy to bring out these companies and quotes but they don't tell the real story, Pompey for example may have ran themselves into horrific debt but the tax collected from the money they paid out in wages would have massively exceeded that ten million over those 4/5 years in the PL so you could argue it's still right of the treasury to have a system in place where football clubs can owe this money as it's more than offset by what they recieve via other means in terms of employment.

[Webbo]

It's the problem with globalisation and large multinationals. They hold more power than governments in some instances. It's another area where being part of the EU could be a bonus.

These companies pay tax in Luxembourg etc. It's not helped so far.

[Guest MattP]

It's the problem with globalisation and large multinationals. They hold more power than governments in some instances. It's another area where being part of the EU could be a bonus.

 

Er?! How?!

 

It's one of the main problems of it, you can pretty much pay it anywhere in the EU if you want to engage in some avoidance!

[ADK]

I said could be. As the EU is I think, collectively the worlds biggest economy, it means we can wield more power against large multinationals.

[leicsmac]

Er?! How?!

 

It's one of the main problems of it, you can pretty much pay it anywhere in the EU if you want to engage in some avoidance!

 

Yeah, as long as different areas of the EU have different tax rates it may as well no exist for the purposes of stopping tax avoidance at all. It's no help in this particular topic. 

 

The point that there needs to be some kind of bulwark against rampant corporate power is sound though.

[Guest MattP]

Yeah, as long as different areas of the EU have different tax rates it may as well no exist for the purposes of stopping tax avoidance at all. It's no help in this particular topic. 

 

The point that there needs to be some kind of bulwark against rampant corporate power is sound though.

 

Considering people in the European Council has now gone into people's savings and stolen money off them I considering them worse than any rampant corporate power I've came into contact with.

[MooseBreath]

In a choice between business or governments running the world, give me business any day.

[leicsmac]

Considering people in the European Council has now gone into people's savings and stolen money off them I considering them worse than any rampant corporate power I've came into contact with.

 

 

In a choice between business or governments running the world, give me business any day.

 

Ultimately they are both governed by self-interest: neither can really be trusted. Especially now both of them (in most countries) are in bed with each other anyway.

 

I'd rather have both equally powerful and constantly getting in each others way to stop one becoming too powerful.

[Guest MattP]

I'm with Moose on that one.

 

Least you can generally choose which Businesses you give your money to in life.

[leicsmac]

I'm with Moose on that one.

 

Least you can generally choose which Businesses you give your money to in life.

 

Until they attain a monopoly or cartel oligopoly over the market.

[Guest MattP]

Until they attain a monopoly or cartel oligopoly over the market.

 

There is always something else if you really want it though, no is forced to pay.

 

Only organisation I can think of that has you absolutely banged to rights to pay them even if you don't want to use their product is the BBC.

[leicsmac]

There is always something else if you really want it though, no is forced to pay.

 

Only organisation I can think of that has you absolutely banged to rights to pay them even if you don't want to use their product is the BBC.

 

All of the petrol/energy companies in their cosy little cartel? 

 

Unless you want to live totally off the grid and generate your own electricity through some means that doesn't involve hydrocarbon fuel.

 

Edit: This isn't a true free market world economy, which is kind of the point I'm trying to make. The big companies have the ear of governments around the world.

[ADK]

Surely you only pay the bbc if you own a tv licence?

[Rincewind]

The blame is being put on the hard working low paid workers who do 60 hours to place a loaf of bread on the table for their children. The blame is being put on those workers who have seen their hours reduced to part time or no contract hours.

There are a lot of people having the wool pulled over their eyes.

 

I give up believe what you want to.