Misanthrope Girl

So Starbucks has, as we now know, given into the pack of rabid dogs which have been assailing it by agreeing to review its tax position in the UK.

Whilst personally I’d like to hope that the result of the review will be them paying even less money to the UK Treasury, I doubt this wish will come true. Nor, I guess, will my second choice of the company sending a cheque for a single penny to UK Uncut and telling them to spend it wisely.

The hypocrites at The Guardian reported on Monday that in order to finance this change of heart Starbucks have begun withdrawing employee benefits. Predictably this lesson in practical economics hasn’t gone down too well with the idiots below the line. It’s almost as if they expected Starbucks to use the magic money tree to have obtain this extra dough without any of the laws of physics economics being broken…

If I were a shareholder* I would at this point be fairly livid. No, not over the changes to employee benefits, but at the thought that a company I part own is giving more of it to the wastrels in government to piss up the wall in pointless ventures, be they foreign or domestic.

I hope that the shareholders of Starbucks request answers as to why the policy has been changed and ask to see what the, if any, financial rationale for this decision was. If no decent answers are forthcoming then I suggest that they should demand that the heads of those responsible be delivered to them on platters as they don’t seem to be aware of their duty.

For myself I shall now be boycotting Starbucks. As someone who doesn’t drink coffee this isn’t a major hardship for me but I have, in the past, been known to pick up a hot chocolate on very cold days. Not any more.

On Tuesday the Church of England (CofE) did, as we know, reject the idea of promoting women to its middle management layer (despite having had several as Chairman of the Board) because, although the majority voted in favour, the necessary threshold wasn’t quite reached.

Ordinarily I couldn’t care less about the membership and management structures of clubs of which I am not a member – with the exception of the odd midnight mass I parted company with the CofE over two decades ago – but, with 26 members sitting in the upper chamber of parliament and thus able to influence legislation, the CofE is hardly your normal private members club.

Given then that I and everyone else in the country is in some way affected by their actions, I have, as the Americans say, some skin in the game. I do therefore wonder why this branch of the state is allowed to maintain such a mindset when the state forbids other public organisations from doing so?

If however the CofE disestablishes itself from its parasitical host body then I will happily defend their right to be as 16th Century in their attitude to women as they please.

It seems that there are some encouraging signs of common sense amongst UK politicians on the subject of Corporation Tax:

David Cameron will be challenged to grant Northern Ireland special status on lower corporation tax during his visit to the province on Tuesday.

[...]

Northern Ireland’s power-sharing government has been arguing for a low corporation tax similar to the regime in the Irish Republic where it is 12.5% and regarded as a key factor in attracting foreign direct investment. The UK’s corporation tax rate is currently 24%.

The Stormont executive claims the province is a special case in the UK because it shares a land border with a state which has such a low corporation tax system against which the north cannot compete.

Ok, it’s only Northern Ireland and they acting out of self-interest but at least they are prepared to take a reasonable position on the subject. Not that I expect that the present or (likely immediate) future occupants of Downing Street listen though.

Last week the CEO of HMRC appeared in front of the Public Accounts Committee and, if The Telegraph is quoting her correctly, suggested that companies could be forced into paying more tax by consumers changing their behaviour.

Whilst I have no doubt that companies will react to changes in customer behaviour (it’s either that or die), do the vast majority really care about the tax arrangements of the company they are buying goods and services from?

It might well be a good thing if the public did so but Lin Homer’s belief that it should be used to shame companies into paying more tax is, I think, misguided and shows a shocking lack of basic knowledge by the person in charge of gathering taxpayers money.

I missed this story at the time but @PrincessOfVP brought it to my attention by inviting me to read her blog post on the subject of Death and Taxes. I left the following comment on her blog but felt that what passes for my readership would appreciate it as well.

Whilst, like yourself, I’m not an accountant or economist my considered opinion is that Lin Homer is a fool.

The CEO of HMRC should be well aware that companies are legal constructs and do not pay tax. As Allister Heath put it in the Telegraph on Wednesday:

Your car doesn’t pay road tax, your house does not pay council tax and your television doesn’t pay the licence fee. You do. Obvious, right?

This is what is known as Tax Incidence and this knowledge has been with us for several centuries. In general terms it means that burden of the tax ultimately falls on those who have to pay it.

For companies (who have to deal with Corporation Tax and Employer’s NI) tax incidence tells us that these taxes will fall on three groups: their employees in the form of lower wages; their shareholders via lower returns (dividends) and consumers by higher prices. The exact breakdown varies by company, economy etc but each group will bear a percentage of the burden.

In avoiding as much tax as possible companies are reducing the amount in indirect taxes that those groups pay and, given that the biggest investors in listed companies tend to be pension funds, helping fund the retirements of many millions.

If we boycotted these companies and thus reduced their revenues they would be likely to reduce their headcount which means fewer people in employment, less money collected in payroll taxes and a reduction in investor returns.

Which is why I think Lin Homer is a fool.

Obviously, if you think I’m wrong, you are welcome to tell me so in the comments.

The National Minimum Wage (NMW) is back in the news with Millipede Sr and UNISON boss Dave Prentis calling in yesterday’s Observer for it be raised to match the ‘Living Wage’ (LW) rate of £7.20 (or £8.30 in London) an hour.

As Tim Worstall pointed out once again yesterday, this could be achieved just as easily as not taxing anyone doing a full-time job at NMW rate for those over 21 (currently £6.19/hour).

The figures (courtesy of Listen to Taxman) for someone doing a 37.5 hour week in the 2012/13 tax year are as follows:

As can be seen the difference between gross income at NMW and nett income at LW is all of £8.74 (less then a half a penny an hour) and this figure will no doubt be even lower in the 2013/14 tax year once the 0% Income Tax (IT) band rises to £9,205.

Raising this threshold, as well as those for National Insurance (NI), to £12,070.50 would hand every employee on the NMW an automatic pay rise of £1,330.52 without costing their employers a penny. Sure, it would cost the treasury the same amount (more once employer’s NI is taken into account) but I suspect that that can be offset against the reduction in tax-credits.

Upping the NMW to match the LW however would mean that the treasury steals an extra £901.23 (£393.10 in Income Tax, £236.34 in employee’s National Insurance and £271.79 in employer’s National Insurance) per employee.

As someone who would rather the government had less revenue to waste, the former strikes me as the more sensible approach.

It also means that private sector employment in those areas of the country where the median wage is less than the UK median (generally everywhere outside of the big cities and their suburbs) should not continue to suffer at the expense of public sector employment.

It would, of course, make more sense if (whilst we have them) the NMW and LW wage as well as public sector salaries were set on a more local basis given that the cost of living varies across the country. We already have this working in London in the form of the ‘London Weighting’* so why not for those outside of the suburbs?

UPDATE: Millipede Jr has said he’d like to see the LW set at £7.45. Using the same methodology as above the figures come out as:

• Gross – £14,527.50
• IT – £1,284.50
• NI – £832.26
• Nett – £12,410.74

The difference between the nett figure here and the gross at NMW is £340.24 – or approximately 17.5p per hour.

Nothing, it seems, if you are Richard Murphy. Always looking to attack those of us who believe in a smaller state and lower taxes, Murphy sent these tweets which purport to show that the think tank The Adam Smith Institute is government funded:

Why is the right wing fundamentalist think tank the Adam Smith Institute 70% funded by UK government funds? ht.ly/dOYYw

— Richard Murphy (@RichardJMurphy) September 19, 2012

The Adam Smith Institute is 70% government funded and pays its director £1.3 million a year. Why?ht.ly/dOZ5L

— Richard Murphy (@RichardJMurphy) September 19, 2012

Which, to anyone who knows even a little about the ASI, seems odd… especially given that they don’t disclose where their money comes from.

If we read the (Gruniad) article to which Ritchie links we find this (my emphasis):

Attention has focused on the activities of Adam Smith International (ASI), a “leading international advisory firm” that is dedicated to promoting the “benefits of competition, good government and individual liberty”. Over 70% of ASI’s income now comes from the Department for International Development. The ASI’s managing director, William Morrison, received £1.3m in total pay and dividends in 2010.

Would it be libel to accuse him of deliberately lying to his followers?

It appears that the French, having thrown out Sarkozy in May, are rapidly losing faith in his replacement as well. This in and of itself is hardly newsworthy but what caught my attention was this:

The French government announced a €2.3bn programme to create jobs for 150,000 young people without skills [...]

By my maths that makes works out at about 15,333 (plus shrapnel) EUR per job. Which, given that the dead hand of government is involved, seems far too cheap. I assume, therefore, that that figure is what will be paid to the recipients of the non-jobs which they intend to create in an attempt to massage their unemployment figures and that the administration costs haven’t been taken into account.

Translating this into a slightly less worthless fiat currency, it works out at approximately 12,140 GBP or fractionally under the our minimum wage (assuming a 40hr week).

Although labelled “jobs for the future”, critics dismissed the scheme as an old-fashioned “make-work” programme. The state will pay 75 per cent of wages for youngsters hired by councils or voluntary organisations to take part in environmental, social, cultural or sports projects.

[Labour Minister Michel] Sapin said the scheme – which will create 100,000 jobs in the public sector and 50,000 in the private sector by 2014 [...].

And the critics would be right. 150,000 people taking more money from the French taxpayer than they would be if they were on benefits is not really the way to run a railroad.

Still, if Hollande wants to wreck his economy by being foolish, who am I to argue? If only it weren’t also happening over here…

It would seem that this year’s (much abbreviated) silly season will run into the party conferences if reports of some of the motions to be debated at the Illiberal Democrats confrence are anything to go by.

A motion, to be debated on the Sunday 23 September, says the party should call for “fiscal measures such as the taxation of heavily sugared drinks”.

…

The plan – which has been proposed by Baroness Parminter, the party’s co-chairman of its Environment, Food and Rural Affairs committee – is part of a series of “policies and measures aimed at promoting healthier and more sustainable diets”.

…

Party officials said taxing fizzy drinks was only one example, and the levy could also include heavily sweetened sweets and other goods.

One idea would see a charge levied on products which breached a set sugar content threshold.

This is, I’m sure you’ll be unsurprised to hear, for the children. Apparently we have half a million children at risk of suffering from liver disease because they are too fat but as this figure comes from Professor Martin Lombard, England’s National Clinical Director for Liver Disease it is possible that we can dismiss it as rent-seeking.

Even if it isn’t, the Torgraph article helpfully tells us that “taxing sugary drinks and other unhealthy foods could cut up to 2,700 heart disease deaths a year” (my emphasis).

Given that in 2010 the Office for National Statistics tells us that 493,242 people across England and Wales, 53,967 in Scotland and 14,500 in NI, that is less than 0.5% of the total.

For comparision, 3,377 people committed suicide in 2010 in England and Wales alone.

Fizzy drinks and sugary items are therefore hardly a national emergency, are they?

Yet another example, it would seem, of politicans searching for answers to a non-existent problems rather than just letting people get on with their lives. Not exactly the actions of a so-called Liberal.

The only potential justification that I can possibly see for an extra (Pingu) tax is if the amount currently raised by VAT doesn’t cover the externalities. Does anyone know how much VAT on these ‘harmful’ products raises against how much treatment (denistry, medical care etc) caused by their consumption costs?

She [Lady Parminter] said that the party was only asking for a consulation on the plans and was not at the moment in favour of a sugar tax.

Looks like the start of another branch of that non-existent slippery slope to me…

The European Court of Justice (ECJ) have, in their infinite wisdom, ruled that employees who are sick whilst on annual leave can reclaim from their employers the holiday affected.

As this is an ECJ judgement, the UK is obliged to do something about it and the government has said that it will implement the change from October.

The obvious next step therefore is for someone to start trying to claim for days off because of illnesses which occur during weekends (or whenever their weekly rest days are). Ill on Sunday? Take Monday off…

Cynicism aside, I am happy to accept this on one condition: if employees fall ill during non-holiday time, their employer should have the right to reclaim the equivalent amount of holiday time from them in order to make up for this.

Fair’s fair after all…

The private company masquerading as a public body which is the Advertising Standards Authority has ‘ruled’ that those who are campaigning to keep marriage as it is should freely be allowed to advertise:

We noted the complainants believed that [the] ads … were offensive as they considered them to be homophobic.

However, the ads focused on the current legal definition of marriage and its history.

We considered that, although some people might disagree with the advertisers’ opinions on the matter of same sex marriage, the ads in themselves did not contain anything that was likely to cause serious or widespread offence.

Well that’s jolly nice of them to say so but quite frankly the whole business has been unnecessary and they should have told those few wannabe Stazi fools who complained in the first place to run along.