Archive for the ‘Politics’ Category.
At this moment politicians in Nicosia are (assuming it hasn’t been postponed again) giving up their bank holiday to discuss the false choice presented to them by the Eurozone finance ministers: accept a deeply damaging bailout agreement or face bankruptcy.
In a statement released on Saturday, the Cypriot President was optimistic that the bailout “would put a definitive end to the uncertainty and restart our economy.”
I think it is safe to say that his optimism is not shared by the Cypriot people – nor many others not on the Greek half of the island.
Much, if not all, of the anger is focused on the decision that bank deposits in the country – previously thought to be safe because of deposit insurance – are to be subjected to a 6.75% levy whilst all amounts above the protection level of €100,00 are to be decimated*. The immediate (and not unsurprising) result of this was that the Cypriots tried to trigger a bank run – only to find that their government had introduced restrictions on the movement of capital. Can’t have people deliberately evading superstate-sponsored theft, can they?
However, as Frances points out, it isn’t quite that cut-and-dried…
The description of this as a “tax” or levy is a bit of a fudge. Under what type of taxation scheme are people provided with shares to compensate them for the taxes they have paid? But that is what is happening here. Depositors will be provided with bank shares to the value of their losses. They are being “bailed in” in the same way as junior bond holders: a percentage of their deposits are being converted to equity. The money taken from the depositors will go to the sovereign to compensate it for the cost of bailing out the banks. At the end of the process, the sovereign will be left with a manageable amount of debt, and the banks will be owned by their depositors and junior bondholders. In effect they will have become mutuals.
…before going on to explain the flaws in the plan.
Olli Rehn, European Commissioner for Economic and Monetary Affairs and the Euro, has said that this will be a one-off but given the number of one-off’s the Eurozone has seen in the last few years, it is unlikely that he will be taken as seriously as he might like – especially given the situation in Greece, Portugal and Spain. I imagine that the Italians are suddenly looking over their shoulders as well. How much money is going to flow out of those countries in the next few days?
Frances Coppola: Reaping the Whirlwind
Tim Worstall: Welcome to another Great Depression
Tom Paine: Governments, gangsters… Same thing, different name
Richard North: A massive own goal
The members of what passes for the Labour Party’s Brains Trust (no laughing, please) have finally, possibly, maybe, made some marks on that blank piece of paper and come up with a policy. Not a new one though but a rehash of an old one: a 10%* tax rate.
The details provided are sketchy but the press is reporting that it would apply to the first £1,000 of taxable income, in contrast to the previous incarnation which applied to the first £2,500.
However, whilst I am very much in favour of governments stealing less money, this ‘policy’ is about as pointless as when Millipede Sr and Dave Prentis called for the Living Wage.
As a result of this policy, basic rate taxpayers** would retain an extra £100 of their salary each year. Oh, be still my grateful heart!
The current government, as useless as they are, have raised the personal allowance (PA) from £6,475 in 2010/11 to £9,205 in 2013/14 – an Income Tax (IT) reduction for basic rate taxpayers of £546 a year.
Raising the PA to £12,070.50 (37.5 hr week at the National Minimum Wage) would save everyone a further £573.10 in IT alone.
Sorry Eds but this policy can only be described in one way: #fail.
** No doubt the threshold for the 40% IT band would be reduced by £1,000 at the same time.
One of the goals of the anti-capitalist morons who occasionally fill the streets of developed world is an end to globalisation. Heck, the loonies in Green Party think that an end to globalisation is the route to prosperity for all. No, I don’t understand their logic either.
The silliness of the localisation idea was, at least to my mind, proven when I saw a piece in the FT during the week about the bread manufacturer Hovis:
Hovis, one of the UK’s top-selling breads, is to abandon its pledge to use only British wheat in its loaves following rain-blighted harvests.
Hovis will start using EU grain from this weekend. The move is another blow for UK farmers, who are already reeling from the relentless rains that made 2012 the second-wettest year on record and cost £1.3bn in agricultural damage and its aftermath.
The UK’s wheat yield fell by 14 per cent last year, according to the National Farmers Union. As a result, the country’s wheat imports are forecast to more than double to 2m tonnes. Since 2011 the price of bread has risen by 4.3 per cent, ahead of the 3.7 per cent rate for general food inflation.
That’s right, because last summer was so awful that the wheat harvest was almost one seventh down on 2011 the company has had to look elsewhere or reduce its output.
Now imagine a similar shortage across everything produced by UK farmers and no option to import any food stuffs from abroad…
Long live globalisation.
Last Friday the leader of the Labour Party (Millipede Jr for those who might have forgotten) stood up in Tooting to give a speech on immigration.
As part of this verbal diarrhea he said that:
…he promised the party would in future help immigrants learn English. It will also consider barring immigrants from some public sector jobs unless they can speak the language properly.
And later he clarified his point via the BBC:
“What I’m talking about today is also the issue of integration, which is when people are here, how do you ensure that they are part of British society?
“That’s about learning English, it’s about making sure that you don’t have slum housing where you have maybe ten, 20, 30 people all packed in a house working in a local factory or somewhere. That’s bad for them and bad for their neighbours – and also making sure that we don’t have workplaces that are segregated.”
Whilst I suspect that barring those with a poor of standard of English from jobs is probably against some piece legislation (EU perhaps and not applicable to non-EU passport holders? Someone will no doubt correct me!) I actually agree with the general point that he is trying to make about wanting immigrants to be able to speak the language.
Without checking with various colleagues who have taken up citizenship over the last few years, I seem to recall that part of the process was an English test. IIRC the Australian cricketer Stewart Law, when asked at the time of his taking up British citizenship how his English was, said something along the lines of ‘You are kidding, right?’ (I’m undoubtably paraphrasing that!)
No such requirement is necessary for those who don’t plan to take up this option but Millipede suggesting (quelle surprise!) throwing more stolen money at the problem by giving immigrants langauge classes.
And that is where he and I part company.
As a fan of open borders (boo hiss etc)* I have no problems with people moving wherever they may wish to. However learning the lingo should be the responsibility of the immigrant and paid for out of their own pocket. The State can assist in this process by not publishing government paperwork in anything other the English (also Welsh, Gaelic etc in the appropriate areas) meaning that if you want to interact with the bureaucracy – a sadly inevitable part of life – then you either have to be competent in the local language, ask a friend who is (at least) bi-lingual or hire an interpreter. Seeing as how the latter is likely to be a costly option long-term and friends are likely to start thinking ‘learn the bloody langauge, will you?’ after a while being able to communicate will become necessary.
A solution which saves trees, cuts down on government expenditure and ensures people have to be motivated? Sounds like a good one to me.
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:
|Gross Pay (£)||12,070.50||14,040.00|
|Income Tax (£)||793.10||1,187.00|
|National Insurance (£)||537.42||773.76|
|Nett Pay (£)||10,739.98||12,079.24|
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.