Categories
politicalbetting.com » Blog Archive » The economics of LICE. How do we deal with parasite taxation ?
politicalbetting.com » Blog Archive » The economics of LICE. How do we deal with parasite taxation ?
LICE – Luxembourg, Ireland, Channel Isles, Estonia – we could add others and play alphabet soup, but the basic premise is the same small countries which live well by diverting the tax revenues of their larger neighbours. These are parasites not in the derogatory sense but in the biological sense of entities which live off others. This is not new, tax havens have been around for centuries but largely as an irritant to those next door. However in the last two decades things have changed.
0
This discussion has been closed.
Comments
We've been addressing it over and over again since about 2008?
* VAT. On everything. Make it simple, scrap the exemptions and zero-rates
* Lots more tax on all the negative externalities, especially fuel
* Steeper income tax curve to make up for any regressive effects of the above
* Get rid of all the silly tax breaks like CGT relief on your first home
* LAND VALUE TAX! HURRAY!
fpt The EU (much to @Richard_Nabavi's chagrin) stipulated that the WA must be signed before we can begin to negotiate the future relationship. So not sure that would be the case although if we rocked up and said: "here this is what we want" then maybe they would consider that.
Of course we have no idea what we want so the chances of that happening are pretty small.
Switzerland’s enjoys the fruits of our effect taking advantage of its semi detached status as a viable corporate headquarters.
The only way to proceed is by legislation. You can reduce corporation tax or close loopholes like transfer pricing and mismatchif dividend and interest deductibility. These have all been tried before of course and serve to make the tax code more not less complex.
The sensible way, albeit, untried and untested, would be to change the basis of tax altogether and base it on sales rather than profit, which is far more subjective. The only alternative is to copy the US and have an alternative minimum tax calculation to try and ensure that every business pays at least something.
That is not the case in Britain as Amazon and Google demonstrate.
An interesting header which bring up things which most people ignore.
There is an awakening going on now prompted by the Brexit referendum (what else). PB regulars aren't representative of the general public and neither is Parliament. There was a lazy assumption that Parliament was there to represent the voters. MPs know better.
The voters aren't there to be represented, they are there to be persuaded. If they won't be persuaded, they are there to be told. The current shenanigans have brought this into sharp focus. The facts were always clear from day one. MPs have a majority of Remainers, but initially, they needed to pretend they were listening. "We, of course, will honour the referendum result … but …"
The mask is off now. The LDs and a few others were honest from the start, the others merely obstructive. until the time was right. MPs hardly ever change their mind, voters sometimes do.
Even convincing voters that tightening up tax regulations is pointless. Unless politicians see a benefit for themselves, it will not happen.
I'm amused by John Bercow. He's a Remainer and wears the badge proudly. No more pandering to people he regards as below him. The mark of a bully? Mind your own business, and leave your betters to their task.
So I've recently bought a bunch of stuff from Amazon EU - a company registered in Luxembourg. Most likely none of the goods I've bought will go through Luxembourg. They will be packaged and sent to me from UK warehouses after being imported from China via Rotterdam. This intuitively feels like a tax dodge and it is. But how do you make the distinction in law?
Consider a theoretical jam company that started out on a family orchard in Luxembourg, growing plums and making delicious plum jam. It's registered in Luxembourg, because of course it is. Where else would it be registered? It's jam is delicious and it sells across the world via the internet. It doesn't pay any UK corporation tax and intuitively this does not feel like a tax dodge and it isn't.
However, the company is very successful. It starts to sell a lot of jam. More jam than can be made with plums grown in Luxembourg. So the company starts to buy plums grown in many other countries and it sets up a large new jam-making factory in Belgium. Soon, most of the jam it sells in the UK is made from fruit grown anywhere other than Luxembourg and never passes through Luxembourg. Is this a tax dodge? Intuitively this doesn't feel like a tax dodge to me as the company is registered in Luxembourg for "genuine" historical reasons.
Legally I don't see any difference with the way that Amazon operates.
It feels like you would need a major up-ending of the tax system to adapt for this.
- Revocation: 10%
+ Revocation: 5%
+ Endless extensions: 5%
I think the point about concentration of wealth in the hands of a few individuals using secrecy jurisdictions is well made but the link between that issue and the taxation of large MNCs is perhaps more tenuous. There has been a massive amount of work on international corporate tax transparency and anti-avoidance in the last decade, mostly under the auspices of the OECD but with the U.K. typically one of the early adopters, sometimes implementing stronger measures than required. The complexity of tax compliance for a U.K. subsidiary of a multinational group has increased perhaps threefold in that time because of (for example) the need to consider interest deductibility requirements and anti-hybrid legislation which frequently depends on understanding on how transactions will be taxed in other countries in order to comply with U.K. legislation. Other broadly drafted rules like the diverted profits tax make it a lot harder to be certain of how normal commercial cross-border transactions will be taxed. Transfer pricing requirements are far more onerous and country-by-country reporting has also increased transparency (and work).
I’m not suggesting these rules are a bad thing, but it’s difficult to see that this is an area where politicians have avoided addressing the issues. It would be interesting to hear suggestions of further changes to the corporate tax system which would make a significant difference, short of moving towards a single European/global consolidated corporate tax base, which is generally seen as too much of a surrender of sovereignty to contemplate.
As @edmundintokyo points out, looking at individual income, wealth and consumption taxes is probably the best bet.
- May's Deal
- Remain
- No Deal
- Some other deal (specify)
If a second vote is 40%, then what we should be doing is splitting that down to, say Remain 20%, No Deal 15%, May's Deal 5%, and adding those to the outcomes arrived at through parliament. (Of course, it's hard to model the odds there without knowing the options that would be put, and the mechanics of the question/s they'd be put by).
We already have a sales tax, it's called VAT, and it already raises more than twice as much as corporation tax (https://www.ifs.org.uk/publications/9178).
But, of course, some sales - such as those to entities outside the EU are exempt from VAT. So we could raise more from our sales tax by extending their reach. At the cost, of course, of effectively imposing tariffs on our own exports.
Finally, attempting to move the overall tax from profits to sales ignores the fact that some businesses are inherently low margin - such as distribution or retail - and some are high margin.
Does any wing of any party have a plan to deal with the coming storm ?
Clean Brexit on 29th March 5%
Being part of a large, coordinated group of countries, most of which have very strong motivation to address this, would seem to be way forward here.
Globalisation will require a major shift in the relationship between states and corporations, and it has hardly begun. It *will* happen, though, because there are millions and millions of votes to be won by cutting this particular Gordian knot.
In any case, as Alanbrooke has made clear, it's not just Ireland any more. It's also Estonia, Cyprus, Malta, Luxembourg...
1. the service is to be performed;
2. the good is to be delivered
So if I am ordering a sweatshirt from a Thai manufacturer, via an Irish-registered company on a US-based server, while I'm on holiday in Spain (I'm not, just in case you're wondering), the supplying company still pays the tax to the UK exchequer because the sweatshirt will be delivered to an address near Wakefield.
At a recent discussion amongst racing friends in the bar at Cheltenham racecourse I was astonished at the degree of consensus amongst a group not noted for its uniformity. Everybody agreed 2nd vote was the logical outcome, but as one of the group put it, ''...if logic had anything to do with it, we wouldn't be where we are."
The EU has actually had plenty of time to do something about this, and instead it has rewarded one of the main breeders of Lice.
Am I liable for UK tax?
You are right that May is getting what she deserves for trying to circumvent Parliament. So the outcome is beneficial and welcome in the short term.
But by throwing away both precedent and legal advice and doing it in the way he has, Bercow had fatally undermined the neutrality of the Speaker's position and ensured it will be a far more political and far less balanced office in the future. He has done real and permanent damage to Parliament.
The operation may have been a success but the patient has died.
May's Deal: 85%
A50 extension, referendum (May's Deal vs Remain): 15%.
Let's move on. Good article about tax Alan. I read the same kind of thing in the Graun every other week and, as @Polruan has noted, it ain't quite as easy as collecting an extra £6-11bn or it would have already been done (cf. government "efficiency" savings).
But I will start with some Cons. Who? Absofuckinglutely no idea
40%
->
Remain: 25%
Deal: 12.5%
No Deal: 2% (It's low mainly because I think the changes of it being on the ballot paper are low)
Black swan / blessed merciful meteor of death: 0.5%
Personally I'd go for it. Would put a lot of lawyers out of work for a start, and that has to be a good thing.
if same question as last time = same result
if rigged question e.g. deal vs remain, then a massive fall in turnout to say 30-40% probably backed by overt calls to boycott the referendum by Farage etc and a clean win for Remain. Remain would claim victory and 20+ years of further bitterness ensue as the EU rub our noses in it financially.
If the ad agency is based in Britain, there'd be a tax liability but I assume it'd be the agency that'd pay it.
At some point, in the near future, a party will gain a majority, pledged to implement No Deal Brexit. It will use the 2016 Referendum and have no other obligation to ask the voters for authority to trigger Article 50 than their Manifesto commitment to do so.
The EU will be sat around waiting for this to happen, knowing that our commitment to their glorious Project is merely short term. Why the hell would they want us back, when they now have festering sores of Italy and Poland and Hungary to deal with?
(1) A big majority for Remain. Advantages ... it clears things up and we carry on with normal politics. The Remainers can gloat. Risks … residual bitterness, and being a laughing stock in Europe. But this applies to (2) as well. However this result is also very unlikely.
(2) A narrow Remain win. More likely, but it solves nothing and exacerbates divisions. Why not a re-run of the re-run next year? the sore continues with added irritation.
(3) A narrow Leave win. It solves nothing, but even having had a re-run sullies our reputation. Parliament won't change its mind. It may lie about this, but it won't.
A revocation, or delay by Parliament is the other option (it amounts to the same thing). All the risks of the above with knobs on.
It will very probably have a permanent customs union bolted onto it, and maybe even more. The only pathway I can see for her is Labour support - whether endorsed by the front bench or not - and they will extract their pound of flesh.
35% #peoplesvote, 5% revocation, otherwise as you say.
You’ve be dragged from your chair within days if you tried to do that.
"We firmly believe that women, non-binary, gender non-conforming, and LGBTQI folks should be vocally claiming our space in pleasure and tech," she said.
https://www.bbc.com/news/technology-46809807
The required gender descriptors are now getting as long as those legal warnings you see on US tv for anything medical.
The EU supported Eire over the backstop because its interests and those of Ireland coaligned.
It's one reason why I think the EU is a necessary thing in the long run - a single country will always struggle to get a grip on multinationals, a whole developed continent has a much better chance...if they want to. But it does mean squashing the tendency of individual countries to rip off the community by a race to the bottom on corporate taxation. Britain hunts with the hounds and runs with the fox on this - yes, we worry about lost revenue, but the City is Tax Avoidance Central.
The only problem is that it is quite obvious that that future trade agreement will take longer than the two years of the WA and hence it looks like we will be in a customs union thereafter (and of course the backstop would kick in). And that takes us into GE territory and then all bets are off (on).
If the Cons leavers were sensible and competent (ha haha hahahahahahahaha) they would get this deal through asap (can they without the DUP?) and get cracking on the future trade deal, and I'm sure one of the early side agreements would deal with the backstop.
But of course they aren't so they won't.
Which would save the cost of running the Brexit Tribunals.
2nd vote can also result in May's deal or No deal.
I suggest
2nd vote 10%
May deal 50%
No deal 50%
Revocation 5%
Scrap national insurance entirely. Raise income tax to 32% at the basic rate, 42% at the higher rate. Maybe 50% at the additional rate.
Introduce a 'retired' personal allowance of say £5,000 (which we used to have) so that poorer pensioners don't lose out by going from 20% and no NI to 32%. If you get a pension of £100k a year, then tough, you're going to be worse off.... but I'm sure you'll struggle by.
Getting rid of NI also means no Employers NI, but I'm sure something could be done to claw it back. Raising Corporation Tax would probably be the best bet. I would NOT introduce a new tax on employers just to cover the loss in the 13.8%. If you're going to reform the system, damn well do it.
Of course, it won't happen. Not because it couldn't be done, but because you could scrap an entire department of HMRC that deals with National Insurance, and the government would be too scared to tell so many hundreds of people they are sacked.
As for high-income / low-profit companies, yes, they would have to increase prices but that would be an industry-wide thing they'd face so it's likely that they wouldn't suffer any material disadvantage (some, operating in the luxury / leisure / discretionary areas might find the size of their industry's cake shrinking but I don't think the overall effect would be big, when set against alternative means of raising the same revenue).
The damage you are doing to the political and democratic systems in this country are vast and quite possibly irreversible. You will have succeeded in making us more like some European countries by introducing continual political turmoil.
I agree with the rest of what you say. She’s trying to cleave off 50 or so Tory ERGers and another 50 or so pragmatic Labour Leavers to get over the line, and that then has to hold for all the subsequent votes to put it into law.
Very difficult, but it’s the obvious play.
Oh well, we still have the old hand-operated model......
The UK has had a contorted and conflicted relationship with Europe for centuries. Our political and cultural histories are very different.
That will continue.
But it’s clearly far more complicated than that, or we’d have already done it.
https://www.dailymail.co.uk/news/article-6575213/Amazon-CEO-Jeff-Bezos-reportedly-seeing-married-former-TV-anchor-Lauren-Sanchez.html
The consequences of MPs deciding to ignore that result because they didn't agree with it, either by asking us to vote again or by simply revoking would be catastrophic. As was pointed out earlier in the thread it would show that MPs regarded themselves as our masters not our servants. The 'we know better than you' meme is putting the final nail in the coffin of Parliamentary Democracy. That is your legacy if Brexit is prevented.
It's true that as a proportion of income poor people spend more on zero-rated stuff than rich people, but they don't spend nearly as much stuff per head in absolute terms, and most people aren't poor, so you collect many times more revenue than the amount the poor are paying and you can give them that and then some with more targetted methods.
Nor does Estonia stint on defence, it has always complied with the NATO 2% of GDP spend, and sometimes by a big margin, but the pressure from Russia is strong, and Estonia has drones, not an airforce, hence the NATO air policing squadron.
More to the actual point. Estonia does not generally run a deficit, so it has rock solid public finances, the government is run efficiently and has net public assets, rather than a national debt. This explains why Estonia has a AA- credit rating, stable outlook (UK is AA, negative outlook). The country has professionals, not bullshitters, in Parliament. The civil service can deliver ferry charters themselves, without lining the pockets of dubious Tory-connected start-ups. Leadership and management is not just a load of box ticking diversity training horsesh*t. Take back control? I think we are now seeing just how dreadful the quality of UK management in the public and private sectors has got over the past few years. In my lifetime the UK has gone from being the second largest economy in the world to being on the verge of leaving the top ten. That is NOT inevitable decline- it is crappy high schools, the class system, a tolerance of bad behaviour, you name it.
Right now I'm transiting Manchester Airport. Its a toilet. Dingy, dirty, cramped, badly designed, surly staff, everything done as "that'll do". might as well be a metaphor for the whole of the UK and it makes me very very angry. Pull your bloody socks up UK! As for tax avoidance, the sleazy cabal of Tory estate agents will not look kindly on taxing the murderers and other criminals from around the world who have bought flats in London... A Land Value tax should be the start of a comprehensive reform of the Uk tax code- its the longest in the world at 27,000 pages and it mostly designed to hide the fact that the rich pay massively less than the poor. In fact it is London that is the centre of global money laundering so take the beam out of your own eye before you mention the motes elsewhere.
The point of a company is not to make sales but to make profit, so ideally we should tax that - the [substantial] challenge being to identify the true level of profit, as opposed to the current accounting fictions.
There aren't any easy answers here, both as you say and the excellent OP implies.
Like a clean Brexit would.
He’d make Macron look like Watt Tyler.
Monday: vote on amendment to May's plan B for 2nd ref fails
Monday: vote on amendment to May's plan B for exiting with no deal fails
Monday: vote on amendment to May's plan B for pivoting to Norway+ fails
Monday: vote on amendment to May's plan B for revoking A50 fails
Monday: vote on amendment to May's plan B for extending A50 fails
Monday: vote on amendment to May's plan B for a new election fails
Monday: vote on May's plan B fails.
Tuesday: vote of no confidence fails.
We will, however, have made some kind of progress, because we'll be able to see the numbers on all the different possible Plan Bs, and for the first time Parliamentarians will have a clear idea of what sort of ways out of this mess are most likely to be able to command a majority in the House.
Possible plan C or D will stand a chance of finally commanding a majority in the house.
The comment was a metaphor for the atom bomb unleashing a force which might not be *politically* controllable and which might have the power to destroy the world.