Friday 30 March 2012

Friday, March 30, 2012 Posted by Hari No comments Labels: , , ,
Fee and KJ discuss the 'pasty tax' levied on hot takeaway foods

Monday 26 March 2012

Monday, March 26, 2012 Posted by Hari No comments Labels: , , , , , , ,
Chris seeks access to a David Cameron TV appearance

Saturday 24 March 2012

Saturday, March 24, 2012 Posted by Jake No comments Labels: , ,
By Dr.Ros Altmann, Director General of SAGA 
This Budget contains an enormous stealth tax for older people. Over the next five years, pensioners with an income of between £10,500 and £24,000 will be paying an extra £3 billion in tax while richer pensioners are left unaffected.

There was plenty of bad news for older people in this Budget:
Ripped-off Brits: pensions
Shock rise in age allowance hits middle-income pensioners - poorest and richest are unaffected:  The big shock in this Budget was the astonishing stealth tax announced for 5 million of Britain's middle class pensioners.  Any pensioner with income between around £10,000 and £24,000 a year will pay more tax in future than they would have done without this change.  The Government says this is a measure to 'simplify' the tax system - and it is true that the age allowance is very complicated - but the reality is that this is really just a revenue-raising exercise.  People reaching age 65 in the next couple of years will be £4 a week worse off as a result of this measure.  If their state pension had been reduced by £4 a week there would be uproar, but abolishing the age allowance has a similar effect - although only for the middle income pensioners.  The very poorest and very wealthiest are not affected, because the age allowance is phased out once older people's incomes reach around £24,000 a year. So it is the decent middle income pensioners, who worked hard and saved hard to have a bit of extra income in later life - the very people that we should be valuing highly - who are hit by this move.  The Office for Tax Simplification report did point to the complexity of the age allowance, but recommended that, if it were removed, other measures could be introduced to offset the income reductions for pensioners.  The Chancellor chose not to listen to this and just removed the allowance.

Nothing for savers:
There was nothing in this Budget to help savers, especially older people trying to live on the income from their savings.  The policy of ultra-low interest rates for the last three years, has hit savers hard and there was still no help from the Chancellor. 
Saturday, March 24, 2012 Posted by Jake 1 comment Labels: , , ,
"Stopping the lies is an impossible task. But spreading the truth just takes a re-tweet."

With the Chancellor's Budget announcing a drop in Corporation Tax down to 22% in 2014, her Majesty's Treasurers got their crayons out and came up with this super poster.

It Demonstrates very effectively how low Britain has dropped its Corporation Tax. 

With only Turkey, Saudi Arabia and the Russian Federation offering lower corporate tax rates, how much lower can the Chancellor get?

As an added temptation, the Chancellor has offered the 'patentbox' scheme offering a 10% corporate tax rate. This is available for profits made on intellectual property and patent licencing income. Not much job creation there. No factories needed, just a couple of guys counting the money as it rolls in. But the chancellor has worked out that if someone is going to get their tax, it may as well be him. Should I have said "it may as well be Britain"? Not really. Politicians collect the sugar to distribute to whom they will, in return for what they want. For example, tax cuts for millionaires paid for with tax hikes for pensioners.

So why, inspite of all these temptations, are all those companies still incorporated in the US, Japan, Germany, France and other countries who charge oodles more corporation tax? 

Could it be that British Chancellors, from Gordon Brown through Alastair Darling over to George Osborne have not yet learned the lesson of the nightclub slapper? A short skirt only guarantees you a drafty backside! 


And yet, the message from a succession of Chancellors - Britannia is ready to drop everything to get your business.

Improving infrastructure, investing in training and education, they would make Britain more competitive and attractive to business. But investing in Britain and in Britons costs money. Much easier to cut the rate of tax.

Britain becomes ever more like a tax haven for companies and foreign oligarchs. But not if you are an ordinary domiciled ripped-off Briton.

Budget 2013 Update: Corporation tax to drop to 20% in 2015, equaling the lowest rates of the G20.  And way way below corporation tax rates of G7 countries who are supposed to be our main competitors as shown in this graphic by our HMRC doodlers:

Saturday, March 24, 2012 Posted by Jake 19 comments Labels: , , , , , ,
So who was the "irrational" borrower that brought down the economy? And was the culprit actually "irrational"?

If you weren't sure why the banks got themselves, and everyone else, into such a pickle with the Credit Crisis, the 2012 Budget Document is the source of some nice nuggets of information. Civil servants, competent and on the whole moderately paid, have little incentive to avoid the truth and will often slip it in if they can.

The financial sector, having burned down the economy, tried to plant the box of used matches in the hands of the public. Ordinary Britons were fingered as a major cause of the crisis due to accepting a rush of cheap credit they couldn't afford. 

They glossed over the fact that the banks and building societies were the pushers of the cheap credit. And they also omitted to point out that actually it was overwhelmingly the banks - not the consumers nor the non-financial businesses - that went on a borrowing frenzy.

Why did the banks borrow so much? "Casino banking" is intended to be derogatory, but bankers probably don't realise they are supposed to feel insulted - as it couldn't be closer to the truth. Idiot sons for hundreds of years have been gambling away their family fortunes - relying on indulgent parents to bail them out. Cunning bankers have been gambling the nations money in the same way - knowing that indulgent politicians would bail them out using the taxpayer's money.

Here is how borrowing boosted bankers bonuses in the good times, and crushed the economy when their bets went wrong:

Idiot Son: I have £50. 
  • I bet it on a "six line" (odds 5:1) spin of a roulette wheel.
  • If I win. I pocket £300 (my original £50 plus 5 x £50). 
  • A 500% return on my original money! 
  • If I lose.
  • There goes my £50. Back to daddy for some more cash.

Cunning Banker: I have £50 million. I borrow another £250 million.
  • I bet it all on bonds, equities, derivatives (odds 5:1) not unlike the spin of a roulette wheel. 
  • If I win. I get £1,800 million (my original £50+£250 million,  plus 5 x £50 million plus 5 x £250 million)
  • I pay back the £250 million. I pocket £1,550 million.
  • A 3,100% return on my money!
  • If I lose. 
  • The taxpayer bails me out. The taxpayer loses his job, has his benefits cut, has his pension reduced and deferred, the nation is protected by an aircraft carrier with no aircraft.
*** MORE DATA FROM McKINSEY report "Debt and deleveraging: The global credit bubble and its economic consequences" added to this post in December 2012***
"The United Kingdom and Spain stand out for having the biggest increases in financial sector debt relative to GDP. These figures reflect the rapid growth of the financial sectors in those countries as well as a gradual shift by their banks away from relying on deposits to fund lending towards raising money by borrowing in the wholesale markets."


In numbers (+ a cool animation): Global tax evasion and money laundering

Saturday, March 24, 2012 Posted by Jake 5 comments Labels: , ,
At last, we know why governments in recent decades, both “left” and right and right-ish, have thrust more money at the wealthy and snatched more from the less well provided for. 

It is because it is all too complicated for us, having all that money. Which is why the recent Budget included a 'major simplification' for pensioners.

We have to thank the Chancellor, George Osborne who made this clear in his 2012 Budget speech:

We should also simplify the age related allowances - which the Office of Tax Simplification have recently highlighted as a particularly complicated feature of the tax system.

The National Audit Office points out that many pensioners don't understand them.

These allowances require around 150,000 pensioners to fill in self-assessment forms, and as we have real increases in the personal allowances, their value is already being eroded away.

So over time we will simplify the tax system for pensioners by doing away with the complexity of the additional age-related allowances for anyone reaching the age of 65 on or after 6th April 2013 and I will freeze the cash value of the allowance for existing pensioners until it aligns with the personal allowance.

This will protect the existing level of allowance pensioners have, while introducing a single personal allowance for all.

It is a major simplification.”

In summary:
  • Age related allowances are complicated.
  • The National Audit Office says many pensioners don’t understand them.
  • Pensioners have to fill out self-assessment forms.
  • Conclusion: to simplify things, we will take these allowances away.
  • “It is a major simplification”, says Osborne.
In the words of Ros Altmann, the Director General of SAGA:

Could it be it isn’t just the government? Could it be all companies – banks, electricity, rail etc. – are doing us a favour by ripping off our money? Because having money is just too complicated for us? Well thank you so much!

Friday 23 March 2012

Friday, March 23, 2012 Posted by Hari 1 comment Labels: , , , , , , , , ,
Foreign pension providers are just the ticket

Tuesday 20 March 2012

Tuesday, March 20, 2012 Posted by Hari No comments Labels: , , , , ,
Road signs o' the times

Sunday 18 March 2012

Sunday, March 18, 2012 Posted by Jake 6 comments Labels: , , ,
As the 2012 Budget approaches, Tory ministers and their cohorts argue for the abolition of the 50% income tax rate. They claim it fails to achieve the objective of raising more tax, and acts as a disincentive to wealth creating businessmen.

The falsity of these claims is easily demonstrated:

a) Should the 50% rate of tax result in significant extra tax collection?
Yes it should. According to HMRC figures for 2010-11 £23.3 billion was expected to be collected at the 50% rate. This means £46.6 billion of taxable income at this top rate. Reducing the top rate from 50% to 40% would mean £4.66 billion of taxes would be lost, handed back to Britain's wealthiest. Except the wealthy know how to dodge the tax. Cutting the tax would be a reward for bad behaviour!

b) Does the 50% rate of tax discourage creative dynamic entrepreneurs?
No it doesn’t. Nearly 60% of employment in this country is provided by small and medium businesses. The directors of these firms earn on average £90,000 – well below the 50% tax band. Creative dynamic entrepreneurs rarely sit on the boards of FTSE100 companies, or in the banking halls of the City. Creative dynamic entrepreneurs tend to reinvest their profits in their companies, rather than extract them as 'remuneration'. They do the extraction once their creativity and dynamism has faded.

In any case, the government provides the wealthy with many loopholes to circumnavigate this tax. The 50% rate only applies to employment income and interest on savings - the only sources of income most Britons have. Tax on dividend income, while not exactly an enigma wrapped in a puzzle, is just obscure enough to escape general notice. According to the HMRC figures for 2010-11, those earning over £150,000 slipped more than £14 billion of dividends through this particular diversion, taxed at 32.5%.

Sunday, March 18, 2012 Posted by Jake No comments Labels: , ,
By Richard Lloyd, Executive Director at Which?
Until now, hard-pressed consumers have had to go it alone when they want to negotiate a better tariff with the energy giants. That is why Which? and online campaigners 38 Degrees launched The Big Switch, a completely new way to buy energy using the power of thousands of consumers to negotiate a market leading deal with suppliers.

There has been an incredible response with more than 200,000 people joining together to get a better deal in less than a month. This unstoppable tide of public opinion shows the public demand for fairer, more affordable energy.

People can sign up until the 31st March, and once we know how many are interested in switching, we will hold a ‘reverse auction’ where energy companies are invited to put forward their lowest price per kilowatt of electricity and cubic meter of gas.

Friday 16 March 2012

Friday, March 16, 2012 Posted by Hari No comments Labels: ,
The gang discuss Greg Smith's open letter in the New York Times offerring his resignation

Tuesday 13 March 2012

Tuesday, March 13, 2012 Posted by Hari 1 comment Labels: , , , ,
Chris's friend defends his decision to massage his taxes

Sunday 11 March 2012

There is a predictable perversity in government policy claiming to encourage Britons to work harder. Like so much past policy the government claims that for the good of the nation it must give the rich more and give everyone else less. A carrot and stick policy that hands all the carrots to the wealthy and only swings sticks at the rest. Two current ideas being pursued by the current government's Tory dog, with its Liberal tail noticeably not wagging, are characteristic of this philosophy:

  • Give the rich more money, by cutting the 50% tax rate, in case they become disincentivised slacking tax-dodgers.

  • Give everyone else less money, by cutting tax credits and benefits, freezing wages, and pruning pensions, in case they are incentivised to become slacking scroungers.

The argument that giving the moneyed elite more money will make everyone wealthier manages to ignore the roaring evidence of the past.

Over the last few decades Britain has given the rich a rapidly increasing share of national wealth and national income. In the same period, the lower 90% of the nation has seen no increase in its income at all.  The data from the Paris School of Economics shows how over the 20 years up to 2010 the income of the top 1% has doubled while the income of the bottom 90% stagnated. High rewards for the top brought nothing to the majority.

Since the mid 1980s Britain has doggedly followed the USA with the top 1%’s share of national income racing away from that in other similar nations. In stark contrast to what happened in other industrialised nations the UK and USA allows the wealthiest to swill to their fill. A cash grab led by bankers and eagerly followed by top executives of other industries. A cash grab funded by rip-offs, such as Payment Protection Insurance and many others in many industries, perpetrated on ordinary people.

Even though other nations did not lose their grip on their own wealthiest 1% they were not insulated from irresponsible and rip-off commercial behaviour. The dash for the cash by the bankers of New York and the City of London brought the whole world into economic crisis. Far from ensuring national wealth, giving the rich more brought global ruin.

Thursday 8 March 2012

Thursday, March 08, 2012 Posted by Jake 2 comments Labels: , ,
Sophie Allain, Campaign for Better Transport's public transport campaigner

The Government launched its rail fares review today with the potential to be the biggest shake-up of our fares system for decades. With rail fares a hot topic across the country affecting the pockets of hundreds of thousands of people, the chance to have a say on fares will be irresistible for many. The Government has said it wants to hear from passengers and has allowed an extended period of time for the consultation.
To help people respond easily we’ve produced a simplified form on our website which people can use to take part in the review and send their views to the Government. We’re also encouraging people on twitter to tweet their views using #farefail.

They are several things up for discussion in the review, but the main issues for passengers are likely to be surrounding tickets and staffing. It’s no secret that rail fares have become hugely expensive having soared by up to 200 per cent since 1995. As part of the review, the Government will look at allowing train companies to increase some peak fares, in order to reduce demand for the busiest trains. A poll we conducted showed this is deeply unpopular with passengers with 63 per cent believing that raising fares on the busiest trains at a higher rate than other services is unfair for all passengers, even if it meant lower fares on some less busy services.

With fare rises of inflation plus 3 per cent for the next two years, fares will already be 24 per cent higher in 2015 than they were in 2011. Proposals for ‘peak peak’ tickets would mean some passengers seeing even steeper increases. Whilst the Government has committed to ending inflation-busting fare increases “at the earliest opportunity”, no one seems to want to put a date on that.

So after many months of waiting to have our say, we need to make sure that this opportunity to improve the fares system is not wasted. Please do take part in the review and have your voice heard. If you need inspiration, here’s a list of ideas we think would improve train fares and tickets:
  •          The cost of train tickets in the UK is soaring year on year and fares must start coming down.
  •          Instead of hitting commuters at the busiest times with an additional fare hike to manage demand we need more capacity and more flexible working patterns.
  •          Stop making people feel like criminals when they catch the wrong train, let them top up their fare instead.
  •          Introduce a part-time season ticket for part-time workers.
  •          Put a cap on walk-on fares so we don't end up with a discount airline ticketing system where you have to book in advance and fare prices change by the minute.
Thursday, March 08, 2012 Posted by Hari No comments Labels: ,
Chris and his wife are incensed by the interest rates banks are offering on their current accounts

Sunday 4 March 2012

Sunday, March 04, 2012 Posted by Jake 2 comments Labels: , , , ,
The “Fraud Triangle” is an established method for sniffing out fraudulent activity, particularly in companies. The three sides of the triangle are:

  • Opportunity
  • Incentive/Motive
  • Rationalisation. 

According to the KPMG report “Profile of a fraudster 2007

"Opportunity generally occurs through weaknesses in the internal controls and creates an atmosphere where fraudsters believe they are likely to be successful and undetected.. .. Trust, however, though important in business often becomes the door opener for fraudsters.

Motive often develops from financial pressure resulting from a fraudster’s excessive life style  …. or the superiority complexes of the individual or basic greed.

Rationalization is the fraudster’s internal dialogue that provides the self justification for his actions. The fraudster convinces himself/ herself that he/she is owed this remuneration by the employer."

The report also states:

“Greed and opportunity (when taken together account for 73 percent of profiles) are indicated to be the overriding motivations for fraud.”

“Members of senior management (including board members) represent 60 percent of all fraudsters. An additional 26 percent of profiles involve management level persons bringing the total to 86 percent of profiles involving management.”

With the management of companies being the core cadre of fraudsters, our own Rip-Off Triangle demonstrates why companies rip off their customers. 

After all, why would a senior manager rip off his employer and risk the shame of sacking and jail, when he can rip off his employer’s clients and look forward to a bigger bonus and promotion?

The three sides of the Rip-Off Triangle are constructed thus:

1) The base is built by people, for people, and with people who are all highly incentivised by money. Exorbitant bonuses in banking, energy, transport and other industries have seen a proliferation of rip-offs. A big enough bonus will salve the conscience of any bonus-driven executive as they perpetrate their sharp practices:

Thursday 1 March 2012

Thursday, March 01, 2012 Posted by Jake 1 comment Labels: , , , ,
By Ed Mayo, Secretary General of Co-operatives UK
We’ve been bashing the banks since the start of the crisis. With the start of Move your Money month today and the publication of a new guide, the "little book of money", bank switching is a viable and vital alternative.

When banks are owned by shareholders there is always pressure to put the interests of outside investors first, using depositors' money for example in more risky ways than they should or selling products that profit the bank at the expense of their customers.

This is not new. It has long been recognised and is the reason why we have banking regulation - and have had it for hundreds of years.

But over the last thirty years, banks have campaigned vigorously to cut back on regulation and they have created new financial products and accounting devices that sidestep regulators who have simply failed to keep up.

As a result, we have twin scandals that stem directly from the way that banks are owned and run, as night follows day.

The first is the scandal of failed loans packaged and sold between banks that brought on the credit crunch.

The second, less well recognised perhaps, is the ongoing tally of consumer misselling, taking advantage of the fact that, compared to buying a toaster or even a car, it can be hard to judge the value of a financial product because it is complex and because it takes time to know.

The best estimate we have of the total cost to UK consumers of these scandals (from misselling personal pensions and payment protection insurance through to punitive charges on current accounts and overdrafts) is £32 billion over the last five years - money which has gone straight from ordinary customers to banks' executives and shareholders.

With these issues coming to a head over the last few years, it’s not surprising we’ve been bashing the banks.

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