EU rules that Apple must pay, retrospectively, €13bn in taxes plus interest to Ireland

SOURCE BBC NEWS: Apple should give Ireland 13bn euros in unpaid taxes, European Commission rules

After a three-year investigation, the European Commission has concluded that the US firm's Irish tax benefits are illegal. The Commission said Ireland enabled the company to pay substantially less than other businesses, in effect paying a corporate tax rate of no more than 1%. Ireland and Apple both said they disagreed with the record penalty and would appeal against it. The standard rate of Irish corporate tax is 12.5%. The Commissions's investigation concluded that Apple had effectively paid 1% tax on its European profits in 2003 and about 0.005% in 2014. The company said: "Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned." The record tax bill should not be a problem for Apple, which made a net profit of $53bn in the 2015 financial year. The US Treasury, which said last week that the European Commission was in danger of becoming a "supranational tax authority", said the latest ruling could "undermine foreign investment, the business climate in Europe, and the important spirit of economic partnership between the US and the EU". In Apple's case, 90% of its foreign profits are legally channelled to Ireland, and then to subsidiaries which have no tax residence. At the same time, countries can scarcely afford not to co-operate when Apple comes calling; it has a stock market value of $600bn, and the attraction of the jobs it can create and the extra inward investment its favours can bring are too much for most politicians to resist.

OUR RELATED STORIES:

Tax relief costs £30bn a year and goes overwhelmingly to those who need it least

How to avoid Inheritance Tax. Easy. If you're rich, that is

Office for National Statistics reports show Tory party claims of lowering personal taxes are an illusion. Personal taxes have actually increased since 2010!

Taxes up! Public spending up! Government borrowing up! No, these aren't Corbyn's future plans. They are Osborne's 2015 budget pledges

In numbers (+ a cool animation): The trillions in global tax evasion and money laundering

Corporate scroungers: How about forcing employers to publish how much welfare top-ups their low paid staff depend on

Graphs at a glance: Budget 2014 document shows we’re growing through borrowing. Again. That's why Britain needs a pay rise

Who needs fat cat pay? The Germans don't. See the comparison with the UK

The incomes of the bottom 90% have hardly risen in 20 years, whilst the top 1%’s has doubled

The Top 1% pay more income tax? ‘cos their income’s doubled since 1995 whilst the bottom 90%'s has stagnated

How decades of consumer spending through re-mortgaging concealed low pay rises during the boom, and helped cause the bust

Read More

The system of tax relief costs £30bn a year and goes overwhelmingly to those who need it least

WELFARE FOR THE WEALTHY

By tax specialist Jolyon Maugham QC at www.waitingfortax.com

Twitter @JolyonMaugham

This year we’ll collect a little less than £170bn of income tax, roughly a third of all tax receipts. We’ll also forego through reliefs about £30bn of income tax.

Spread evenly amongst the population that £30bn would deliver to every man, woman and child almost £500 a year.

But it isn’t. It goes overwhelmingly to those who need it least. And that’s not mere happenstance. It’s the inevitable consequence of two deliberate policy choices: to distribute that £30bn through the tax system. And to fail to monitor what good it does.

Let me give some specifics.

Last year we spent £480m per annum rewarding those who earn more than £54,000 per annum and make gifts to charities. We spent nothing rewarding those who earn less.

This year we’ll spend £2.6bn per annum encouraging saving in ISAs. But the average ISA holder with annual earnings of more than £150,000 will get – through higher savings relieved from income tax at higher rates – well over 6 times as much tax relief as her equivalent earning between £20,000 and £30,000 per annum.

In 2013/14 the highest earning 1% of taxpayers made almost 13% of all contributions to pension schemes. Pension scheme relief costs £21bn in income tax foregone. But that 1% of taxpayers – roughly 0.5% of adults – will get even more than 13% of that £21bn because we give them a larger tax bonus than those who earn less.

HMRC doesn’t publish much data on how the benefit of these reliefs is distributed between rich and poor. By and large you have to stitch the statistics together.

But HMRC does track one particular sub-set of reliefs: “Allowances given as tax reductions”. It comprises, in particular, Venture Capital Tax Relief, Enterprise Investment Scheme Relief and Seed Enterprise Investment Scheme Relief. Remarkably Additional Rate Payers – those earning over £150,000 – receive 69% by value of those reliefs. That figure has risen every year since 2010/11.

More striking still, the highest earning 15,000 taxpayers – an almost homeopathic 0.05% of all taxpayers – netted 5.5% of total deductions and reliefs. Most will have seen six figure reductions to their income tax bills.

Why is this? Should we be concerned?

It’s hard to find sense in it.

Take pension tax relief as an example.

The more you earn, the more likely you are to have surplus income. Because you have surplus income you’re less in need of incentives to save for your retirement. But the tax system gives you more.

That’s not sensible policy. It’s a wasteful bung.

We can make the same argument for ISAs. If a couple can afford to save what the median household earns (after direct taxes and benefits) – and that’s what the annual ISA limit for a couple represents – why do we spend money giving them incentives to save? If there’s money to be spent, surely we bolster the position of those who struggle to save rather than those compelled to by surplus income.

We don’t need to reward the wealthy for making donations to charity. The impulse to donate is a civic responsibility. It doesn’t need to be greased. Only the wealthy win, and the causes they prioritise. Good for Opera Houses; Youth Clubs, not so much.

These – I can put it no politer than ‘anomalies’ – have two related causes.

First, we deliver these reliefs through the tax system. It must be this that has led us unthinkingly to give most generously to those who have the highest earnings and so pay the most tax. But to achieve the public ends these tax reliefs serve does not require that we forego the most from those who pay the most.

That brings us to the second. We have no mechanism for assessing what public good we achieve with this £30bn. The absence means our political class need not confront the question. And what they can pretend they don’t know they can pretend they needn’t remedy. This state of affairs is convenient to them. Because the noise made by the losers from tax decisions tends to drown out the applause from those who’ve won.

But there is an answer. And a precedent.

Interest rates decisions were once heavily politicised. Were they still, now, in the hands of the Government the UK would be a more dangerous place. After seven years of near zero interest rates could any Government hold the line between depositor pensioners and the borrower working age population? But, devolved to the Bank of England, the political heat has simply evaporated.

As it was with interest rate decisions, so it could be with tax reliefs. Value for money assessments, decisions around functioning, decisions around shape; all these could be devolved to an independent body such as the Office for Budget Responsibility. Over time, and insulated from political heat, it could reshape tax reliefs to operate in the public interest.

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Inheritance Tax is easily avoided by the extremely wealthy. They don't even need to hide their wealth offshore, they can do it in plain sight.

In April 2016 the "Panama Papers", a vast document leak revealing offshore tax dodging, reminded us how extremely helpful British law is to the very wealthy around the world. 

However, one of the biggest and most exclusive UK tax loopholes of all isn't hidden offshore. It is here in plain sight right in front of you in good old Blighty, and it relates to Inheritance Tax (IHT).

We don't refer to the widely known IHT free bequests from one spouse to another. Though that perhaps opens up a loophole for the most determined IHT avoiders whatever their wealth.

We refer to a loophole available to all, but accessible only to the most wealthy. Jesus Christ apparently said "it is easier for a camel to go through the eye of a needle, than for a rich man to enter the kingdom of God." At least the heirs of rich men and women can console themselves that you really need camel-sized assets to go through this particular British tax loophole. The loophole being the Inheritance Tax "7 year rule", whereby you pay no Inheritance Tax if :

• You give away assets (property, cash, shares, polo ponies, etc.) 
• AND you take no further benefit from them (e.g. you can't give away a house and continue to live in it, or collect interest from gifted cash, or use the manure from the pony on your roses), 
• AND you live for at least seven years after the gift

Before 18th March 1986 it was so much easier. You could hand your wealth to your heirs before you drop dead, trust them to look after you, and escape inheritance tax. For instance, gifting your home: while your home would legally belong to your kids you could still live in it, and so long as you survived 7 years there would be no inheritance tax on it. 

The only risk you took was that the new owners of your property – your kids – would throw you out on the streets. In the words of Roy Jenkins, a former Labour Chancellor of the Exchequer, Inheritance Tax was “a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue.” 

From 18th March 1986, for the transfer to escape inheritance tax you would have to obey the "7 year rule". The economics of comfortable living and death duties are merciless. If you are moderately wealthy, with assets of £1.5 million, consisting of a £750k home plus £750k other assets (cash, equity, buy-to-let, and the like) providing an income of £30k per annum, then you probably need to keep these assets until you die to provide a place to live in and money to live on. When you die, because you were unable to give away your assets, a large proportion of your wealth will go as inheritance tax.  

However, if you have assets of £10million, then the bulk of this wealth is not required for your ‘subsistence’ in old age. Holding on to your home and keeping enough to generate a reasonable income, you could safely ‘give away’ £8 million to your heirs, potentially avoiding IHT completely on that wealth. If you are fearfully wealthy – the following table, for a single person dying in 2015/16 speaks for itself:

In the above examples, the Moderately Wealthy individual, without surplus assets to give away, pays 31% of their wealth in IHT. The Significantly and the Fearfully Wealthy individuals pay 7% and 4% in IHT respectively.

An example of how the exceedingly wealthy navigate their way around IHT is given in a book, "The British Tax System", by John Kay (academic, author, and FT columnist) and Mervyn King (formerly governor of the Bank of England):

“It is clear that individuals who are obviously far from being paupers may die leaving estates for tax purposes that bear little relation to their real wealth. 

It is generally believed that the largest sum ever paid in death duties, by a considerable margin, was the £11 million paid on an estate estimated at between £40 million and £60 million on the death of the third Duke of Westminster in 1953. 

On the subsequent death of the fourth Duke, his reported estate was a little over £4 million, on which estate duty came to around £1 million. In fact not even this sum was paid, since after a protracted legal case it was resolved that the Duke (who was partially disabled by war wounds received in 1942 and who died of cancer 1967) was entitled to the benefit of an exemption from estate duty for those killed on active military service. 

The fifth Duke died in 1979, and press reports then estimated that the family fortune controlled by the new Duke of Westminster was between £300 million and £800 million. Again the reported estate was expected to be less than £5 million (Daily Telegraph, 20 February 1979).”

Evidently loopholes will be opened when the need arises. The fourth Duke of Westminster was wounded in 1944, and died of cancer 23 years later. His executor seems to have successfully argued, for the purposes of Inheritance Tax, that the Duke was deemed to have been killed on active service. 

David Cameron's father Ian was a significantly wealthy individual. According to the Sunday Times Rich List Ian Cameron had an estimated £10 million in assets in 2009. Following his death in 2010, his Probate showed UK assets of £2.9 million (N.B. the Grant of Probate doesn't reveal offshore assets). According to a report by the Guardian newspaper, some years earlier Ian Cameron had gifted properties in Berkshire and in Kensington to his children (not including David, who received £300,000 in Ian Cameron's will plus a further gift of £200,000 from his mother a year later).

Even for the very wealthy things aren't as simple as that. One finds oneself playing a game of Chicken with the Grim Reaper (a.k.a. the taxman), trying to guess when one has just over seven years left. After all, one wants to be in full control of one's assets as long as one can. According to Office for National Statistics data for 2014, about 10% of people lived beyond 84 years. If you want a 50-50 chance of giving away your stuff in time to avoid IHT, perhaps consider handing it over by your 73rd birthday. On the other hand, there is a fair probability you would spend more than a decade without your stamp collection and granny's Renoir.

The statistics provide a pretty good idea, but not really enough to be quite sure.

Of course, if a benefactor's estate is big enough then it may become cost effective for the heirs to keep him or her on life support, or at least well hidden and plausibly fresh, until the requisite seven years is up.

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How do Tories catch tax dodgers? By cutting HMRC’s budget by £400m between now and 2020

SOURCE MIRROR: David Cameron blasted over £400m cut to tax collectors in furious Prime Minister's Questions clash

Jeremy Corbyn has blasted a £400million cut to the government's tax collection department in his first clash over the Panama Papers at Prime Minister's Questions. The Labour leader accused David Cameron of letting down the nation by cutting the HM Revenue and Customs budget from £3.3bn to £2.9bn by 2020. "Why has he laid off so many staff in HMRC who therefore can't go and collect tax?" said Corbyn. This week David Cameron announced UK law enforcement will be able to find out the beneficiaries of firms in all tax havens except Anguila and Guernsey, which hadn't yet agreed to a deal.

OUR RELATED STORIES:

Office for National Statistics reports show Tory party claims of lowering personal taxes are an illusion. Personal taxes have actually increased since 2010!

Taxes up! Public spending up! Government borrowing up! No, these aren't Corbyn's future plans. They are Osborne's 2015 budget pledges

In numbers (+ a cool animation): The trillions in global tax evasion and money laundering

Corporate scroungers: How about forcing employers to publish how much welfare top-ups their low paid staff depend on

Graphs at a glance: Budget 2014 document shows we’re growing through borrowing. Again. That's why Britain needs a pay rise

Who needs fat cat pay? The Germans don't. See the comparison with the UK

The incomes of the bottom 90% have hardly risen in 20 years, whilst the top 1%’s has doubled

The Top 1% pay more income tax? ‘cos their income’s doubled since 1995 whilst the bottom 90%'s has stagnated

How decades of consumer spending through re-mortgaging concealed low pay rises during the boom, and helped cause the bust

Read More

Will "Panama Papers" tax dodgers and their friends fight back and win?

Chris, KJ and Fee think their chances could be quite good...

SOURCE GUARDIAN: Britain under pressure to end opposition to tax haven blacklist

Pierre Moscovici, the European commissioner in charge of tax policy, urged member states to throw their support behind his plans for a blacklist of tax havens – an idea dismissed last year by UK officials. He cited the case of Lichtenstein as a success, arguing that a deal to hand over information to the EU was accelerated because the principality wanted to get off the list. Last year, the commission made a first attempt at creating a blacklist when it published the names of 30 “non-cooperative tax jurisdictions”. The list was based on EU member states’ own varying ideas and included the British Virgin Islands, Guernsey, Hong Kong and Panama. The British government, which does not keep a blacklist of tax havens, criticised the move as “deeply unhelpful”. A briefing in the name of Treasury minister David Gauke, seen by the Guardian, described it as “a misleading list, since most countries and jurisdictions which are referred to are as transparent as EU member states”. The Treasury document went on to claim that “the UK’s overseas territories and crown dependencies have put themselves at the forefront of global tax transparency over the last couple of years”. As the Observer reported in January, Treasury officials also lobbied Brussels against action against Bermuda, a tax haven favoured by Google. David Cameron said on Tuesday that no government or prime minister had done more “to make sure we crack down on tax evasion, on aggressive tax avoidance, on aggressive tax planning, both here in the UK and internationally”.

Definition of Tax Avoidance is using tax law in a way "Parliament never intended."

OUR RELATED STORIES:

Office for National Statistics reports show Tory party claims of lowering personal taxes are an illusion. Personal taxes have actually increased since 2010!

Taxes up! Public spending up! Government borrowing up! No, these aren't Corbyn's future plans. They are Osborne's 2015 budget pledges

In numbers (+ a cool animation): The trillions in global tax evasion and money laundering

Corporate scroungers: How about forcing employers to publish how much welfare top-ups their low paid staff depend on

Graphs at a glance: Budget 2014 document shows we’re growing through borrowing. Again. That's why Britain needs a pay rise

Who needs fat cat pay? The Germans don't. See the comparison with the UK

The incomes of the bottom 90% have hardly risen in 20 years, whilst the top 1%’s has doubled

The Top 1% pay more income tax? ‘cos their income’s doubled since 1995 whilst the bottom 90%'s has stagnated

How decades of consumer spending through re-mortgaging concealed low pay rises during the boom, and helped cause the bust

Read More

Google must be laughing at the taxman. It’s just too easy for them to hide their real UK profits

SOURCE GUARDIAN: Google expected to reveal growth of offshore cash funds to $43bn

Google is poised to confirm next week that controversial tax structures in Ireland, the Netherlands and Bermuda have boosted its offshore cash mountain to more than $43bn (£30bn), figures from financial analysts suggest. Despite governments around the world promising to crack down on the tech company’s tax avoidance arrangements, Wall Street analysts are confident Google will continue to salt away profits in Bermuda for years to come. Alphabet, Google’s parent company, will report its 2015 earnings next week and is expected confirm that offshore cash funds have grown by about $4bn in just 12 months. Offshore reserves of $43bn, held largely through Bermuda, represent profits from markets outside the US. Of these markets, the UK is the largest, accounting for 17% of non-US sales. But latest published accounts show Google’s UK subsidiary paid just £21m in tax for 2013. Google’s tax structure means income from many major overseas markets – including £4.56bn from the UK – is booked through Ireland. Much of it is then bounced through the Netherlands and back to Ireland and Bermuda. These strategies are known in tax jargon as the “Double Irish” and the “Dutch Sandwich”. Two years ago, George Osborne promised to bring an end the “extraordinary lengths … some technology companies go to to pay little or no tax [in Britain]”, introducing a tax on diverted profits last year. Last week, however, Google reached a long-awaited settlement with HRMC – in which it agreed to pay £130m in back taxes and bear a greater tax burden in future – that effectively sanctioned its continued use of Irish companies to book UK sales. Only a small increase in UK tax must now be paid by Google’s British arm.

SOURCE ITV NEWS: Intimate waxing? Worst tax return expense claims revealed

HM Revenue and Customs (HMRC) has revealed the top five most outrageous personal expenses claims included in last year’s Self Assessment tax returns. The expenses range from furnishing a new flat to the cost of storing Mars bars overnight in a fridge. Here’s the full list of bizarre expenses that some taxpayers have tried, and failed, to claim for:

• The costs for storing Mars bars overnight in a fridge
• The cost of a pair of flip flops so I don’t have to walk barefoot between my work’s changing and shower rooms
• The costs for my intimate waxing
• I bought a second hand car to get me from home to work so I didn’t have to walk
• I purchased my own flat, so I need to claim back the money I spent on the furniture.

Ruth Owen, HMRC Director General Of Personal Tax, said: “There are a number of items and expenses that people can claim against, such as genuine business costs and items needed to do a job. But a painful beauty regime or the furniture for your own home are not items that every taxpayer in the country should be contributing towards. It’s wrong that a small minority of people expect the honest majority to subsidise their lifestyle and HMRC will never allow for these to be processed as genuine claims.”

OUR RELATED STORIES:

Office for National Statistics reports show Tory party claims of lowering personal taxes are an illusion. Personal taxes have actually increased since 2010!

Taxes up! Public spending up! Government borrowing up! No, these aren't Corbyn's future plans. They are Osborne's 2015 budget pledges

In numbers (+ a cool animation): The trillions in global tax evasion and money laundering

Corporate scroungers: How about forcing employers to publish how much welfare top-ups their low paid staff depend on

Graphs at a glance: Budget 2014 document shows we’re growing through borrowing. Again. That's why Britain needs a pay rise

Who needs fat cat pay? The Germans don't. See the comparison with the UK

The incomes of the bottom 90% have hardly risen in 20 years, whilst the top 1%’s has doubled

The Top 1% pay more income tax? ‘cos their income’s doubled since 1995 whilst the bottom 90%'s has stagnated

How deacdes of consumer spending through re-mortgaging concealed low pay rises during the boom, and helped cause the bust

Read More

Facebook paid just £4,327 tax on UK revenues of £105m

Fee and KJ get a tour of one of the global tech giants...

SOURCE GUARDIAN: Facebook paid £4,327 corporation tax despite £35m staff bonuses

Facebook made an accounting loss of £28.5m in Britain in 2014, after paying out more than £35m to its 362 staff in a share bonus scheme, according to the unit’s latest published accounts. Operating at a loss meant that Facebook was able to pay less than £5,000 in corporation tax to HM Revenue for the year. The level of tax contribution by Facebook, which claimed in 2013 that at least a third of UK adults visited its site every day, will add to the debate about how to ensure that multinationals make fair tax payments in each country in which they operate. Last year, Facebook made a profit on its worldwide operations of $2.9bn (£1.9bn), on revenue of $12.5bn. UK revenues were £105m last year. John Christensen, the director of campaign group the Tax Justice Network, said: “it’s very likely they’re using all the usual techniques to shift profits around.” George Osborne, the chancellor, has pledged to crack down on tax avoidance by global firms by swiftly legislating to enact a new set of rules drafted by the Paris-based Organisation for Economic Co-operation and Development (OECD), which has become a hub for global tax reform in recent years. The so-called BEPS rules are aimed at cracking down on “base erosion and profit-shifting”: the practices used by many global firms to minimise their tax liabilities by recording profits in low-tax jurisdictions. “Taxes should be paid where profits are made,” Osborne tweeted from the International Monetary Fund’s annual meetings last week. Separately, the chancellor has introduced a diverted profits tax, known as the “Google tax”, aimed at preventing hi-tech international firms from minimising their tax liabilities in the UK.

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The real reason the top 1 percent pay a vast share of income tax is the rest of us do not get enough income to chip in more! Do not be grateful to them for their taxes, get them to pay us more wages!

Writing in the Daily Telegraph in 2013, Boris Johnson said in a piece titled "We should be humbly thanking the super-rich, not bashing them":
"Now, the top 0.1 per cent – about 29,000 people – pay an amazing 14.1 per cent of all taxes."

Boris’ figure seems to come from a Freedom of Information (FOI) response from HMRC [which we have looked for but can’t find it where it is supposed to be published – we would be grateful for a link to this]. However Boris was mistaken. The Daily Mail, clarified this as 14.1 percent of Income Tax, not of All Tax. Boris' mistake is often heard in the media, with people claiming and some actually believing the top 1% pay for most of public spending.

So, what difference does "Income" versus "All" make? Actually, a lot.

HMRC doesn't publish the top 0.1% tax normally, except in FOI responses. However HMRC estimates for 2015/16 show the top 1% do pay over a quarter, about 27.5%, of Income Tax. HMRC figures also show Income Tax for that year made up 31.7% of "All Taxes". 

Therefore the top 1%'s income tax makes up just 8.7% of "All Taxes" (31.7% x 27.5% = 8.7%).

It has been a common tactic to use the enormous share of Income Tax the very rich pay to throw a smokescreen of eye-lowering "don't look too hard" gratitude over the enormous amount of income they receive. And yet it is true, the top 1% do pay a share of Income Tax disproportionate to their population. 


The reason for this is low pay in Britain has meant most people couldn't afford to pay a greater share of Income Tax even if they wanted to. Far from having spare cash to contribute in Income Tax, a report by the Resolution Foundation think tank in 2012, "Gaining from growth: The final report of the Commission on Living Standards" shows the bottom 50% actually have to borrow money to cover their living costs. The "Savings Ratio" in the graph below shows what percentage of income each group can save. A negative Savings Ratio indicates they are borrowing.


In a separate press release the Resolution Foundation stated by the 2020 General Election the number of workers on the legal minimum wage will have doubled to more than 10% of the working population. It's due to free-market set wages falling behind the government set minimum wage (laughably renamed by George Osborne as the National Living Wage). If you look at specific sub groups of workers, the proportion on minimum wage in 2020 will be even higher than 10%:

• 15% of female employees
• 25% in micro businesses (businesses with fewer than 10 employees, who had over 8 million employees in 2014)
• 40% in the hospitality sector

It is said by some that burgeoning top pay does not hold down bottom pay. That may be true if the question is simply diversion of bottom pay into top pay packets. However top pay is usually justified by profits. According to Gavyn Davies, (hedge fund manager, former Goldman Sachs partner, and former chairman of the BBC) two thirds of corporate profits have come from holding wages down:

"[If the] decline in the wage share had not occurred, and everything else had (implausibly) stayed the same, then gross profits in the developed economies would have been about one-third lower than they are today and net profits (after depreciation) would have been about two-thirds lower."

So while the 1% may not be directly siphoning off the wages of the 99%, they use holding those wages down to boost their profits and boost their resulting rewards. We can see an example of how executive pay has ramped up from a report, "How to make high pay fairer", published in July 2014 by the High Pay Centre think tank. The report stated:

"Typical annual pay for a FTSE 100 CEO has risen from around £100,000-£200,000 in the early 1980s to just over £1 million at the turn of the 21st century to £4.3 million in 2012. This represented a leap from around 20 times the pay of the average UK worker in the 1980s to 60 times in 1998, to 160 times in 2012 (the most recent year for which full figures are available)."

Creating a growing economic distance between the few and the many creates a deeper problem. As those at the top, who direct the government of Britain, no longer need public services they don’t feel the pain when those  services are cut. Those who can afford private health, private education, those who don't rely on subsidised public transport and subsidised housing, and those who don’t live in areas that need strong policing, don’t notice when what they don’t need is not there.

And I suppose it would be churlish to mention the taxes the 1% contribute to the state allow them to keep their staff on low wages (subsidised by in work benefits) and keeps their staff healthy (NHS) and educated (Schools) enough to turn up to work on subsidised public transport. 

So we should not, as Boris suggested, be "humbly thanking" the super-rich. On the contrary, they should be humbly thanking the rest of us: not for our generosity but for our incomprehension of what is happening. The Golden Rule, "Those who have the gold make the rules", held until relatively recently. When rule-makers began to be chosen by Parliamentary Elections, those with the gold have relied on the rest of us not really noticing they aren't fairly sharing it.

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Office for National Statistics reports show Conservative Party claims of lowering personal taxes are an illusion. Personal taxes actually increased since 2010!

One month before the UK General Election in May 2015 David Cameron, warming up for a post prime ministerial career as a game-show host, announced it was "Money Back Monday". 

On that first day of the 2015-16 tax year Cameron declared: 
"Today is a big day for our country. It's 'money-back Monday' - a day when, quite simply, hard working taxpayers get to keep more of their own cash. A whole host of changes to our tax, benefits, pensions and savings systems come into effect today."

Promising** a handout to the nation one month before the General Election clearly didn't do him any harm. But who actually took the money Cameron promised to give back? 

We get an insight by looking at data from the Office for National Statistics (ONS) annual report on "The Effects of Taxes and Benefits on Household Income". Comparing data from financial years ending in 2010 and 2014 (the report for 2015 won't be out until June 2016), we see the personal tax burden actually increased during the last Conservative led coalition government.

How is this possible? Surely the Tories have been lowering some income tax rates and raising allowances? Yes they have. But they take back significantly more than they give via other taxes. 

Personal taxes come in two forms:
1) Direct Taxes including: Income Tax; National Insurance Contributions; Council Tax.
2) Indirect Taxes include: VAT; Duty on tobacco, alcohol, fuel; car tax; TV licence; Stamp Duty; etc.

Between 2010 and 2014 (charts show percentage of gross income taken in tax):
a) Direct Taxes decreased

b) Indirect Taxes increased

c) Overall Direct + Indirect Taxes increased

Because the poorest pay most of their taxes as Indirect Tax they were hit hardest by Tory tax rises. Nonetheless, the richest also paid a higher rate of tax in 2014 than they did in 2010. 

Indirect and Direct Taxes for richest and poorest [click on picture for better view]

How do the Tories manage to be seen as the "party of low taxation"? They do it by saying it with such confidence people believe it is true without checking. In a speech in March 2014, David Cameron said:
"We believe in helping people keep more of the money they earn. It’s the right thing to do. Let’s be clear: there is no such thing as government money. It’s your money – taxpayer money. It’s not my money, not George Osborne’s money, not the government’s money - it’s your money. Hard-working people’s money."

In the same speech Cameron went on to promise: 
"A bit of extra cash that can help a Dad afford those trainers for his son or help a Mum celebrate her daughter’s birthday with a meal out."

The reality is those who depend on a tax reduction to buy trainers and pizza for their children were far less able to afford those treats. Even those at the other end of the income scale found themselves with more tax taken from what they have to invest or to spend on a whim.

The Conservatives warn us the Labour Party can't be trusted with the UK's economy and security. And yet five years of a Tory led government brought higher taxes, increased national debt, cuts to the military, and cuts to the police. 

The real puzzle in Britain is not what the Labour Party has to do to be trusted. It is what the Tories have to do to be distrusted.

[** Cameron's promise of "money back" in this April 2014 speech was based on an analysis the Tories hadn't published. Sir Andrew Dilnot of the UK Statistics Authority complained about this in a letter that stated:
"Reference to the analysis was made in the Conservative Party press release, but the analysis has not been published and is neither available to all other parties nor to members of the public. We regard this as unsatisfactory because of the significance that we attach to the principle of equal access to statistics and underlying analysis."]

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"Lest We Forget" Banker Special: a review of continuing banker scandals the major parties have gone quiet about

As we all know, the country went into a tailspin following the collapse of the banks, both here and abroad. You can say what you like about the Tory LibDem government's attempts to turn the country around, and the opposition's criticism of it. But one thing is for sure. Whoever is paying for the crisis, it's clearly not our top bankers.

In the first week of March the total pay of the CEOs of our largest banks was revealed. The boss of Lloyds, Antonio Horta-Osorio, got £11.5m, Stuart Gulliver at HSBC got £7.6m, and Barclays’ Antony Jenkins got £5.5m. RBS boss Ross McEwan modestly took £1.85m after voluntarily turning down a £1m bonus, because he “does not want this issue to be a distraction from the task of building a great bank for customers and shareholders.” Surely because he does not want everyone to ask the obvious question: given RBS lost another £3.5bn last year, the seventh year in a row of losses that brings the total to £43bn since the 2008 bailout, how come you were offered a £1m bonus to turn down in the first place?! And how come, overall, RBS handed out £421m in bonuses to its “top” bankers last year?

So, now would be a good time to give a round-up of continuing financial services shenanigans, all taken from the mainstream media both left and right, since January 2014.

It includes...

• Bank scams, from sneaky mis-selling to outright fraud, from mammoth large to small-ish.
• The huge fines US regulators have imposed, in contrast with the measly fines we do.
• Revolving doors: some of the former bank regulators who got hired to advise the banks.
• Promises, predictions and failures to rein in the banks.
• The continuing rise of consumer and mortgage debt, which got us into all this trouble in the first place.

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HMRC Crime Map and "Most Wanted" posters show where the Taxation Action is, and where it isn't.

Just as you can judge a person by the company he keeps, you can judge an enforcement agency by the villains it confronts.


America's FBI chases the most murderous crooks of their times: Al Capone; Bonnie & Clyde; John Dilinger; the Unabomber.


Comic book heroes pursue the vilest vicious verminous villains violently.

[Image: The Multi Powers]

HMRC, on the other hand, included in its top 8 "Most Wanted" miscreants in February 2015:

• three VAT fraudsters; 
• two cigarette smugglers;
• one individual pocketing stamp duties; 
• one individual running a tax-credit racket; 
• and an individual who was smuggling non-EU garlic disguised as ginger!

These were, incredibly, HMRC's eight "Most Wanted"! They were more wanted than anybody else HMRC could think of. The garlic smuggler was "More Wanted" than the HSBC and the Pricewaterhouse Coopers (PWC) executives who were accused by MPs of running tax dodging scams on an "industrial scale". 

Perhaps HMRC doesn't include the pin-stripe villains in their "Most Wanted" because they know where they are, i.e. they are not 'on the run'. Though perhaps the suits aren't 'on the run' because they know there isn't anybody chasing them?

If it is true that the 'most wanted' only include 'on the runs', then take a look at HMRC's "Crime Map". This shows geographically where HMRC is getting its convictions, and what jail time is being inflicted. The map should show the captured pin-stripe crooks who are not 'on the run'. 

Lots of blue balloons on the map suggest HMRC has been busy. Zoom in and you will find clusters of convictions around Manchester, Birmingham and London. Click on the balloons (not our image, but the real thing) and you find examples of crimes and prison sentences:

• £13k duty evasion: 56 days prison
• £16k duty evasion: 5 months prison
• £30k duty evasion: 10 months prison
• £98k VAT fraud: 2 years prison
• £3.2million duty evasion: 7 years and 1 month prison

According to the BBC Panorama programme, HSBC's Swiss arm took care of US$21.7 billion of assets for clients from the UK, representing hundreds of millions in dodged taxes. I will leave the mathematicians among you to do the extrapolations to determine jail terms proportionate to the sentences given to the VAT and duty dodgers' listed above.

Search for convictions in Britain's "industrial scale" centres of tax dodging services: zoom in on the Crime Map to the two key financial industry hubs in London:

1) The City: there were no blue balloons at all.

2) Canary Wharf: Also a blue-balloon-free-zone.

 
In Parliament's Public Accounts Committee meeting on 31st January 2013 tax chiefs of the Big Four (the world's four largest accountancy firms Ernst & Young, Deloitte, KPMG and PwC accused of running 'industrial scale' tax dodging services) were asked what they were paid:

Q146 Chair: Are you all on seven-figure sums? Taking salary and bonuses-are they seven-figure sums? Yes.

Bill Dodwell [Head of Tax Policy, Deloitte LLP] : I’m not, no.

Kevin Nicholson [Head of Tax, PwC]: Yes.
Chair: Jane?

Jane McCormick [UK Head of Tax, KPMG]: Six.
Chair: Are you seven or six?

John Dixon [Head of Tax Policy, Ernst and Young]: Seven.

Bill Dodwell: Six.

Bragging rights went to Kevin Nicholson of PwC and John Dixon of Ernst&Young. Mr.Dodwell and Miss McCormick took as consolation prize the ammunition to get a pay-rise at their next appraisals. All for helping people dodge tax. Doubtless the bosses in charge of HSBC Suisse were no less remunerated.

History has showed for millenia that if you offer enough, people are prepared to do anything. Napolean did it with ribbons and medals. Our financiers prefer hard cash. 

Is that the reason certain salaries in the City are so high? They are not paid for their talent, but for their consciences? Top bankers and accountants aren't prepared to sell their souls at any price: only for a high price.

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