• Dr Ha-Joon Chang
• Jack Dromey MP
• Daniel Elton
• Mark Ferguson
• Sunny Hundal
• Will Hutton
• Joy Johnson
• Paul Kenny
• Stewart Lansley
• Professor Costas Lapavitsas
• Professor Ruth Lister
• Kevin Maguire
• Angela Mason
• Professor Marjorie Mayo
• Len McCluskey
• Professor Jonathan Michie
• Seumas Milne
• Richard Murphy
• Frances O’Grady
• Ann Pettifor
• Professor Kate Pickett
• Professor Allyson Pollock
• Professor Roger Seifert
• Polly Toynbee
• Hilary Wainwright
• Professor Richard Wilkinson
• Zoe Williams

We’re not likely to get all that much coherent from them, are we?

I mean seriously: Murphmeister, Will Hutton, Sunny, Polly, Seumas and Anne Pettifor? The entire range from those who believe in the magic money tree to the woman who claims to have found it.

There’s no doubt that the biggest part of what I measured was profit that should have been taxed in the UK and wasn’t. That tax gap is down to Vodafone, and Google, and Amazon, and GSK and PricewaterhouseCoopers and all those other names we all know and love who’ve been darned sure they shift their profits out of the UK.

Eh?

From memory he looked at UK quoted companies. Which excludes Google and Amazon right from the start. And isn’t PWC a partnership?

So friends, let me tell you something right now in case I forget to do it later. If defending your jobs, and demanding that you be spared from redundancy and if saying that giving jobs back to your colleagues who have been sacked makes me a dangerous man, well then I’m proud to be dangerous. And yes, I’m proud too to have a friend like Mark.
….
The first was to say the tax gap was no big deal. And let’s be honest, he’s got to say that. How else can he justify sacking 10,000 more PCS members over the next three years unless he can argue the work you’re doing is unimportant?

Nothing at all to do with being funded by the PCS to insist that more unoion members should be employed. Nothing at all….

There is joy in heaven and sniggering down here upon Earth as Richard Murphy gets a jolly good spanking from HMRC over his quite lunatic estimates of the tax gap. You’ll have seen him, heard him perhaps on the radio, popping up to claim that there’s £120 billion that should be collected. Just collect that and all our economic and financial problems are over.

The full whipping is here in Hansard. As an example of the asininity of the Murphmeister’s “estimates” try this:

The figure for unpaid tax of £28bn that Tax Research UK use is a snapshot of the total amounts owing to HMRC on a particular day. We think this gives a misleading impression of tax that is lost. Most tax paid late is collected within a few days, and over 90pc is eventually collected. Therefore the figure we include in our tax gap estimate shows only the amounts we don’t ever collect. 90 per cent of this arises because of insolvency.

That is, the Murph claims £28 billion, but once we’ve accounted for the people who pay late but do pay and those who go bust the actual unpaid tax unpaid is some £400 million. Less than 0.1 per cent of tax collected. I’d be absolutely astonished to hear that any other organisation in the country manages to get its unpaid receivables down that low.

It really doesn’t support his continued insistence that HMRC should double the number of staff it has. For, and here’s the real story, that’s what Murphy’s ever more phantastical estimates of the tax gap are about.

Our story starts here, back in 2004, when Gordon Brown decided to merge the Inland Revenue and Customs and Excise to create HMRC. The point and aim of this was to enable the firing of some large number of the people in the now conjoined offices. Brown actually said this was the point. By 2006 there were 37,500 redundancies in the pipeline as duplication could be eliminated. Reducing the total headcount in HMRC by approaching 50 per cent.

Now, if you were the leader of the union that represented those taxmen what would you do?

Here I must wander off into opinion, supposition on my part. But I would look around for some vaguely numerate hack who was willing to take my union’s shilling to produce reports proving that vast sums of taxation were not being paid as they righteously and justly should be. In each such report I would insist on a few paragraphs about how we really must stop this slaughter of the innocents and have tens of thousands more taxmen where they belong, sitting behind a desk sucking pencils and coughing up regular union dues.

Now that’s what I would do because I’m an evil manipulating neoliberal b’stard. What they did actually go off and do, I’m not sure:

Richard Murphy, a campaigner who calculated the £120bn estimate, rejected HMRC’s criticisms. He called on HMRC to increase staff levels and crack down on small companies that were not filing tax returns or company accounts.

Mark Serwotka of PCS, a union representing HMRC staff, said:
The tens of thousands of staff in HMRC know that Richard is not overstating the tax gap, and they know that as well as it being an issue of political will, the problem is one of staffing.

With 10,000 more job cuts planned by 2015, the government stands no chance of tackling this, when even a modest dent in the billions lost to our exchequer would change the debate about public spending overnight.

Quite which latin tag this falls under I’m not quite sure: quis custodiet ispso custodes isn’t quite it, perhaps cui bono is closer? Your evocations of ancient wisdom in the comments please.

The resolution also raises the stakes to make evading the FTT potentially far more expensive than paying it. Taking the UK stamp duty approach, the text links payment of the FTT to the acquisition of legal ownership rights. This means that if the buyer of a security did not pay the FTT, he or she would not be legally certain of owning that security. As FTT rates would be low, this risk is expected to far outweigh any potential financial gain from evasion.

I think the principle in this last paragraph especially important. What it says is that the right to ownership of an asset is dependent upon having paid the tax due when acquiring it: without that tax having been paid the title to the asset is void and the asset is forfeited to the state.

Isn’t there just a slight difference between having valid legal title to something and it being forfeit to the State?

For example, I’ve no idea where the receipt is for the boxer shorts I am currently wearing. I cannot prove that I paid VAT, the required tax, on them. And I’m not sure I’m all that worried that I cannot prove valid legal title to said boxer shorts.

But that’s a little different from stating that this (used!) underwear is now forfeit to the German State isn’t it?

And of course financial markets are well used to dealing in assets that have no clear, registered, legal title. Ever heard of bearer shares and bonds?

Superficially flat taxes look attractive. People like the idea of simplicity. It’s an easy sell. The fact that it takes 417 pages to explain the proposal suggests that this idea is not simple though, and that’s because it isn’t.

What, as opposed to the 17,000 pages of Tolley’s for the current tax system?

The rest of it is the usual drivel: people are evil for even suggesting that a smaller state might be a useful thing to think about.

The personal allowance will increase very modestly to £10,000 and then 30% tax will due – which will hammer low earners and pensioners in particular, whose tax rates will rise considerably as a result, as will the tax rate for most on less than £45,000 of income a year.

That’s about the TPA report. In which they say:

Income Tax and Employees’ and Employers’ National Insurance would be merged into a single tax on labour income, with rates levelled down so that certain groups don’t face higher bills

Currently, between £7.something k and £45 k ish you pay three taxes on your wages. Income tax at 20%, employees NI at, umm, 12 ish % and employers NI at 13.8%. And yes, even Ritchie agrees that the actual incidence of that employers’ NI is upon the employee, in the form of lower wages.

This selection of three taxes will be cut to 30% in total. This is known as a cut in taxes and a cut in tax rates as well. Not, as our innumerate retired accountant seems to think, an increase.

This how the TPA report achieves the following:

For example, a two earner household, with an income of around £28,000 would receive a tax cut of around £3,400.

I do sometimes wonder whether Ritchie can even read.

So, just to make this clear, in 2009-10, the year for which their latest tax gap estimate for tax avoidance was prepared, they said in September 2011 there was just £5 billion of tax avoidance in all (making up part of the total tax gap in their estimate of £35 billion) and yet by March 2012 they were admitting tax avoidance for just one reason in that year exceeded £6 billion. And yet despite that they are still telling parliament their estimate of the tax gap is better than mine.

Well yes. Because what HMRC defines as tax avoidance is different from what Ritchie defines as tax avoidance.

Ritchie defines it as people doing anything that Ritchie doesn’t like. HMRC defines it as people twisting the law so as to legally avoid tax.

For example, from company taxation. HMRC says that using capital allowances or the R&D tax credit, if they’re used properly as capital allowances or against R&D expenditure is not tax avoidance. The way that Ritchie has calculated corporate taxes he is including these in tax avoidance.

If you deliberately bumped up the overhead that you assigned to the R&D budget (say, allocating the entirety of not just the salaries of the R&D blokes but also of the entire CEO/CIO/COO/CFO team to that budget) and then claimed the 125% credit against those expenses then HMRC would call that avoidance….if not evasion in fact.

The reason we’re getting different numbers is that they’re actually counting different things.

The trend in the VAT gap is used by OBR as part of the VAT receipts forecasting process.

This is something that Ritchie just never considers.

That tax rates are set with the certain knowledge that any tax system has holes and gaps in it. Revenues assumed from mooted tax changes are calculated with this knowledge in mind.

In fact, this means that there is no tax gap at all, not the way Ritchie defines it.

Recall, if you will, what he says that gap is. It’s the gap between what Parliament thinks everyone should be paying and what they do pay.

However, HMRC, thus Ministers and thus Parliament do consider those inevitable holes when setting the tax rates and calculating the revenues to be raised. Parliament gets the revenue that Parliament expects therefore: and thus there is no tax gap at all.

It may well be that Joe has pocketed the £20 he got for cleaning windows and has no intention whatsoever of paying VAT or income tax on it. But the existience of this sort of behaviour is already included in the likely revenue calculations.

Thus, as I say, there is no tax gap at all.

Britain is not broke, nor can it go broke. If you can print your own money you can’t ever go broke.

We actually have a recent example to prove this. Zimbabwe printed so much money that they actually ran out of the ability to purchase the ink to print the money.

Yes, an extreme case. But the categorical statement that you cannot go bust if you can print your own money is untrue.

Actually Bob, lots of us would like to lecture you on your tax morals if you don’t pay in full what somebody else living in the UK might owe. I stress we don’t know whether you do or not, but you had the option of saying you do and got angry instead, which makes me think you’ve got something to get angry about.

And candidly, in that case Lucy Bannerman was absolutely right to question you as she did. Paying tax in the right place at the right time is a principle inextricably linked to solving the problems of poverty in Africa – and elsewhere. You can build as many ditches as you like. But candidly if you set an example by tax avoiding then you undo all your good works.

It’s your choice though Bob. You’ve no need to get angry. You can just either drop the non-dom claim or pay up instead. It’s not hard.

Bob Geldof being a non-dom you see. So he pays full whack on all his UK income in the UK. This not being enough for the Murphmeister.

But there’s more to it than this. The Murph has been insisting that actually, tax should not be paid upon this either domicile or residence basis. But upon citizenship. You have a passport from a place then you’re gaining something from that citizenship and thus you should be paying tax to that State.

And the Murph is on an Irish passport. And Irish taxation of his sort of income would be higher than UK tax on said income. He is, therefore, an Irish tax exile.

He who would cast the first stone etc….

Requiring just one quarter of all new pension contributions go into new infrastructure investment – in exchange for a guaranteed and proper return, maybe with an upside if something went especially well, is a wholly reasonable condition of giving pension tax relief.

That’s the finance part he doesn’t understand. If infrastructure investment could provide a guaranteed and proper return, with that option on the upside, then you wouldn’t need to direct investment into it. There’s hundreds of billions out there crying out for such guaranteed and proper returns. You could pave the country three times over with what people would be willing to invest in a proper and guaranteed return.

The problem isn’t finding the money: it’s creating the guaranteed return. Which is the part that he and Colin Hines haven’t in fact addressed except for some wibble about….well, what have they actually said about where the guarantee comes from?

So long as these funds were invested witha view to returns then they’re not part of the revenue cycle and should not be considered part of the deficit or government borrowing. It is ludicrous that such stupid accounting definition are destroying real lives and constraining rela growth – precisely because the government is slashing investment now to try to balance books to meet these accounting rules, and is destroying lives in the process. No business is constrained by such stupidity. When they invest the profit and loss account is not punished – the asset is put on the balance sheet and the behaviour is applauded. That should be true for government too.

And that’s accounting that he doesn’t understand. Sure, let’s have a proper balance sheet for government. Let’s put the assets onto it. And given that it is indeed a balance sheet then we’ve also got to put the liabilities onto it. You know, all those unfunded pension rights for example? Look a bit sick at that point, wouldn’t it?

As to his not understanding economics, well, blogs passim and all that.

The European Court of Justice (ECJ) declared the French tax was discriminatory, preparing the way for a tax rebate to UK investment funds of up to €5bn.

France had levied a withholding tax of between 15pc and 25pc on dividends paid to foreign investors, while exempting local funds from the tax, a practice the ECJ said discriminated against international investors.

Isn’t it great when courts deliver true tax justice?

Anyone who wants to teach economics or accountancy these days has to subscribe to neoliberal economic thinking.

Blatantly untrue. Prem Sikka is a Prof of Accounting and he’s certainly not a neo-liberal. George Irvine most certainly ain’t a neo-liberal and he’s a Prof of Economics. Murph might not have noticed that he’s actually working with academics who refute his very own contention.

In my first year of economics and accountancy at Southampton University in 1976 to 1979, I realized that the assumptions that underpinned the course—including that competition was “perfect” and that this would always lead to “correct” outcomes in the markets—bore no relation to reality.

Absolutely no one at all believes this. Here, for example, are some extracts from the 2005 GCSE Economics syllabus.

The ownership, control, finance, management and aims of different forms of
business enterprise
Candidates should be able to:

distinguish between different ways of organising production through private and
public enterprise;
distinguish between different ways of organising production through sole trader
and plc;

distinguish between different ways of organising production through cooperatives;

distinguish between different ways of organising production through municipal
enterprises;

……
The aims and effects of government intervention on producers
Candidates should be able to:

illustrate knowledge of advantages and disadvantages of competition within an
economy (knowledge of theories of monopoly and perfect competition is not
required).

So we’re actually teaching the 14 year olds that there are advantages to not-competition?

The role of public enterprise and the arguments for and against privatisation
Candidates should be able to:

give examples of public enterprise and privatisation;

assess the arguments for and against privatisation.
…..

The determination of the allocation of resources in different economic systems
Candidates should be able to:

analyse the main features of market, state planned and mixed economies and
assess the advantages and disadvantages of each;

distinguish between private and public goods.
…..
The determination of price in market economies
Candidates should be able to:

construct demand and supply curves from basic data;

explain shifts of the curves;

understand the market forces that determine equilibrium;

explain the impact of government intervention e.g. taxes, subsidies, minimum and
maximum prices.

We’re really not teaching them that competition unadorned is perfect, are we?

Differences and changes in factor rewards
Candidates should be able to:

analyse the effects of changes in demand and supply;

give arguments for and against government intervention e.g. wage and rent
controls;

I don’t think that Ritchie’s quite managed to prove that idea that the neoliberals have taken over the basic teaching of the subject, do you?

One of the things I recognized as exceptionally dangerous was the discounting of future cash flows, which entered mainstream economic theory in the 1950s and became prevalent in accounting from the 1970s onwards. What I found extraordinary about this was the assumption that you could dismiss the future consequences of current behavior and appraise it only with regard to its impact on the present. Of course that drives a short-term mind-set where business pays no heed to future consequences of its actions, one where all that matters is peak performance now.

Snigger. Discounting future cash flows is to bring the future in to influence the present. He’s got it entirely arse about tip.

Modeling is now the bedrock for the teaching of all financial disciplines. However, future consequences are never built into the models, since they are literally “discounted,” which is a very close synonym of “dismissed.”

No, discounting is how we assess future consequences.

It has been undermined by the requirement that all accounting academics must have a PhD, which is quite a hurdle to jump and rules out a lot of talent.

Translation: I couldn’t get an academic job when I left my marriage and company.

Ho hum

but candidly, I don’t give a damn if the solution works, and nor should anyone else. That is logic from another era designed to constrain what needs to be done now.

Apparently not even he cares whether his nostrums work or not any more.

That ignoring the requirements of law is worrying in itself. It indicates a civil service that has been corrupted by greed and the ethos of personal gain.

The answer, of course, is that the State administered by the corrupt and greedy must be given more power over the rest of us.

Facepalm.

Without such tactics, Apple’s federal tax bill in the United States most likely would have been $2.4 billion higher last year, according to a recent study by a former Treasury Department economist, Martin A. Sullivan. As it stands, the company paid cash taxes of $3.3 billion around the world on its reported profits of $34.2 billion last year, a tax rate of 9.8 percent.

It’s amusing that the country’s leading tax expert doesn’t pick up on the important point about that statement. Apple’s 9.8% tax rate is entirely mind gargling nonsense.

US Corporation tax is paid a year in arrears. Thus the $3.3 billion cash taxes paid this year refers to the profits from the previous year.

And what do we know about Apple’s profits recently? Yup, they’ve been rising very strongly, haven’t they?

And what that 9.8% tax rate, cash taxes paid on last year’s profits when compared to this year’s profits is that profits at Apple are growing very fast.

It’s an interesting thing for the country’s leading tax expert to miss, isn’t it? Almost as if he doesn’t know the subject upon which he is pontificating.

But let me also be clear, based upon my long experience as a tax practitioner, which I was before I became a tax campaigner, and during which earlier career I was responsible for the preparation of thousands of tax returns, I can genuinely say that I can’t recall seeing anyone give 10% of their income to charity. I can also only think of one instance of seeing a person give more than £10,000 to charity in a year.

Makes sense of course. Murphy Deeks Nolan’s business was advising luvvies on how to claim for greasepaint.

At least that’s what I conclude from their annual release of the artists’ financial guide during the 90s.

The reason why we got a welfare state was that charities did not and could not do the job that was needed.

Nor can they now.

Which is why although I think charity is vital at drawing attention to problems and facilitating the actions of those who want to address them paying tax to maintain essential services will always be more important

Of course I think it’s vital that charity cash be used to pay activists to draw attention to outmoded political ideologies. That’s where my largest income comes from after all.

I just don’t want charitable funds to be used to actually do anything.

That would mean less for activists, wouldn’t it?

Today presenter Evan Davis said: ‘We need to clear up something from earlier this week … We said that Sir Philip Green had cut his tax bill in the UK by hundreds of millions of pounds by transferring ownership of Arcadia … to his wife. We’re happy to make it clear that Arcadia was bought by Lady Green in 2002, and because she has not lived in the UK for 15 years no tax was due in this country on any dividends that were paid to her. We apologise for suggesting otherwise.’