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Cameron: "Cuts will change our way of life"


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This farcical tax system is cheating us out of billions

The whims of past chancellors have set up bizarre anomalies. It’s time to scrap tax reliefs and chase down avoiders

A-person-looking-at-the-H-011.jpgUnions representing HMRC staff are concerned at the loss of thousands of jobs from the department. Photograph: Chris Batson/Alamy

This week tax collectors go on a rolling three-day strike over the loss of another 5,000 staff. The Public and Commercial Services Union (PCS) says there is a backlog of letters unanswered and the public are “tearing their hair out” trying to get through on the phone, with the 281 frontline offices offering help and advice now closed.

 

These cuts look mind-blowingly self-defeating, as ARC, the union for HM Revenue and Customs managers, says investing £312m in staff raises £8bn in tax. PCS says 90% of tax is effectively voluntary, with so few staff to check suspect cases. The National Audit Office reports that HMRC has in one year doubled the amount of tax debt written off, partly due to its own errors. Perverse incentives encourage HMRC staff to write off cases just to get through the work.

 

It’s not just unions complaining about the stripping out of tax inspectors. I interviewed a senior partner in a respectable Sheffield accountancy firm who said closure of their local tax office means collecting less tax, through loss of crucial local knowledge. “You used to call a local inspector who knew us and the client. Now it’s a call centre somewhere and someone who has no idea what you are talking about. They say they’ll call back but they don’t. They tell you to write, they don’t reply.” Inspections are much rarer, he says.

 

In his interview on the Andrew Marr Show, Ed Miliband said Labour would go after corporate tax avoidance. High time, since a large hole in predicted tax receipts has opened up this year. Some is due to the loss of good jobs, substituted with low-paid ones. But slabs of corporate tax are vanishing, as Britain turns into a tax haven that cheats itself in the process.

 

Labour’s record on chasing tax loopholes was dismal. In 2009 it set up the patent box – a vast new tax avoidance vehicle. Supposed to entice entrepreneurs with a 10% tax rate on any patented product, all it brought was enterprising tax lawyers applying the 10% tax to anything that had even a tiny part with a patent inside it, not even manufactured in the UK.

 

This government’s new enormous tax escape hatch is the controlled foreign companies regime, allowing UK companies to pay tax in the cheapest country they can find, and none when they bring profits back. At the same time, corporation tax is falling from 30% in 2007 to 20%: as a tax haven, foreign companies set up here with an artificial tax HQ, but their real jobs and money stay away. How can Barclays get away with claiming most of its profits are made in Jersey and Luxembourg, where they have few staff?

 

Labour’s well-intentioned attempt to support the film industry with tax relief has ended up being taken advantage of. In my inbox this week came a lurid offer for the enterprise investment scheme: “Be part of the booming film industry”, expect “stellar returns”. How? “30% tax relief, no capital gains tax. No tax on profits. Exempt from inheritance tax. Fully approved by government.” The company is called Stealth Media Films, and despite criticism of some celebrities on this scheme, it is still legal.

 

The public tells pollsters that tax swindling matters most in their view when it comes to a company’s ethics. What public accounts committee chair Margaret Hodge started with her grand inquisitions of tax-avoiding corporations, taken up by UK Uncut protesters, has sparked deep public indignation. As the government obstructs international negotiations, tax cheating is an issue ripe for Labour to make its own. Better still is a harvest of very ripe fruit for picking in these cash-starved times.

 

Margaret Hodge is gunning for all tax reliefs. In the name of tax simplification, she would do away with them. Not counting the enormous pension tax reliefs or personal tax allowances, the treasury hands out £100bn a year in tax reliefs that are an accretion of past chancellors’ whims and pet projects, full of nonsensical anomalies. She cites a small one: cleaners, nurses and other night shift workers can’t claim against tax for their taxi fares to get home safely at night, but a lawyer, accountant or professional can.

 

Even reliefs designed with the best of intents, she says, are wrong-headed. Why did the chancellor give tax relief to provincial theatre in his last budget – an excellent cause – when he could have given the same sum to the Arts Council to distribute to them more rationally? Why give a fortune randomly to companies for R&D, when these huge gifts should awarded as well-considered grants through research councils? An attempt to pick winners is better than random scattering of funds when so much of it vanishes down greedy tax loopholes, doing no good. Why inflate house prices by giving tax relief on mortgages for buy-to-let landlords?

 

Transparency is her other demand. Public companies should be obliged to open their tax accounts, so everyone can see where tax is due instead of secret deals struck by the likes of Vodafone with HMRC. Hodge would ban any tax-avoiding company from government contracts. That might stun the big four accountancy firms, who she says earn £2bn a year in “tax advice” to companies, depleting the state while simultaneously earning handsomely from the government. Why are their advisers seconded to the Treasury to set up the schemes they will help others avoid?

 

Tax campaigner Richard Murphy has just published his latest assessment of the Treasury’s missing taxes – a gap he sets at £100bn. The difference between this and the Treasury’s £35bn estimate comes partly from Murphy’s recent uncovering of some 360,000 companies not declaring income, never checked by the staff-starved HMRC, with a sample of 40% of declarations found to be fraudulent. But most of all, he would change the law to assert a general avoidance principle, to stop rules being wriggled around, but let HMRC strike down any activity whose purpose is plainly to avoid tax.

 

Ask Murphy where money is to be had and he has large sums to offer. Start by bringing back the level playing field, abolished in the Thatcher era, between tax on earnings and investments. If the same 13% national insurance was charged on earned and unearned income, that would stop people setting up artificial companies just to avoid it – and it would bring in £40bn.

 

Hodge would confront Amazon and the rest right away. “Don’t wait for international negotiations. It will take forever; just close the loopholes now.” She has strong allies in making companies pay tax where they make profits. I asked Michael Heseltine recently what he would do, and he gave one of his leonine glares and said: “Go after them! How many gunboats has Amazon got?” Labour should follow Hodge and Heseltine’s advice. They need the money – and the public would cheer.

 

http://www.theguardian.com/commentisfree/2014/jul/29/farcical-tax-system-cheating-billions-chase-avoiders

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Interesting to see if Ed Ballbags is right.

 

Tories want rich and poor to pay 31% flat tax, claims Ed Balls

The Conservatives would secretly like to bring in a flat rate of tax meaning rich and poor alike paid 31%, Ed Balls has claimed.

The shadow chancellor said the thinking of senior Tories had been exposed after Oliver Letwin, a Cabinet Office minister, was reported by the Daily Mirror to have been recorded mulling a flat tax when speaking at a thinktank.

 

"In 2010, indeed now, we were not in a position to take a large fiscal cut. There may come a time when the situation is different and that discussion will no doubt open up," he was quoted as saying.

 

Balls will claim in a speech that the Tories are first plotting to cut the top rate of tax to 40p after the next election, having previously lowered it to 45p.

Conservative sources denied that either of the moves were on the cards, rejecting the idea of a flat rate "full stop", as tax started to become a battleground for claims and counter-claims between the parties before the election.

 

A separate recording on Wednesday quoted Andy Burnham, the shadow health secretary, backing a tax on estates to pay for elderly care, while acknowledging there were questions over whether this was publicly acceptable. Labour said this was not the party's policy.

 

Previously, Labour has accused David Cameron of being a liar for taking comments made by the deputy leader, Harriet Harman, out of context to claim she would like to impose higher taxes on the middle classes.

 

Before a speech on the economy on Wednesday morning, Balls cast Labour as the party of fairer taxes as it would raise the top rate of income tax for those earning more than £150,000 to 50%.

 

"There's a very clear choice at the next election. We say, put the top rate back to 50p while we get the deficit down in a fair way. George Osborne wants to cut the rate to 40p. In fact, we now know from Oliver Letwin that they want a flat tax, cutting the top rate to 31%," he told BBC Radio 4's Today programme.

 

Balls will also set out figures from the House of Commons library showing that there will have been the biggest squeeze in income since the 1874-1880 parliament of the Tory prime minister Benjamin Disraeli. He will claim it is the first parliament since the 1920s in which real earnings have been lower at the end than at the beginning.

 

The economy is not fixed and most people are worse off under the Conservatives, he will say, pointing out that average wages after inflation are down by more than £1,600 since 2010.

 

"From a Conservative-led government that promised to make working people better off back in 2010, this is a dismal record of failure," he will say.

 

Listing the risks of a Conservative government to the economy, Balls will say the Tories would offer more depressed wages and no proper industrial strategy.

 

In contrast, Labour would balance the books in a fairer way while freezing energy bills, introducing a lower 10p starting rate of tax, increasing the minimum wage and offering tax breaks to firms that pay the living wage.

 

"This is the stark choice we face next year," he will say. "A choice between a Labour plan to make Britain better off and fairer for the future – with rising living standards for the many, not just a few at the top – or more of the same from the same-old Tories."

 

Balls's speech is the latest in a series from Labour on the theme of choice, highlighting the party's differences with the Tories. Ed Miliband contrasted his dislike of image-based politics with Cameron's career based on photo opportunities; Yvette Cooper, the shadow home secretary, attacked the government for turning its back on domestic violence; and Burnham called for a ban on further privatisation of the NHS.

Their speeches are designed to counter accusations last year that Labour left a political vacuum in the summer, allowing criticism of Miliband to fester among some backbenchers. It also marks an intensification of political attacks on the Conservatives with less than a year to go to the election.

 

 

 

 

 

http://www.theguardian.com/politics/2014/jul/30/tories-rich-poor-pay-31-percent-ed-balls

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http://www.theguardian.com/commentisfree/2014/jul/29/rich-wealth-good-inequality-green-party

 

The rich want us to believe their wealth is good for us all

As the justifications for gross inequality collapse, only the Green party is brave enough to take on the billionaires’ boot boys

 

 

When inequality reaches extreme and destructive levels, most governments seek not to confront it but to accommodate it. Wherever wealth is absurdly concentrated, new laws arise to protect it.

 

In Britain, for example, successive governments have privatised any public asset that excites corporate greed. They have cut taxes on capital and high incomes. They have legalised new forms of tax avoidance. They have delivered exotic gifts such as subsidised shotgun licences and the doubling of state support for grouse moors. And they have dug a legal moat around the charmed circle, criminalising, for example, the squatting of empty buildings and most forms of peaceful protest. However grotesque inequality becomes, however closely the accumulation of inordinate wealth resembles legalised theft, political norms shift to defend it.

 

None of this should surprise you. The richer the elite becomes, and the more it has to lose, the greater the effort it makes to capture public discourse and the political system. It scarcely bothers to disguise its wholesale purchase of political parties, by means of an utterly corrupt and corrupting funding system. You can feel its grip not only on policy but also on the choice of parliamentary candidates and appointments to the cabinet. The very rich want people like themselves in power, which is why we have a government of millionaires.

 

But that describes only one corner of their influence. They fund lobby groups, thinktanks and economists to devise ever more elaborate justifications for their seizure of the nation’s wealth. These justifications are then amplified by the newspapers and broadcasters owned by the same elite.

 

Among the many good points Thomas Piketty makes in Capital in the Twenty First Century – his world-changing but surprisingly mild book – is that extreme inequality can be sustained politically only through an “apparatus of justification”. If voters can be persuaded that insane levels of inequality are sane, reasonable and even necessary, then the concentration of income can keep growing. If they can’t, then either states are forced to act, or revolutions happen.

 

For the notion that inequalities must be justified sits at the heart of democracy. It is possible to accept that some can have much more than others if one of two conditions are met: either that they reached this position through the exercise of their unique and remarkable talent; or that this inequality is good for everyone. So the network of thinktanks, economists and tame journalists must make these justifications plausible.

 

It’s a tough job. If wages reflect merit, why do they seem so arbitrary? Are the richest executives 50 or 100 times better at their jobs than their predecessors were in 1980? Are they 20 times more skilled and educated than the people immediately below them, even though they went to the same business schools? Are US executives several times as creative and dynamic as those in Germany? If so, why are their results so unremarkable?

 

It is, of course, all rubbish. What we see is not meritocracy at work at all, but a wealth grab by a nepotistic executive class that sets its own salaries, tests credulity with its ridiculous demands, and discovers that credulity is an amenable customer. They must marvel at how they get away with it.

 

Moreover, as education and even (in the age of the intern) work becomes more expensive, the opportunities to enter the grabbers’ class diminish. The nations that pay the highest top salaries, such as the US and Britain, are also among the least socially mobile. Here, you inherit not only wealth but also opportunity.

 

Aha, they say, but extreme wealth is good for all of us. All will be uplifted by their god’s invisible hand. Their creed is based on the Kuznets curve, the graph that appears to show that inequality automatically declines as capitalism advances, spreading wealth from the elite to the rest.

 

When Piketty took the trouble to update the curve, which was first proposed in 1955, he discovered that the redistribution it documented was an artefact of the peculiar circumstances of its time. Since then, the concentration of wealth has reasserted itself with a vengeance. The reduction in inequality by 1955 was not an automatic and inherent feature of capitalism, but the result of two world wars, a great depression and the fierce response of governments to those disruptions.

 

For example, the top federal income tax rate in the US rose from 25% in 1932 to 94% in 1944. The average top rate throughout the years 1932 to 1980 was 81%. In the 1940s, the British government imposed a top income tax of 98%. The invisible hand? Hahaha. As these taxes were slashed by Reagan, Thatcher and the rest, inequality boomed once more, and is exploding today. This is why the neoliberals hate Piketty with such passion and poison: he has destroyed with data the two great arguments with which the apparatus of justification seeks to excuse the inexcusable.

 

So here we have a perfect opportunity for progressive parties: the moral and ideological collapse of the system of thought to which they were previously in thrall. What do they do? Avoid the opportunity like diphtheria. Cowed by the infrastructure of purchased argument, Labour fiddles and dithers.

 

But there is another party, which seems to have discovered the fire and passion that moved Labour so long ago: the Greens. Last week they revealed that their manifesto for the general election will propose a living wage, the renationalisation of the railways, a maximum pay ratio (no executive should receive more than 10 times the salary of the lowest-paid worker) and, at the heart of their reforms, a wealth tax of the kind Piketty recommends.

 

Yes, it raises plenty of questions, but none of them are unanswerable – especially if this is seen as one step towards the ideal position: a global wealth tax, that treats capital equally, wherever it might lodge. Rough as this proposal is, it will start to challenge the political consensus and draw people who thought they had nowhere to turn. Expect the billionaires’ boot boys to start screaming, once they absorb the implications. And take their boos and jeers as confirmation that it’s on to something. You wanted a progressive alternative? You’ve got it.

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The problem for Balls is zero credibility, he was part of the problem. Labour need a new man fronting up fiscal policy. There is some merit in flat rate taxation and increasing VAT.

There's is no credit whatsofuckingever in a flat rate of taxation.

 

It's such a shit idea even those crazy fools UKIP have scrapped the idea.

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The only way a flat rate tax could even remotely have a chance of working is if you had a negative income tax/basic guaranteed income, and even then I think it's unlikely.

 

Certainly you would expect any Tory implementation of flat tax to disproportionately benefit the wealthy.

 

Progressive tax is honestly the best tool we have at the moment.

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Whilst I hate the tories and Osborne the fact he's had a sex life and dabbled in class A's shouldn't stop him from being an MP, chancellor or even stop his ambitions of being leader of the tories and PM.

 

The fact he's a vile fucking politician with no scruples or compassion should.

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Again, I'm reminded of the sage words from that student socialist guy I used to know in uni: "fascism is the extreme reaction of the ruling class when their position of power is under threat".

 

The tea party, Obama and his new deal for drones, the Labour party backing a welfare cap. the rise of UKIP, the rise of right wing movements in France and across Europe. Turning people against each other and away from the real enemy. We all know where it leads, we've been there - twice.

 

The only time the world seems to get its shit together is when there's been a cataclysmic conflict. It seems to focus the people at ground level into looking at what's truly important (having lots of working class men back from war, jobless and handy with a gun also no doubt helps prompt those at the top to throw down a few crumbs). But we seem to get all our social progress when the left is given a shot. A European Community that was genuinely about not letting conflict start again, wasn't expansionist or had federalist goals, but was about the common good. Labour movements over here and in the states that built social housing and social security, and that - over here- built free healthcare. 

 

Then, as time goes by, that whole new framework is torn apart by the rich as though they were termites. They nibble, demonise, scoff more than their fair share until there's not enough to go around. Economic problems follow, then come the social problems, then the finger of blame for those social problems is pointed at the wrong people and conflict erupts, first small scale and then large scale, until eventually the counter is set to zero.

 

If you look at the middle east, the direction of the EU, the rise of Russia, the direction of the USA, you can see the way this is all heading - again.

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No wonder the tories want to get rid of the Human Rights Act.

 

 

Withdrawal of night-time care breached disabled woman's human rights

 

The European Court of Human Rights (ECtHR) has decided today (20 May 2014) that the withdrawal of night-time care from Mrs McDonald by the Royal Borough of Kensington and Chelsea breached her human rights for a period of almost a year before proper care planning processes were completed.

Sean Rivers, instructed solicitor and senior solicitor (social welfare) at the Disability Law Service

“We hope that this judgement will make local authorities like the “Royal Borough of Kensington and Chelsea” start to consider the inherent ‘right to dignity’ when dealing with the most vulnerable people in society”

“It is a tragedy that someone like Elaine McDonald OBE should face the indignity of putting the most personal elements of her care though the British legal system just so that she can be afforded the most basic human rights”

Elaine McDonald OBE is a former prima ballerina of the Royal Scottish Ballet. Her complaint arose from the decision by Kensington and Chelsea to withdraw her night-time care on cost saving grounds. This meant Mrs McDonald was forced to wear incontinence pads although she is not in fact incontinent, but needs assistance to reach the commode.

The judgment in McDonald v UK is the first time that a breach of Article 8 ECHR, the right to respect for private and family life, has been identified by the ECtHR in a case concerning the provision of services or support to a disabled person. The ECtHR held that the withdrawal of night-time care was an interference with Mrs McDonald's right to respect for private life, and that for the relevant period this interference was 'not in accordance with the law' because of the admitted failures of the care planning in her case. Although the Court of Appeal found that care planning had not been carried out properly in that period, a finding upheld by the Supreme Court, none of the domestic courts considered this to be a breach of Article 8 ECHR.

An important aspect of the judgment is the focus on Mrs McDonald's human dignity, and in particular the extension of the principles established in Pretty v UK, a case on assisted dying, to the arena of the provision of welfare support.

A further key finding by the ECtHR was that the withdrawal of night-time care constituted a negative interference with Mrs McDonald's Article 8 ECHR rights, which meant she did not need to establish any positive obligation to provide the support she was seeking. This is likely to be very helpful to future challenges to cuts to disabled people's care packages, not least because any such cut which is implemented without a proper reassessment or care plan review is highly likely to involve a breach of Article 8.

Mrs McDonald has been awarded damages of 1,000 Euros by way of just satisfaction.

 

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There's an article in the guardian saying the east coast line has made the taxpayer a billion quid but the Tories have said they are still going to privatize it. So the country needs all the revenue it can get and yet it flogs all the service its has that makes money. Seems to me like we just have a load of robbing cunts in charge who will fucking decimate this country to enrichen their ilk. A fucking pox on them.

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There's an article in the guardian saying the east coast line has made the taxpayer a billion quid but the Tories have said they are still going to privatize it. So the country needs all the revenue it can get and yet it flogs all the service its has that makes money. Seems to me like we just have a load of robbing cunts in charge who will fucking decimate this country to enrichen their ilk. A fucking pox on them.

Surely the line is already privatised, and £1bn back is no bad thing? That will continue after the franchise comes up for renewal.

 

I was not in favour of the wholesale privatisation of the railways, nor do I think that reprivatizing them in total is the answer.

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There's an article in the guardian saying the east coast line has made the taxpayer a billion quid but the Tories have said they are still going to privatize it. So the country needs all the revenue it can get and yet it flogs all the service its has that makes money. Seems to me like we just have a load of robbing cunts in charge who will fucking decimate this country to enrichen their ilk. A fucking pox on them.

 

An absolutely ludicrous accusation.

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