Writing for the Daily Telegraph Comment Matthew Sinclair argues that simplifying the tax system is the answer to restoring the legitimacy of the tax system.
For a long time Anglo-Saxons have had a stereotype of the feckless southern European who doesn’t pay his taxes. But with fresh stories of British tax avoidance cropping up almost every day, how long before those jokes start to sound hollow?
This week we have seen three different examples of tax avoidance: Jimmy Carr was benefiting from a scheme called K2 based on loans from an offshore trust. Take That singer Gary Barlow was using a music investment scheme which a tax adviser claimed was a big tax avoidance opportunity. And investors are reported to have been exploiting special reliefs put in place to help the British film industry.
Today doctors are out on strike for the first time in over 35 years, protesting against proposed reforms to their generous pensions. It appears though that many of them are having second thoughts about the impact of the strike and the reasons behind it. Many more GP surgeries are expected to stay open than was predicted. It’s no wonder they are thinking twice, this strike action is in unjustified in the face of necessary and moderate changes. The retirement deals doctors are seeking to preserve are on average worth far more than the average pay packet so it’s unsurprising that there is little support for the BMA’s decision to call a strike. The action will disrupt patient care and result in the cancellation of planned operations and non-emergency appointments. Doctors will still be paid though, as they will be providing emergency treatment.
There is a battle underway to decide who will pay for the increasing costs of the public sector workforce as they grow old and retire. We’re all living longer which means retirement will cost everyone more, someone has to pay. Should those who benefit from the generous retirement deals pay more towards the cost of them, or should it be ordinary taxpayers, most of whom can only dream of such great deals? As our previous research has shown, there is a £4 billion black hole in the amount of money paid into unfunded public sector pensions compared to what what they are paying out and that is only going to get worse. It should be down to those who benefit from the scheme to pick up a greater share of the cost of it.
The BMA has been quick to claim that their pension scheme is sustainable as more money is currently paid in than is being claimed by its members. Taxpayers cannot afford to buy into that spin. They argue that these measures are simply a way of putting more money into the Treasury’s coffers but this ignores the fact that while more money might be going to the Chancellor today, he will have to pay out much more in the years to come. Yes, thanks to an NHS recruitment drive there are currently more people paying into the scheme than claiming their pensions but that is going change, estimates suggesting by just after 2016. A National Audit Office (NAO) report into public sector pensions points out:
Payments out of the NHS scheme can be expected to exceed contributions in future as this is the natural position for mature schemes in which employers and employees are changed at a level reflecting future pensions being earned
The current estimated cost of paying pension benefits to doctors totals £83 billion. Of that £67 billion is likely to have to come from the taxpayer according to figures from the Government Actuaries Department. This is why doctors, many of whom who have had staggering pay rises in recent years, must accept changes. Otherwise taxpayers will have to pick up a disproportionate share of the bill.
Doctors do challenging and important work that is held in high regard. They are considered pillars of our communities yet this strike action will severely undermine their standing and credibility. Patient care will be affected while some of the best paid public servants will be out trying to preserve pensions that are out of reach of all but a select few. The strike is bad news for patients, bad news for taxpayers and bad news for doctors’ reputations. The BMA should take the lead and accept these reforms instead of associating themselves with the head in the sand approach to public sector pensions taken by unions such as Unite and PCS.
Our friends at the National Taxpayers Union in the US have this week published a paper considering the legitimacy of the current membership of the G20, which is of course meeting in Mexico at the moment.
The authors, Alex M. Brill and James K. Glassman, assert that the G20 currently “lacks the necessary will and authority to deal with the immense problems at hand” and that it needs to introduce new membership criteria in order to regain a sense of legitimacy. They set three appropriate membership criteria as follows:
- A country’s economic size and global economic importance,
- A country’s adherence to rule of law and other principles consistent with market-based economies, and
- The size of a country’s financial-services sector and the magnitude of inbound and outbound cross-border banking activity (financial interconnectedness).
They propose, on the basis of these critieria, that Indonesia, Russia, Mexico and Argentina should be booted out of the G20 (and replaced with Malaysia, Norway, Singapore, and Switzerland).
The appearance of Argentina there is particularly interesting, and here’s a flavour of why the authors say it is “clearly… ill-suited” for G20 membership:
“Given Argentina’s record over the last decade, it is unsurprising that the country would fail to qualify for the G20 based on the proposed criteria. In the largest sovereign default in history, Argentina renounced its debt in 2001, just two years after acceding to the G20. Displeasure over Argentina’s actions has increased notably in recent months. In March, President Obama denied Argentina trade preferences because the Argentine government refused to pay a settlement to two U.S. investors awarded by the World Bank’s International Centre for the Settlement of Investment Disputes.”
This comes in the wake of the StopFundingArgentina.org campaign we recently launched, calling on the British Government to use its votes at the World Bank to oppose any further loans to Argentina. As we have noted, the Obama Administration in the United States currently has a policy of voting against any new loans, in response to Argentina’s treatment of existing creditors, so we believe British representatives should also be instructed to support that policy.
If you haven’t done so already, click here to sign the click here to sign the StopFundingArgentina.org e-petition.
Matthew Sinclair writes for the Spectator’s Coffee House blog on the campaign to end fossil fuel subsidies.
The environmental movement hasn’t responded well to the setbacks it has suffered seen since the failure of the Copenhagen climate conference. The #endfossilfuelsubsidies campaign — trending worldwide on Twitter this morning — is the latest example of their descent.
To be clear, fossil fuel subsidies are not a good idea; that is why governments like ours don’t offer them. Fossil fuels are huge cash cows for every western government. When someone fills up their car with petrol, around sixty per cent of the pump price goes to the Exchequer. When an oil company drills in the North Sea and extracts a barrel the amount that the Treasury gets varies but it is invariably a substantial share of the price, and the sector was raided again at Budget 2011. The idea that fossil fuels are subsidised by the British government is silly. To the extent that there is support, it is for things like carbon capture and storage designed with environmental objectives in mind.
With the recent pasty tax, caravan tax and charity tax u-turns you would think that there were no more ill-advised tax alterations set to implement from this year’s Budget. Unfortunately there is still one left: the levy of VAT on improvement, alteration and restoration works to listed buildings; aptly dubbed the ‘Heritage Tax’.
The proposal to add 20 per cent to the cost of alterations will force individuals, charities and community groups to pay tens if not hundreds of thousands of pounds extra to look after historic buildings. This will make it much harder to improve listed buildings, which a great number of people enjoy.
Worse still, the tax rise is justified on insufficient evidence and fatuous claims. According to the Government this tax rise is right because the majority of the improvement work covered by the relief is not necessary for heritage purposes. They want you to believe that this tax alteration will stop millionaires installing tax-free swimming pools in their Jacobean mansions.
However the argument that the majority of improvement, alteration and restoration works are not for heritage purposes is based on just 105 cases the Treasury studied, despite the fact there are almost 30,000 Listed Building Consent applications made during the course of a year. A closer inspection by the Listed Property Owners Club found that, of 12,049 recent applications for listed building consent from across the UK, only 34 applications were for swimming pools.
There are almost 400,000 historic buildings in this country and while some are grand Palladian mansions, there are also small country cottages or barns, which are homes, community centres and places of work for people from all income brackets. Indeed half of people who live in listed buildings are in socio-economic groups C1, C2, D and E. This won’t just hit the rich.
The Government has already conceded that this tax rise will have a negative impact on some of the nation’s finest and most treasured buildings and great numbers of people, who enjoy, rely on and care for them, by offering additional compensation to listed places of worship. But yet they offer nothing to community centres, town halls, village halls, businesses and privately owned listed buildings.
There is already evidence of projects that have been cancelled or put on hold as people worry about the cost of the additional 20 per cent. Cancelling building projects will also have a negative impact on the construction industry, at a time when weak demand in this sector is a major factor holding back wider economic recovery.
By dis-incentivising listed property owners from improving, altering or restoring their properties, there is a great risk these buildings will fall into a state of continual decline and will eventually be lost. Once they are lost, they are gone forever. This will not, as the Government would like you to believe, only affect millionaires in mansions; it will affect the very fabric of our Heritage, which is something that is treasured by the majority.
Several organisations, including the Countryside Alliance and the Federation of Master Builders signed a letter in today’s Times (£) urging the Chancellor to review the proposed implementation of the heritage tax before it is too late. If you agree with them, then you can show your support by signing this petition against VAT on alterations to listed buildings. Send the Chancellor a message that this is another ill-thought out tax rise to consider a U-turn on.
In a speech this week the boss of IATA – the organisation that represents most of the world’s airlines – confirmed that the UK has the highest air passenger taxes in the world . Tony Tyler, the IATA’s director general, said the fact that it had been cut in Northern Ireland showed the government there recognised its negative economic effects. By contrast, at the last Budget George Osborne increased Air Passenger Duty (APD) by a staggering 8 per cent. A typical family flying economy class from the UK now pays almost 400 per cent more in tax than if they were making the trip from another country in Europe.
Not only do we pay more in air passenger taxes leaving a British airport than in any other country in the world, but only five other countries in Europe even levy a passenger tax. If you and your family want to get away for a well-earned break and decide to go to Florida this year, four of you flying in economy class will pay a whopping £260 in air taxes alone. All that despite the fact that, as far back as 2007, the Government’s own research found it was excessive compared to the environmental costs created by flights and a whole new tax has since been imposed on air travel with its inclusion in the EU Emissions Trading System.
It’s not just ordinary families that are being affected by this regressive tax. Inbound tourism, which supports thousands of jobs in the UK, is taking a huge hit too. Last year three million Chinese tourists came to Europe, yet a paltry 127,000 of them visited the UK. Why? Probably because a family of four from China will pay nearly £600 more than most other EU countries to visit the UK (a result of both our exorbitant air taxes and higher visa costs). We’re losing out on a huge growth market precisely at a time when our struggling economy would benefit from the inbound investment tourism brings. That’s why the final report of the 2020 Tax Commission recommended abolishing APD entirely.
In the meantime the very least the Government could do is reduce it. A new campaign has been launched to raise awareness about the impact of APD, not just among ordinary holidaymakers, but amongst policy-makers, many of whom seem oblivious to its damaging impact. A Fair Tax on Flying is asking the public to write an email to their MP as possible to oppose the current levels of APD.
Air Passenger Duty is having a damaging impact on the ability of ordinary families to take a well-earned holiday and it’s having a damaging impact on our economy, at the worst possible time. It’s time for, at the very least, a fair tax on flying ; add your name to the list to get politicians listening.
Argentine politicians have been scathing in their contempt for Falkland Islanders’ opinions about their future and their right to self-determination. Despite this, and repeated other violations of international law, Britain still does not use its votes at the World Bank to block our money backing loans to Argentina, explains Rory Meakin at ConservativeHome.
The Falkland Islands Government has announced an historic referendum on the future of the islands’ sovereignty, which David Cameron welcomed during Prime Minister’s Questions this afternoon following a question from Nigel Adams MP about British Government support for World Bank lending to Argentina. Although few are in any doubt that Falklanders will vote overwhelmingly in favour of remaining a British Overseas Territory, the move is expected to help repel attempts by Argentina to colonise the territory, either diplomatically or militarily.
Over 6,000 members of the public have already signed our e-petition demanding that the Government oppose new World Bank loans to Argentina since it launched last Friday. If you haven’t already done so, simply go to www.StopFundingArgentina.org to add your support – and please encourage friends to do the same.
Meanwhile, the campaign has now reached Parliament, with Romford MP Andrew Rosindell having tabled an Early Day Motion (EDM) yesterday on the subject. EDMs are effectively akin to e-petitions for MPs, which allow our representatives to show where they stand on an issue and demonstrate support for particular measures.
EDM 185 is entitled World Bank Loans to Argentina and the text of it is virtually identical to that of the e-petition which anyone can sign.
In order to rally support for EDM 185, please contact your MP via writetothem.com and encourage them to sign it. That way, you can help pile the pressure on the Government to change its policy on these loans to Argentina.
Matthew Sinclair argues in the Spectator’s Coffee House that we can’t give money to countries that snub Britain at every turn.
One of the justifications for Britain’s large, and rapidly growing, international development budget is that it promotes our national interests. Politicians are wary of appealing to a public sceptical of the benefits of aid purely on the basis that it will help where it is spent. The idea is that by supporting poorer countries we increase their stability, and thereby create a safer world for British people as well.
But the evidence that foreign aid promotes political stability is weak. Harvard economist Nathan Nunn and Yale economist Nancy Qian found in a Working Paper published this January that ‘an increase in U.S. food aid increases the incidence, onset and duration of civil conflicts in recipient countries.’ They documented how and why that happens, with ‘aid stealing’ as ‘an important mechanism.’
If you haven’t signed the petition at StopFundingArgentina.org and shared it with your friends yet, yesterday protestors in Buenos Aires came up with a fresh reason to support our campaign. They’re burning the Union Jack in the streets. And they’re burning it for the most absurd of reasons.
The Argentinian Government recently finished nationalising YPF, a firm that was owned by the Spanish Repsol oil company. Now they are arguing that, to press their facile claim on the Falkland Islands, the nationalised YPF should stop using tankers that fly flags from the British Commonwealth. Bloomberg Businessweek report that before “it was expropriated from Spain’s Repsol oil company, YPF used the Stela Polaris, which flies a Bermudan flag, to carry oil from Patagonian ports.”
These protests aren’t just the work of a few extremists. Argentinian Government Ministers have been pressing for a boycott of British goods and Businessweek also report that “Liliana Fadul, a congressional deputy from the Tierra del Fuego province that nominally includes the Falkland Islands, says YPF is now violating regulations designed to thwart offshore oil and gas exploration in contested waters around the Falklands, which Argentina claims as the Malvinas.” Sure enough, the newly nationalised company is bowing to the pressure and has said it “only made an exception this one time”.
If they are so hostile to doing business with Britain that one shipment of oil by a firm with a Bermudan flag, which proudly displays the country’s historical links to Britain through the Commonwealth, leads to the Union Jack being burned by angry protestors, why are we still supporting the billions in loans they get from the World Bank and its affiliates? Turning the other cheek is one thing, but at the moment we look like complete patsies. Sign the petition at StopFundingArgentina.org and encourage your friends to do the same. Send a message that the Government should be voting against World Bank loans to Argentina.
Emma Boon writes for Total Politics about why it’s time to end British taxpayer support for Argentina.
DfID isn’t directly giving taxpayers’ money to Argentina, but we do support loans to them. Given their recent agression towards the people of the Falklands, why hasn’t this been stopped?
Just over a month ago, after increasingly aggressive statements about the Falklands made by Argentine president Cristina Kirchner, Derek Twigg MP asked the Secretary of State for International Development the following question in Parliament:
“… how many loans under both the simplified and non-simplified procedures have been submitted to the International Bank for Reconstruction and Development board since September 2011 related to projects in Argentina; and on what dates any such loans were made.”
New research from the Institute of Economic Affairs looks at how many charities are funded with grants at taxpayers’ expense, and how many of them are increasingly using that money and the organisational clout that it buys to campaign for changes in Government policy. Ending undemocratic subsidies for political campaigns is a key campaigning priority for the TaxPayers’ Alliance and we’ve done a lot of research on the scale of the grants politicians are handing out, creating what the IEA research calls “sock puppets”.
You pay twice. From the unions and their £113 million subsidy in 2010-11 to the environmentalist campaigns that received £10.1 million from the British Government and the European Union in 2009-10 (look out for an update on that research coming soon), your money is financing groups that fight for even higher taxes and spending and new draconian regulations that drives up prices.
Taxpayer funded politics is one of the dangers of the Government getting too involved in financing charities. Another is that it displaces private contributions. Politicians give taxpayers’ money out to their favoured causes instead of letting people make up their own mind how to spend their own money. Eamonn Butler, Director of the Adam Smith Institute, explains the problem in the video above and there is empirical evidence in Section 3.3.4 of the 2020 Tax Commission report. Once that happens, and as charities are less and less accountable to donors giving their own cash, the charities tend to get less and less efficient. Our research looking at efficiency in aid spending has found that some international development charities spend as much of a third of their budgets before it even reaches projects, and there will be additional administrative costs within the projects themselves.
The Government want to involve charities in delivering public services because they can be more efficient than departments or quangos. That is a laudable objective. They need to be very careful though, that they don’t turn nimble little groups with a great record of helping people efficiently into more lumbering bureaucracies that squander our money campaigning for their pet causes.