Monday, February 21, 2011

The Guardian: Uncut and Full of Cant

On Saturday morning The Guardian decided to give UK Uncut a front page boost.  The protestors managed to shut down three dozen of the 1,720 branches of Barclays bank. Surprised they found any branches to occupy given Saturday opening hours.

The gist of the shabby story was Barclays bankers are evil tax dodgers. The evidence was a hatchet job with the paper making the spurious claim that Barclay’s only paid 1% tax on their £11.6 billion profits. In arriving at a profit before tax figure of £11.6 billion, The Guardian has added the profit from the ongoing business (£4.5 billion) to profits from a disposed business (£726 million) and the gain made on disposal of that business (£6.3 billion) to reach a total of £11.6 billion.

What they chose to ignore however was the total tax take Barclay’s had to pay; payroll taxes, bank levy, non-recoverable VAT, employers NI, SDRT and so on. Over the weekend Tim Worstall and the FCA Blog tore chunks out of the piece:

The article compares the cash paid to HMRC in respect of UK corporation tax in 2009 (£113 million) to the profits generated by the consolidated Barclays group worldwide in 2009. In the UK, tax is paid in arrears, so 2009 taxes would relate to widespread 2008 losses, not 2009 profits.

Multinational companies such as Barclays pay tax in a number of jurisdictions. Generally speaking Barclays only pays UK corporation tax on profits it generated in the UK.  Anything earned outside the UK doesn’t get taxed here. So it’s a howler to compare the UK corporation tax payment to the global consolidated profit. Most of those profits were taxed where they were made.

In 2002 (under Gordon Brown, Chuka), the UK government introduced the substantial shareholdings exemption, a corporation tax exemption for UK businesses disposing of a substantial shareholding in a part of their business. The idea was that businesses should be able to restructure their businesses without having to worry about chargeable gains implications. Barclays are heavily criticised by The Guardian for using it.  The last time that Guido saw this being used was by the, err, Guardian Media Group to save themselves some £60 million of taxes in 2008:

“In 2008 GMG sold half of Auto Trader publisher Trader Media Group and made an exceptional (one-off) profit of more than £300 million. No tax was payable on the return from that sale because under UK law GMG qualified for SSE”

In 2008 The Guardian made £302 million in profits and paid no corporation taxes. The CEO, Carolyn McCall, was paid an £827,000 package. Yet we don’t see the UK Uncut crowd kicking up a stink about The Guardian’s tax structures or their fat cat pay and bonuses.

Over the weekend the Guardian editor Alan Rusbridger (half-a-million a year since you asked) tweeted about Barclay’s offshore holding corporations. Guardian Media Group holds hundreds of millions in assets in a Caymans Island domiciled offshore corporation.

Guido put it to the GMG press office that GMG has £223.8 million invested in an overseas/offshore hedge fund managed by Cambridge Associates which trades currency derivatives. They don’t deny it and have declined to confirm the fund’s structure for tax purposes.

Guardian readers seem to be under the illusion that it is owned by a not-for-profit charity. The Scott Trust was wound up in October 2008 and the Guardian is a for-profit-privately-owned media business, the well paid directors of which confirm in their annual accounts that they operate tax strategies in line with their fiduciary duty to the shareholders – just like any other business.

The old Scott Trust was set up in 1936 to avoid inheritance taxes and wound up in 2008 so that GMG could cynically exploit the SSE capital gains tax shelter to pay 0% in corporation taxes on their £302 million in profits that year. GMG claim that it was about modernising the holding structure, in fact it was a disingenuous cover for corporate venality.

For three quarters of a century the The Guardian has been shirking taxes, Guido has no problem with them acting in their shareholders’ best interests. The hypocritical cant from them however about others doing the same is beyond contemptible…

Monday, February 14, 2011

Don’t Mention the War

The news that more than half of the council chief execs are paid more than the PM has caused a fair flurry of chatter today. It made it out on to the wires and was picked up by almost all of the news outlets. Except the BBC. A quick look over at the website and it seems large publicly funded salaries are not something they wish to talk about.

Funny that.

Tuesday, February 8, 2011

Balls 1, Osborne Nil

No hangover from the Black and White Ball for George Osborne, he was up bashing bankers at the break of dawn. And what a coincidence he’s up against Balls in the House today in what will no doubt be the first of many ugly brawls. However before they even face each other, Balls has won the day.

Last night Balls claimed Osborne was “all talk and no action” and as if by magic Osborne gave ground. While the extra £800 million levied on those driving growth in the City will blunt Balls’ sword today, what about next week and the week after that? Will Osborne raise a tax a week to avoid standing by his principles?

Tuesday, January 25, 2011

Double Dip Fears Grow

The half-point fall in GDP has serious political ramifications. If we get a second quarter of what Gordon Brown would call “negative growth” we will be in recession. Ed Balls will have been proved right and George Osborne’s credibility will be shattered. One policy change could prevent that happening. Suspend the VAT hike.

The short-term political hit of executing a u-turn versus the wrecking of the long-term mission to cut the deficit is a calculation that George Osborne won’t like to make. He is touring the studios saying that he “won’t be blown off course by bad weather”. The trouble is he is making the bad weather with this VAT hike.

The VAT hike depresses GDP growth, adds to already rampant inflation and hits the poorest hardest. If GDP in this forthcoming quarter is slightly negative, he’ll have only himself to blame. Why maintain a tax hike that suppresses the very consumer spending necessary for growth?

Wednesday, January 19, 2011

Publicans Call Out Booze Bull

Guido didn’t weigh in on the minimum pricing story yesterday because if he jumped on every broken promise from Dave he would be typing till the cows came home. Instead of living up to his promise of being on the “cider” pubs (gettit?) Dave is continuing the crippling of the industry. Proponents of the hike Alcohol Concern say “duty is so low in the UK, that it will still be possible to sell very cheap alcohol and be within the law.” Something that is frankly nonsense given booze duty is up 26% in the last two years. The British Beer and Pub Association are quick to hit back. Just look at the how much tax Brits pay on their drink compared to their neighbours:

It’s not much better here in Ireland, guess Guido will have to stay in France more often…

Monday, December 6, 2010

More Left-Wing Tax Hypocrisy from Richard Murphy

In what is a bid to soothe ruffled LibDem feathers, rather than in response to the looter’s protest, the government has just announced a new clamp down on tax avoidance. Guido mentioned at the weekend how quiet the left were about the Guardian’s tax avoidance in contrast to their attitude to Philip Green. There hasn’t been a squeak from the likes of left-wing millionaire Richard Murphy, a Rowntree and TUC funded, self-styled “fair tax” expert. But then he did give the Guardian Media Group accounts his seal of approval, after GMG made a £302 million profit in 2008 and paid not a penny in corporation tax.

Murphy, of the Toynbee school of hypocrisy, seemingly wears his principles on his sleeve and argues for anti-avoidance measures and crucially that the philosophy behind tax collection should be judged by the spirit not the letter of the law. However has Murphy  always practised what he preached?

Before he discovered the cause of “Tax Justice” between 2001 and 2003 he wrote technical articles for The Guardian advising how to minimise tax on employing a nanny, how to minimise tax for the self employedmaximise your tax allowance through taking out a stakeholder pension and attacking legislation which requires accountants to report tax evasion. On second reading Murphy’s recent line that he was just highlighting the holes doesn’t really wash, especially when his own tax practises are examined.  Although Murphy puts his home address on all his business literature – it is the registered address for all his companies – he does not pay business rates on the property. Not quite within the spirit of the law now is it…

Sunday, December 5, 2010

Polly Missed Guardian Tax Justice Demo

In February 2009 Guido’s co-conspirators held a tax justice demo outside the Guardian’s spanking new HQ. Shouting “Scott Was a Tax Evader” and “GMG Fat Cats Pay No Tax”. We didn’t manage to get any support from multi-millionaire, three home-owning, anti-poverty campaigner Polly Toynbee. We would have dragged her out if we could…

The Guardian Media Group is one of the shrewdest corporate avoiders of tax in Britain, in 2008 it made a £300 million profit and yet managed to pay no corporation tax, the following year in 2009 it still paid no corporation tax, it uses the offshore Caymans tax haven to own assets, it uses tax efficient trusts and deploys all manner of perfectly legal tax shelter strategies to avoid paying tax. Polly seems silent about this tax dodging…

See also: Guardian’s Tax Hypocrisy is RidiculousTax Justice Protest Against Guardian Tax Dodging

Saturday, December 4, 2010

Defending Philip Green Against the Looters

Philip Green is a sharp businessman who turned round the Arcadia chain when they were closing shops and made them profitable. He turned Top Shop from a fading also ran into an international brand with cheap chic credibility. In doing all that he secured thousands of high street jobs, boosted profitability and made a billion.

He bought Arcadia via an offshore company, perfectly legally and paid that famous billion pound dividend perfectly legally. He did it the way he did it because this country punishes entrepreneurs and risk takers with capital gains taxes on top of income taxes. Double taxing those who create and produce.

Arcadia pays hundreds of millions in taxes every year, VAT, carbon taxes, stamp duty, business rates, National Insurance, employee’s income taxes and the myriad of other taxes that penalise enterprise and entrepreneurs. That isn’t enough for the type of parasites and political activists the great novelist Ayn Rand correctly identified as “looters”.

The looters are killing this country because, in their humanitarian noble-minded, public-spirited contempt for entrepreneurs, they forget how much they rely on entrepreneurs. With each new restrictive regulation designed to enhance equality and “justice” they make it harder for the remaining entrepreneurs to create the Vodafone-supplied iPhones from which they tweet their bleatings about “fighting the cuts”. Self-styled Anarchists” calling for higher taxes to fund a bigger state are no anarchists.

Philip Green deserves his billions, he is a self made man who left school at fifteen, worked hard, took risks, clearly enjoys himself and defends his just rewards from the rapacious grasp of the tax man.  If only we had one hundred more Philip Greens…

Tuesday, November 30, 2010

Iceland Shows the Way Forward for Ireland:
Decouple, Default, Devalue and Develop

Iceland’s President, Olafur R. Grimsson, told Bloomberg TV on Friday that his country is better off than Ireland because they allowed the banks to fail two years ago and devalued the krona:

“The difference is that in Iceland we allowed the banks to fail. These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks.”

The Irish bank bail-out is being foisted on them by the EU and the IMF whereas sovereign Iceland let the banks go bust and restructured the financial sector to keep the commercial sector serviced. As a consequence, “Iceland is faring much better than anybody expected” says Grimsson:

“How far can we ask ordinary people – farmers and fishermen and teachers and doctors and nurses – to shoulder the responsibility of failed private banks… That question, which has been at the core of the Icesave issue, will now be the burning issue in many European countries.”

Under this plan 20 cents of every euro of Irish taxes will go to pay the interest on the bank bail-out debts. The Irish bail-out plan will cost €54,800 per Irish household. Ireland’s future thus looks a lot more bleak than Iceland’s path of debt default and a devaluation of 60% two years ago which has the country rebounding: exports and manufacturing are growing by 20%, tourism is back near all-time highs, real wages are rising, unemployment is declining sharply, interest rates fell from 18% to 5.5% and the stock market has rebounded 50% from its lows. In contrast this euro-banker’s bail-out will only burden the next generation of Irish who don’t flee with crushing debts not of their making…

Britain and europe should keep their bail-out billions rather than foist them on Irish taxpayers to cover the responsibility for bad investments made by their own private banks. They can use the billions to bail-out their own banks directly if they want, without involving the Irish taxpayers…

Monday, November 29, 2010

How Liam Byrne Could Help the “Squeezed Middle”

Liam Byrne says that the “squeezed middle” are those on between £16,000 to £50,000 and Labour’s task in reviewing policy is to help them. Guido is glad to hear it. Presumably he would therefore support those struggling on middle incomes being taken out of the higher-rate tax bracket, which kicks in at a ridiculously low £37,401? That is smack bang in the middle of the range he defines, surely it should kick in at £50,001, above the income levels of those hard squeezed middle classes. C’mon Liam, review that policy…



The Iranian Model is Hitler | Lawrence J. Haas
No.10′s Andrew Cooper Should Look at this Poll | Douglas Carswell
Livingstone Has Form on Homophobia | ConservativeHome
Investors HBack Over RBS Meddling | CityAM
Riddled With It | Pink News
I Went Mad in the Seventies | Ken
Guy Newsroom Splits | Indy
Polly’s Voodoo Polling | UK Polling Report
Labour SpAd Backs the Bill | Mark Wallace
Guido Goes for the Lobby | Press Gazette

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Peter Botting


Max Clifford says…

“Most people want to read nasty things about people, not nice things.”



DisgustedOfMitcham2 says:

Maybe if they really wanted to “decontaminate the Labour brand” with business people, they shouldn’t have totally buggered up the economy?

Just a thought.


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