Hope you’ve all been keeping well while I’ve been taking a blog break. With the madness that surrounds us it’s always good (and sometimes necessary) to shut out the noise and clear one’s head of the idiocy and wrongheaded nonsense that defies reason and logic.
So, the horsing around continues. This essay isn’t about the horsemeat farce – Richard has been at his blistering best showing up the ignorance and incompetence of most politicians and journalists about food regulation and the EU’s
competence control of it, and there’s really nothing I can add of value. Suffice to say if you have not read his post about the involvement of Nestlé in the scandal then you really should.
No, this is about the political arrogance and media’s hysteria and misrepresentation surrounding the subject of taxation. According to a typically statist article in the Independent, tax avoidance schemes:
are costing the Treasury £5bn a year by exploiting loopholes in a complex system designed to help businesses, the Public Accounts Committee (PAC) said.
Apparently the committee was scathing about the performance of HMRC, which, it says, is losing a game of cat and mouse with companies that promote aggressive tax avoidance.
That assessment sums it up. Costing the Treasury money? How very dare some people and firms try to keep what actually belongs to them. While there is nothing new under the sun here, it is deserving of focus because of what it reminds us about what is wrong with governments of every stripe, namely that they believe they are entitled to the money we earn – our money – and that it is theirs to do with whatsoever they wish.
Tax avoidance is perfectly legal and responsible, yet HMRC is being criticised by MPs for not collecting more money from businesses and individuals for whom there is no legal necessity to pay it. Despite the actions of tax advisers, and the businesses and individuals who rightfully want to hold on to as much as possible of what they earned, MPs and HMRC are engaging in a game of setting traps to seize more money and demonising those people and businesses who manage to retain their money legally. Look at Starbucks, accused of not paying its fair share and disgracefully maligned by MPs and the media, it actually does make a loss in the UK even before its supposedly controversial (yet under EU law perfectly legal) transfer pricing to its European headquarters. Yet as a result it has been pressured into voluntarily paying over money to HMRC, worsening its UK losses and most likely resulting in cost cutting that could affect jobs.
This is an outrageous inversion of the way things are supposed to be. The state has assumed for itself the position of master, rather than servant. And when it doesn’t get what it wants it bullies, threatens, slanders and character assassinates those who justly stand up for themselves. And now MPs are calling for this so called informal ‘naming and shaming‘ to be made into a formal approach.
The inversion looks set to be extended by something even more dangerous – as evidenced by a discussion on BBC Radio 4 this morning – where a recommendation was being made to follow the approach taken by the Australian tax authorities. This is where schemes designed to be tax efficient are not permitted until they have been examined and then approved by the authorities. Such a change would represent a move away from a position where an action is lawful unless proscribed by law, to one where the action is considered illegal until permission for it is granted. This is not the definition of freedom within a society. It is defacto enslavement.
Lets not forget it is the state, in the guise of grubbing politicians continually making unsustainable and unfunded spending pledges, that has caused and is deepening the financial mess this country is in. The same state thinks it can arrest the decades-old slow burn implosion of our economy by seizing more of our money. It is as desperate as it is futile.
The fact is successive governments have, over a period of decades, been buying votes with our money by inflating and extending the welfare state. The emergency safety net originally envisaged for the welfare state has been gradually replaced by unfunded gerrymandering to buy off voters, creating an unaffordable client state.
The notion of living within one’s means has been abandoned by many Britons and by the government itself. Instead of government recognising it cannot keep doling out an ever increasing number of billions of pounds to people to subsidise their lives – even when they are actually working – and cutting welfare spending to all but the most needy and vulnerable, governments have embedded a handout culture that has been funded by ever increasing borrowing. This has been exacerbated by the adoption of increasingly delusional and unaffordable European approaches to welfare combined with a rapid increase in eligibility for benefits for foreigners who come to these shores.
The system is broken and the UK is bankrupt in all but name, owing a total of 900% of what the whole economy generates. The irresponsible politicians and feckless fools who believe in something for nothing are to blame. It is only low interest rates that are keeping the country clinging on by its fingertips as it tries to service ever rising debt repayments. Yet incredibly this Cameron-led coagulation government which promised to tackle and reduce debt is actually borrowing even more money than the feckless Blair and Brown government before it.
If the UK economy was a business, the organs of the state would immediately close it down and ban its directors from ever running a company again. But instead we have desperate politicians engineering the state sanctioned theft by HMRC in a desperate last gasp effort to undo the folly that has built up over many years. It is an utter waste of time because the government’s own policies add more to the debt burden than can ever be replaced by even 100% taxation.
So back to the original question in the title of this essay. Whose money is it exactly? The answer is simple and unsurprising. The money we earn through our endeavours is ours. The tax system is being abused, but it is the irresponsible and profligate previous and current governments that have been abusing it and continue to abuse it for its own self serving ends. In such circumstances it is not only understandable that people and businesses are aggressively looking to be as tax efficient as possible, moreso than ever they are completely justified in doing so.
It’s interesting that George Osborne has been finding that despite record levels of people in employment, the UK’s tax receipts have actually been falling. It’s common sense really and not just because more people have part time rather than full time work. Many more productive people have started working for themselves due to redundancy or uncertainty with existing employers, forming small limited companies, they are discovering they can set their tax arrangements to ensure they pay no income tax or national insurance. In fact they can pay corporation tax only on company profits after allowable expenses, and as long as they keep dividend payments below the higher rate tax threshold they pay no tax on that either – with some doubling the tax free dividend amount in their household if their spouse is a shareholder in the company too. If their spouse is also a director of the company an extra £7,488 of tax and NI free income can be taken in by the household.
I know this because it’s what I am now doing and it means for taking a small risk by being self employed I can keep more of what I earn. It’s worth any fight with HMRC for the reward and the sheer bloody satisfaction of not having as much of my hare earned money pissed up the wall on moronic pet projects like wind turbines and imported benefits claimants by the useless idiots in Whitehall. Forget the claims that the Thatcher era made people selfish. It’s this supposed compassionate era since that is making people say enough is enough and look to themselves. The money I earn is being used to clear all my household’s debt and to purchase gold which will hold its value far better than our steadily devaluing paper currency, so I can leave something with intrinsic value for my children in what is likely to be a harsher economic climate that even that we have today.