Whatever the motives, whatever the spin, whatever the cynics may say, I have to say that I am really pleased that Tony Blair has decided to give the advance and proceeds from his memoirs to the British Legion.
I don't think that the donation is a cunning stunt or that is is a complicated tax avoidance scheme or that it is motivated by his wish to get into heaven and atone for his sins or that i is 'blood money' that seeks to remove or reduce criticism of his decisions past.
It is clear that the donation will cost him much less than the highlighted figure because of the tax relief that he will be able to claim - but that is a consequence of our tax system, not a consequence of his gift and he should not be criticised for that.
It is clear that his PR people have done their best to ensure that this story gains the preeminence that they wish - to maximise sales at the very least. Again, although I am exceedingly cynical about his motives most of the time, the beneficiary of this PR, if successful, will be the British Legion.
If you want to show your appreciation for what our servicemen and women do for us and on our behalf, and if you can afford to, please give something to this wonderful charity - the more the merrier!
Tuesday, 17 August 2010
Friday, 23 July 2010
Giving evidence before Congress ...
Whatever the US sensibilities may be, the manner in which Congress conducts its 'enquiries' is completely alien to any sense of justice - one only has to consider the examination of Mr Toyoda or Mr Heywood to see that the questions are dominated by the needs of the mid term elections in the US and the political posturing of US senators and congressmen and women. Very few of the questions are directed at enquiring into the events that are being examined and most are closed questions that suggest that the aims are political rather than inquisitorial ...
Further, the decision to release a certain convict on compassionate grounds is entirely a decision for the UK - and in this case for the Scottish Minister of Justice. I have little doubt in my mind that the decision was taken on dubious evidence and the longer that the Al-Megrahi lives, the worse the evidence appears.
But we should not forget that the decision is accountable here and not in the US ... the representatives are accountable here and not in the US ... the conviction was by a peculiar Scottish Court and not an American court. The US could have sought to try Al-Megrahi ... the UK extradited him and he was tried pursuant to a special agreement between the UK and Libya. Whilst I understand and sympathise with the families of the deceased victims of this particular atrocity, their remedies are here, not in the US. We should not forget that some of families even doubt the conviction's basis in any event ...
And before the US starts to cry about US sensibilities and sentiments, one only has to consider for a moment the manner in which the US has behaved and continues to behave in its own interests to understand that the US is being somewhat hypocritical at best ...
Further, the decision to release a certain convict on compassionate grounds is entirely a decision for the UK - and in this case for the Scottish Minister of Justice. I have little doubt in my mind that the decision was taken on dubious evidence and the longer that the Al-Megrahi lives, the worse the evidence appears.
But we should not forget that the decision is accountable here and not in the US ... the representatives are accountable here and not in the US ... the conviction was by a peculiar Scottish Court and not an American court. The US could have sought to try Al-Megrahi ... the UK extradited him and he was tried pursuant to a special agreement between the UK and Libya. Whilst I understand and sympathise with the families of the deceased victims of this particular atrocity, their remedies are here, not in the US. We should not forget that some of families even doubt the conviction's basis in any event ...
And before the US starts to cry about US sensibilities and sentiments, one only has to consider for a moment the manner in which the US has behaved and continues to behave in its own interests to understand that the US is being somewhat hypocritical at best ...
Friday, 16 July 2010
Effective taxation ....
I am persuaded that the UK Government cannot continue spending £4 for every £3 it receives by way of income - it is simply not sustainable. The irresponsible nature of the last Government in achieving this level of deficit has only served to increase our national debt to a level at which it will begin to affect our ability to grow - I remember reading that when a nation's debt exceeds a certain proportion of its GDP (some economists fix this at about 90%), then there is a corresponding reduction in the trend growth rates which has been estimated by some at 1%.
There are economic arguments to be made - but they are not enhanced by, for example, Danny Blanchflower asserting his own views as the 'correct' vision and anyone who disagrees with him as being a 'mad' or 'dangerous' 'zealout' or 'idealogue'. Equally, there are those on the other side of the economic argument who cry out in a similar fashion. Am I alone in finding the name calling irritating to the point that I simply refuse to listen to the argument made in that manner?
The problem in the UK is that we need to maximise income for the Government at a time when that income is reducing and we need to get a grip on Government exenditure at the same time - because the last Government irresponsibly and foolishly thought that it could maximise its political benefit by increasng expenditure at a time when its income was dramatically reducing.
Some will say, 'just tax the rich more' ... the problem for this argument is that there aren't enough 'rich' people who we can tax with effect. If you want to save raise really large sums of money, you cannot target the richest 1%, as they are so few in number that even if you confiscated their income above, say, £100,000, you would not increase Government income very substantially. Further, you need to define who you mean by the 'rich' - for someone on benefit, the 'rich' are people who pay tax on income - for those in the middle, the 'rich' are people who earn more than them - for those who are in the top 10% and who earn over about £40,000, the 'rich' are those who earn more than £100,000 - and so on ...
Some will say, 'close the loopholes' ... the problem here is that without specific proposals as to which 'loophole' it is impossible to know what the effect would be. If you decided to tax people on their worldwide income on the basis of 'habitual residence' and simply abolished the distinction between residence and domicile, how much would actually be raised and what would the cost be? I happen to believe that the benefit of having billionaires resident in the UK but domiciled abroad is marginal and so I would support a tax simplification measure that abolished the distinction - it would have the added advantage that it would place us in the same position as most other developed and developing tax jurisdictions.
Having written that, we have a system of taxation that allows for tax avoidance - tax mitigation - tax minimisation. Whatever we do, rich people (and many not so rich people) will use the services of accountants and lawyers and others to keep their tax liabilities as low as they possibly can - the higher the marginal rates of tax, the more use will be made of these services. Is there something morally wrong with people saying that they wish to pay no more than they are required to? I happen to think not - others will disagree. We have rules that limit and eliminate the power of schemes that are designed solely to reduce tax liabilities and I support those rules. The fact is that taxation is a legislated system of confiscation that is required to pay for public goods - and we can argue about the extent of the need for those public goods til the cows come home - and it is my view that it is simply not good enough for people to talk about evasion and avoidance in the same terms - there is a substantial difference between people honestly trying to ensure that they pay no more than they have to and people dishonestly evading their obligations to pay tax.
The problem arises that, at the margins, there will be argument: and people will want to test those margins, in court if necessary. If they are found to be wrong, then they will pay; both in terms of penalties and interest that the tax authorities are entitled to charge, and in terms of the costs of the litigation. That people want to test the margins is understandable - especially where the impact is substantial for them. I cannot see how their wishing to do so is wrong. They take on a risk and pay out if they are unsuccessful.
What we need as a country is not simply a 'fair taxation' system, but an effective one. Simplification is part of the process by which it will become more effective - but at the margins, particularly where there is a 'progressive' system (in the sense that marginal rates are increased as the sums involved increase), there will be elements of unfairness. That is an unfortunate consequence of all laws - and we need to remember that it was to meet the 'unfairness' of the common law that the laws of equity evolved.
There are economic arguments to be made - but they are not enhanced by, for example, Danny Blanchflower asserting his own views as the 'correct' vision and anyone who disagrees with him as being a 'mad' or 'dangerous' 'zealout' or 'idealogue'. Equally, there are those on the other side of the economic argument who cry out in a similar fashion. Am I alone in finding the name calling irritating to the point that I simply refuse to listen to the argument made in that manner?
The problem in the UK is that we need to maximise income for the Government at a time when that income is reducing and we need to get a grip on Government exenditure at the same time - because the last Government irresponsibly and foolishly thought that it could maximise its political benefit by increasng expenditure at a time when its income was dramatically reducing.
Some will say, 'just tax the rich more' ... the problem for this argument is that there aren't enough 'rich' people who we can tax with effect. If you want to save raise really large sums of money, you cannot target the richest 1%, as they are so few in number that even if you confiscated their income above, say, £100,000, you would not increase Government income very substantially. Further, you need to define who you mean by the 'rich' - for someone on benefit, the 'rich' are people who pay tax on income - for those in the middle, the 'rich' are people who earn more than them - for those who are in the top 10% and who earn over about £40,000, the 'rich' are those who earn more than £100,000 - and so on ...
Some will say, 'close the loopholes' ... the problem here is that without specific proposals as to which 'loophole' it is impossible to know what the effect would be. If you decided to tax people on their worldwide income on the basis of 'habitual residence' and simply abolished the distinction between residence and domicile, how much would actually be raised and what would the cost be? I happen to believe that the benefit of having billionaires resident in the UK but domiciled abroad is marginal and so I would support a tax simplification measure that abolished the distinction - it would have the added advantage that it would place us in the same position as most other developed and developing tax jurisdictions.
Having written that, we have a system of taxation that allows for tax avoidance - tax mitigation - tax minimisation. Whatever we do, rich people (and many not so rich people) will use the services of accountants and lawyers and others to keep their tax liabilities as low as they possibly can - the higher the marginal rates of tax, the more use will be made of these services. Is there something morally wrong with people saying that they wish to pay no more than they are required to? I happen to think not - others will disagree. We have rules that limit and eliminate the power of schemes that are designed solely to reduce tax liabilities and I support those rules. The fact is that taxation is a legislated system of confiscation that is required to pay for public goods - and we can argue about the extent of the need for those public goods til the cows come home - and it is my view that it is simply not good enough for people to talk about evasion and avoidance in the same terms - there is a substantial difference between people honestly trying to ensure that they pay no more than they have to and people dishonestly evading their obligations to pay tax.
The problem arises that, at the margins, there will be argument: and people will want to test those margins, in court if necessary. If they are found to be wrong, then they will pay; both in terms of penalties and interest that the tax authorities are entitled to charge, and in terms of the costs of the litigation. That people want to test the margins is understandable - especially where the impact is substantial for them. I cannot see how their wishing to do so is wrong. They take on a risk and pay out if they are unsuccessful.
What we need as a country is not simply a 'fair taxation' system, but an effective one. Simplification is part of the process by which it will become more effective - but at the margins, particularly where there is a 'progressive' system (in the sense that marginal rates are increased as the sums involved increase), there will be elements of unfairness. That is an unfortunate consequence of all laws - and we need to remember that it was to meet the 'unfairness' of the common law that the laws of equity evolved.
Wednesday, 14 July 2010
Banks ... are exasperating!
Sometimes people are frustratingly silly and sometimes they completely surprise you with their stupidity. Yesterday was a case in point ...
As some readers will know, I assist my Inn (one of the professional associations for barristers that I am a member of) and yesterday I was asked to speak to a student member of the Inn about her financial position.
In essence, having completed her courses, she found that she was unable to obtain a training position as a barrister and she has been finding it difficult to obtain a training position in the legal profession at all - and given the straightened times that we live in, that should not surprise people.
She had borrowed the money to pay for her courses from one of our biggest banks as a professional development loan and over the last 8 months or so she has been finding it impossible to discuss the matter with the bank because she simply finds that no one will talk to her or renegotiate the loan in anything like a sensible manner. During that time she has made over 200 applications for positions that she is qualified for - or for which she is more than qualified for - without success ... or sufficient luck.
Earlier this month, she received a 'final demand' before the matter was to be 'handed over' to debt collectors or solicitors. Her income is what she receives by way of Job Seekers' Allowance and her rent is paid by way of Housing Benefit. She told me that she had no assets or savings of substance (about £100). The demand from her bank was to repay the £23,000 that she had paid in full within 18 days 'or else'.
Now, I suspect that there are many people in this sort of position, so I thought that we would talk to someone at the bank and see what could be done. We explained to the person that we spoke to that she had no assets and that her income was limited to JSA and that she would afford to pay £15 per month until such time as her financial position changed - and I listened in astonishment as I was told that there was 'nothing that the Bank would do'.
I explained that the consequence of taking proceedings against her may well be to reduce or even eliminate her prospects of becoming a lawyer (as a result of professional rules of conduct) and I was told that while the person we were speaking to was aware that she was trying everything that she could there was nothing that could be done.
In the end I asked whether the Bank's position was that unless she repaid the entire loan sum (£23,000 odd) - then the bank was unwilling to discuss or negotiate any deal or repayment plan of any sort. I was surprised to be told that it was. I asked the Bank's employee to tell me where someone in my colleague's position would raise that money - to be told that the Bank wasn't in a position to advise! I asked whether there was anyone at the Bank that I could speak to in any department about the matter - to be told that there wasn't, and that, in any event, the answer wouldn't change! I explained that refusing to negotiate was on the face of it unreasonable - to be told that that was the position the Bank would adopt having sent out a 'final demand'.
I then asked for confirmation of the Bank's position - and was told something slightly different - that unless the arrears (which I was told was a little over £2,000) were paid by the deadline - then the Bank's position was unchanged. I explained that I as prepared to give my colleague a witness statement to explain what had been told to me and that I understood that it may have legal consequences - to be told that the Bank's position was unchanged and unyielding!
I simply don't understand it - let's assume that the worst happens: from what I know, the Bank will incur charges (legal and procedural) which will be added to the debt - and never recovered. The debt will never be recovered. The interest never recovered. Sadly, by student colleague may find her ability to continue her development as a lawyer barred or severely impeded - with no benefit to the Bank or its shareholders. Were the Bank to accept her offer to pay what she can, then the Bank may well eventually (and assuming that there is an economic recovery, probably will) recover its loan in full as her circumstances change. Why is this Bank so blind? Why so unyielding? I shall write to its Chairman and complain!
As some readers will know, I assist my Inn (one of the professional associations for barristers that I am a member of) and yesterday I was asked to speak to a student member of the Inn about her financial position.
In essence, having completed her courses, she found that she was unable to obtain a training position as a barrister and she has been finding it difficult to obtain a training position in the legal profession at all - and given the straightened times that we live in, that should not surprise people.
She had borrowed the money to pay for her courses from one of our biggest banks as a professional development loan and over the last 8 months or so she has been finding it impossible to discuss the matter with the bank because she simply finds that no one will talk to her or renegotiate the loan in anything like a sensible manner. During that time she has made over 200 applications for positions that she is qualified for - or for which she is more than qualified for - without success ... or sufficient luck.
Earlier this month, she received a 'final demand' before the matter was to be 'handed over' to debt collectors or solicitors. Her income is what she receives by way of Job Seekers' Allowance and her rent is paid by way of Housing Benefit. She told me that she had no assets or savings of substance (about £100). The demand from her bank was to repay the £23,000 that she had paid in full within 18 days 'or else'.
Now, I suspect that there are many people in this sort of position, so I thought that we would talk to someone at the bank and see what could be done. We explained to the person that we spoke to that she had no assets and that her income was limited to JSA and that she would afford to pay £15 per month until such time as her financial position changed - and I listened in astonishment as I was told that there was 'nothing that the Bank would do'.
I explained that the consequence of taking proceedings against her may well be to reduce or even eliminate her prospects of becoming a lawyer (as a result of professional rules of conduct) and I was told that while the person we were speaking to was aware that she was trying everything that she could there was nothing that could be done.
In the end I asked whether the Bank's position was that unless she repaid the entire loan sum (£23,000 odd) - then the bank was unwilling to discuss or negotiate any deal or repayment plan of any sort. I was surprised to be told that it was. I asked the Bank's employee to tell me where someone in my colleague's position would raise that money - to be told that the Bank wasn't in a position to advise! I asked whether there was anyone at the Bank that I could speak to in any department about the matter - to be told that there wasn't, and that, in any event, the answer wouldn't change! I explained that refusing to negotiate was on the face of it unreasonable - to be told that that was the position the Bank would adopt having sent out a 'final demand'.
I then asked for confirmation of the Bank's position - and was told something slightly different - that unless the arrears (which I was told was a little over £2,000) were paid by the deadline - then the Bank's position was unchanged. I explained that I as prepared to give my colleague a witness statement to explain what had been told to me and that I understood that it may have legal consequences - to be told that the Bank's position was unchanged and unyielding!
I simply don't understand it - let's assume that the worst happens: from what I know, the Bank will incur charges (legal and procedural) which will be added to the debt - and never recovered. The debt will never be recovered. The interest never recovered. Sadly, by student colleague may find her ability to continue her development as a lawyer barred or severely impeded - with no benefit to the Bank or its shareholders. Were the Bank to accept her offer to pay what she can, then the Bank may well eventually (and assuming that there is an economic recovery, probably will) recover its loan in full as her circumstances change. Why is this Bank so blind? Why so unyielding? I shall write to its Chairman and complain!
Wednesday, 16 June 2010
An Economist Royal?
Simon Jenkins in the Guardian asks whether there should be a 'economist royal'? See here. I suspect he meant to write 'Economist Royal'...
Richard Murphy, whose writings have taken an increasingly partisan and silly tone in recent months, assures us that the difference between the deficit hawks and doves is political sympathy rather than economic theory - see here. In that I agree with him - although he has outdone himself in unreasoned and unreasonable rhetoric.
The problem is that our last Government spent more than it should have - it spent more than we can afford - it spent more than our children can be expected to afford - and often without thought for the consequences. It saw expenditure as the answer to headlines and criticism regardless of the cost and regardless of any benefit that could be achieved by that expenditure.
Benefits are paid to people who earn considerably more than national average earnings - to people who pay the top rate of tax! The absurdity of creating such tax and credit systems is not considered by Richard Murphy - no, he believes that making more sense out of our tax and benefits system to remove such obvious anomalies is 'ugly class politics'. Methinks he betrays his own political sympathies ...
The problem with economics is that very often it is about politics (if not always). It is no surprise to find someone who supported the last Government and who advises an organisation that calls itself the 'tax justice network' that mainly comprises trade unions and socialists is opposed to getting Government expenditure under control and reversing the splurge of spending that the last Government indulged in in an doomed attempt to avoid defeat at the last election - equally it will be not surprising to find me, a former candidate for the Conservatives, keen to see Government spending reigned in.
One thing that we should all agree on is that any changes to the tax and benefits systems should be effective and achieve benefits that exceed the costs. So increases in taxes that cost a lot and achieve little in terms of revenue raised should not be accepted. Equally, reductions in benefits that target the poorest and cost them a lot at relatively little benefit in reduced expenditure should not be accepted. All of these things are a balance - and the decisions about what you will support or oppose are essentially political.
To answer Simon Jenkins, I don't believe that there can be an Economist Royal (capitalised or otherwise) - although it would be perfectly possible to appoint one, the problem will be that the person who appoints will chose the person who most closely fits their political viewpoint.
Richard Murphy, whose writings have taken an increasingly partisan and silly tone in recent months, assures us that the difference between the deficit hawks and doves is political sympathy rather than economic theory - see here. In that I agree with him - although he has outdone himself in unreasoned and unreasonable rhetoric.
The problem is that our last Government spent more than it should have - it spent more than we can afford - it spent more than our children can be expected to afford - and often without thought for the consequences. It saw expenditure as the answer to headlines and criticism regardless of the cost and regardless of any benefit that could be achieved by that expenditure.
Benefits are paid to people who earn considerably more than national average earnings - to people who pay the top rate of tax! The absurdity of creating such tax and credit systems is not considered by Richard Murphy - no, he believes that making more sense out of our tax and benefits system to remove such obvious anomalies is 'ugly class politics'. Methinks he betrays his own political sympathies ...
The problem with economics is that very often it is about politics (if not always). It is no surprise to find someone who supported the last Government and who advises an organisation that calls itself the 'tax justice network' that mainly comprises trade unions and socialists is opposed to getting Government expenditure under control and reversing the splurge of spending that the last Government indulged in in an doomed attempt to avoid defeat at the last election - equally it will be not surprising to find me, a former candidate for the Conservatives, keen to see Government spending reigned in.
One thing that we should all agree on is that any changes to the tax and benefits systems should be effective and achieve benefits that exceed the costs. So increases in taxes that cost a lot and achieve little in terms of revenue raised should not be accepted. Equally, reductions in benefits that target the poorest and cost them a lot at relatively little benefit in reduced expenditure should not be accepted. All of these things are a balance - and the decisions about what you will support or oppose are essentially political.
To answer Simon Jenkins, I don't believe that there can be an Economist Royal (capitalised or otherwise) - although it would be perfectly possible to appoint one, the problem will be that the person who appoints will chose the person who most closely fits their political viewpoint.
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