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Bounty

April 7, 2014

I was surprised to read in a new piece about Bounty (the organisation that distributes those “bounty” packs to new mothers) that HMRC are still paying them – a commercial company – £90,000 a year to distribute child benefit application forms.  Didn’t we deal with this?  The Telegraph investigated it last May and there was a petition against the practice of the company being allowed to visit maternity units at all but at the same time a call to email David Gauke asking him to end HMRC’s relationship with Bounty (scroll down to the comments).

I have no knowledge of whether the “Bounty” packs are a good thing or not (except that I never realised “bounty” was the name of a commercial company – I had heard the term “bounty pack” for years and had taken it for its literal meaning of  a bonus or gift – I thought they were the NHS’ gift to newborns!)  But I am pretty certain that giving a commercial firm legitimacy by allowing them to distribute child benefit forms is a bad thing.  Don’t get me wrong, they can add them to the packs if they like – but they’re a commercial company.  It should be up to them to decide whether or not they want to obtain supplies of the forms from HMRC and stick them in the packs.  HMRC shouldn’t be giving them ninety grand of our money for doing so.  Give the responsibility instead to registrars; there shouldn’t be any need for one arm of the government to pay another arm of the government for doing something desirable in the first place, should there?  Isn’t THAT what we mean by “joined up government”?  So when someone comes to register a birth they should automatically be handed a form to apply for child benefit.  In fact, if we’re in “tell us once” mode, why can’t a registered birth also be a registered claim for a universal benefit?

Just a thought!

Posted in Bit of politics, HMRC | Leave a Comment »

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More competitive, simpler, greener and fairer.

March 20, 2014

After the election, the Tories and the LibDems got together and agreed on a programme of what they would actually do together in government.  On taxes, they agreed their priorities were to make taxes simpler, fairer, greener and more competitive.

So how did yesterday’s Budget move them towards those objectives?

More competitive

Can we just kick this one into touch now please?  According to the back of my envelope, the budget is giving away £920 million next year on measures tagged with “investment and growth” (table 2.1) when, by the World Bank and Bloomberg‘s methodology we’re in the top ten places to do business and well placed in KPMG’s tax competitiveness survey.  So let’s say, yes, we’ve DONE this one, and stop throwing money at it?  Please?

Simpler

Is the Budget going to make taxes any simpler?  Well, pensions and savings maybe – insofar as big chunks of them won’t BE taxed.  But in general?  OOTLAR (the inelegantly named “Overview of Tax, Legislation and Rates” document) has only seven instances of use of the words “simple” or “simpler”:

  • In a reference to the revalorisation of the VAT registration limit, commenting that this and the “simpler” income tax cash basis will help SMEs
  • In talking about the processes banks and building societies already have in place for savings, in claiming the abolition of the starting rate for savers won’t have much of an impact on banks’ processes.
  • In the general measure to let governments give tax exemptions for future sporting events without having to go through the rigmarole of passing specific legislation like they did for the Olympics and the Champions League Finals.
  • In a claim that “Chargeable gains roll-over relief: reinvestment in intangible fixed asset”  (sic: what, only one?) “makes the tax system fairer and simpler by clarifying the current legislation.” Uhuh.
  • Twice in “Modernising the taxation of corporate debt and derivative contracts” where it is claimed that the change to de-grouping rules “supports the Government’s objective of establishing a simpler, more certain and more robust tax system”.  Well, I feel much better for that.  You?
  • In the change to the ISA rules, so you don’t have to decide whether it’s better to have a few quid in a cash ISA or a few more in a stocks and shares one.

I mean, I’ll give you the last one, and I appreciate there’s some stuff coming out of the OTS so I think on the whole I’ll mark this one as “some progress; more to be done”.

Greener

Stop laughing at the back!

The “green” elements of the tax system are mostly around fuel duty, and it’s coming up to an election year, so you couldn’t expect the government to carry on with any of “that green crap”, now, could you?  Section 2.27 et seq in the actual Budget document, under the heading for spending on “Energy and Environment” is just embarrassing: 140 million extra on flood defences, granted, and £200 million on potholes but 2.31, 2.32 and 2.33 are laughable.  The government “welcomes announcements”, “has agreed” someone else will “set out plans for how they will help”, and “welcomes announcements by the vast majority of suppliers…”

No.  Green measures are definitely marked “see me” in red ink.

Fairer 

The thing is, if you’ve got a bit of money, then it actually does seem like a fair budget.  You can earn a bit more and save a bit more without faffing about with tax, you can do more with your pension than buying a bog-standard annuity, and you’re not going to have to pay more for petrol and beer.

But what if you haven’t got a bit of money to start with?  What if you haven’t just not got £15,000 a year to save in an ISA but you haven’t even got £15,000 a year AT ALL?  What if you haven’t got a job, or haven’t got enough hours, or you’re on a zero hours contract or you have a disability or are a carer?

Well you’ll be under the cap.  Because while there’s no limit on the amount of money you can accumulate in profits or rents or inherited wealth, and no-one is going to tax you on the money you make just from having stuff that accumulates in value, not even when you die and pass it on in their silver spoons to your children.

But if you haven’t…

… if you haven’t, well, there’s going to be a fixed amount of money.  Fixed like a granite slab over the heads of the ordinary, poor or unlucky; regardless of how many of us there are, or what changes in circumstances might have pushed us under.  And once you’re under, well, the cap fixes the amount we can share out.  Let’s fight it out amongst themselves.   I warn you not to be ordinary.

Sorry George, but beer and bingo aren’t going to distract us from noticing.  Fairness – must try harder.

Posted in Bit of politics, Budget | Tagged , | Leave a Comment »

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Intrastat

February 27, 2014

You’re going to have to bear with me.  I’m going to talk about Intrastat, and about Administrative Burden, and unless you’re a statistician by trade or inclination, they’re about the most snooze-worthy topics imaginable.  Try and stay awake at the back  –  I’ll smuggle in a joke or a quiz somewhere- (or consider printing this entry out and reading it in bed and you’re almost guarantzzzzzzzz…)

I’m awake.  Honest!

OK then, look at this page of incredibly boring trade statistics.  Or don’t, but DO read this explanation:

These statistics record the movement – for trade purposes – of goods between the UK and both EU and non-EU countries.

They are collected from the EU-wide Intrastat survey and from Customs import and export entries, both administered by HMRC.

Now, I read this as meaning we’ve got trade statistics collected by two different methods; within the EU via Instrastat, and outside the EU from “Customs import and export entries”.  So my first thought is, are we comparing like with like?  I’m guessing that there are good reasons why not, because the EU is supposed to be a free trading zone and there are different customs duties applied to goods from outside the EU.

Intrastat is statistics (the “stats” part) from trading inside, “intra”, the EU.  With me so far?  But there’s no need, theoretically, for people to tell the authorities what they’re exporting and importing within the EU, so the Intrastat process seems to be finely balanced between forcing people to provide data that gives them no individual benefit, and obtaining data which does have some kind of collective benefit.  The benefit or otherwise of having trade statistics at all is left as an exercise for the class.  Write on one side of the paper only, and, please, refrain from showing your workings.

Now the UK is pretty groovy in the field of administrative burden; we have a high threshold for VAT registration (is it still the highest in Europe?  Anyone?  Bueller?) We used to have a serious programme of reduction in administrative burden …

All right, it’s probably time to talk about administrative burden now.  Get an expresso, I’ll wait.

“Administrative burden” is a way of conceptualising the cost of regulatory action.  Think about it this way.  If the government makes you spend one afternoon a year filling in your tax return, you lose an afternoon out of your life.  You could have been reading a book, watching bad telly, taking your kids to the park…  But there isn’t – theoretically – a monetary value to stick on that.  But if a business has to spend an afternoon filling in forms, there conceptually is a hard monetary cost to that.  The three hours your hairdresser spends filling in her tax return is three hours that she isn’t cutting hair, so she’s theoretically lost 3 x her hourly profit.  That’s the measure of the “administrative burden” of regulation.

(Sidebar for the excessively caffeinated; in 2010 the government decided  your time in the “reading a book, watching bad telly…” example does have, if not a cost, at least a value.  It’s £14.20 an hour.  So there.)

So.  There’s an “administrative burden” – a cost to business of the time they spend filling in and sending off the forms – to “intrastat” – the statistical information about movement of goods inside the EU.

Now interestingly enough the last government had a five year mission… I mean, it set up a five year programme to reduce the administrative burden on business by 10%.  Although, rather heartbreakingly for those of us who might have agonised over some of the work on it, by the time they’d gloriously achieved the target there was a new government who didn’t give a hoot about what the previous government had done but certainly wasn’t going to let anyone crow about them having reduced the regulatory burden when the new narrative was all about the red tape challenge.  So the results were in an unpublicised Budget paper called “Delivering a new relationship with business” and oooh look at paragraph 2.5 on, would you believe it, Intrastat:

2.5 On 1 January 2010 the exemption threshold for completing Intrastat forms for arrivals was reduced from 97 per cent to 95 per cent. All VAT registered businesses who reach the threshold for their value of arrivals or dispatches (goods arriving from or going to other Member States) are required to submit Intrastat declarations on a monthly basis. The threshold reduction means that around 6900 businesses will no longer have to complete the arrivals declaration and will benefit from a share of the estimated £1.8 million admin burden savings.

Now my calculator says that £1.8m divided by 6900 is £260.  So it cost £260-ish to fill in an Intrastat survey each year back in 2009?  It says it in the impact assessment, so it must be true.

Well if we look at the consultation into a further “simplification” of intrastat (closing date for comments 8th April) there are a couple of draft TIINs for the options under consideration.  Tick v.g. to the policy team for correct use of TIIN to cost out the options under consideration, by the way – the idea of doing an impact assessment is to look at the costs and benefits of options and decide on the best policy action according to the balance of costs and benefits.

So we are currently looking at options.

One of them, is the EU proposal to collect data only from exporters.  You can see the benefits: if you only ask one side of the transaction to report, you can halve the amount of data collected.  So I sell a million widgets to France and there’s only one form to fill in, the one saying I sold them, and not two – one by me and one by them – but provided the data is shared across europe the total information collected is still the same.

However we don’t seem to like that idea.  I’m not sure why, but the condoc drips condescension towards it:

“Theoretically, there are superficial benefits to be achieved by doing this…”

and

“It also appears to make the existing asymmetries between Member States data disappear overnight.” (and no, not my emphasis!)

Let’s have a look at the options and what they’d cost.

Option One – SIMSTAT proposal – removal of the requirement to submit arrivals declarations (with additional data requirements at dispatch)

In other words the EU proposal, to make the data collection one sided, from the sender only.  So you’d only collect information from exporters (and not from both importers and exporters) but you’d made the exporters give a bit more detail.

If you look at page 12 of the consultation document you’ll see the impact assessment suggests HMRC would have to spend £1.1m on computer equipment and the administrative burden on businesses would go UP by £0.6m.

(Irrelevant joke insert: What do you call a man with a plank on his head?  Edward.  I told you I’d smuggle in a joke if you stayed awake till the end.)

Then there’s option two, which seems to be the worst of all possible worlds: increase the data requirements on exporters and (slightly) reduce the numbers required to give information on imports, or, as the condoc has it

Option Two – SIMSTAT proposal (with additional data requirements at dispatch) – reducing coverage for arrivals to 90% to meet national requirements

This one still costs HMRC £1.1m AND increases the admin burden by £2.3m.  So let’s not do that, eh?

(oh, and Irrelevant Joke data: you have to pronounce it ‘ead wood)

Then there’s the Third Way.

Option Three – Alternative simplification proposal: 93% coverage for arrivals and dispatches (used for illustrative and comparative purposes)

This one apparently doesn’t cost HMRC anything AND it reduces the admin burden by £3.6m a year.  Oh, and it takes 8500 of the smallest businesses out of having to produce stats at all which, my calculator suggests, will save them £423 each and that seems quite a lot more than the £260 it was costing businesses in 2009 but there you go.

Now impact assessment theology would suggest it’s a no-brainer that you simply do that one; achieves the same objective and costs less.

So why are we having a public consultation on it?

The consultation is directed at people who either have to produce intrastat declarations, or make use of the resulting trade statistics.  But it’s the “how did we get here” bit of the consultation that interests me:

The EU Commission have put forward a proposal to modernise the Intrastat system which is targeted for implementation from 2017.

To offer a more immediate simplification, during 2013 HMRC informally consulted with businesses required to submit Intrastat declarations and users of Intrastat data on a proposal to reduce the coverage of trade on which data must be collected by the Intrastat system for arrivals from 95% to 93%. The UK, along with other Member States, worked with the EU Commission to deliver this change and as a consequence the EU legislation has been amended resulting in an increase to the Intrastat Exemption Threshold for arrivals from £600,000 to £1,200,000 from 1 January 2014.

So are we saying that we’ve already achieved option 3 and we don’t want any further change?  And that further change will add to HMRC and to businesses’ costs?  And we’re trying to persuade our fellow states that we don’t need to make any further change?

Well then, I go back to, why the consultation?

Are we – I wonder – hoping that affected international businesses will kick up a fuss in other european states and get them to back the UK proposal/status quo?  Or are we genuinely looking to confirm or refine our costing data, since there seems to be some question over the cost of the increased data requirements on the exporters if we went to the asymmetric method.

Speaking as a PhD student, wouldn’t it be cheaper, or at least more efficient, to spend some money on getting some research done?  Stick a few grand in the pot, get the other member states to do the same, and get someone to lead a research project and send a bunch of eager young PhDs and post-docs out to get some actual data from some actual businesses and write it up in a comprehensible way?  (And dear god no, I’m not pitching for the work!)

In other words, while Oliver Letwin might not think that consultation is the place to gather “views”, I’m not entirely certain it’s the right place to gather “data” either.  And maybe this is an instance where data would be more valuable than views.

(Irrelevant joke insert: What do you call a man with three planks on his head?  Edward Woodward.)

Thank you for staying awake.  As you were.

Posted in Bit of politics, Consultation, HMRC, Regulation | Tagged | Leave a Comment »

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Muggle morality

February 24, 2014

Let’s talk a bit about “fairness”.  Or about “morality”.  Or we can talk about “equity” instead, if you like.  After all, “there is no equity about a tax” (Mr Justice Rowlatt in Cape Brandy Syndicate, 1921), and “there is no morality in a tax and no illegality or immorality in a tax avoidance scheme.” (Lord Templeman in Ensign Tankers v Stokes in 1992).  That’s tax wizard talk: people with a professional interest in tax can sometimes get caught up in the idea that tax is legal confiscation of private property and no overbearing state ought to be able to dip its hand in your pocket without good reason and legal backing, preferably from a body of law hallowed by time and created by a democratically elected parliament.  Quite right too… except, is that really the problem, in a twenty-first century democracy?

Let’s be clear: if HMRC were coming through my front door with guns I’d be against it.  When I DO deal with the actual HMRC, I get pretty pissed off if they’re inefficient, rude or inaccurate… but please note that I haven’t (so far) disappeared into a gulag for arguing my corner with them if they happen to stray.  In general, if they put their hand in my pocket, I’d rather they didn’t but I accept I also would rather have an education, an army, a National Health Service and a few quid back from the state when I’m too decrepit to work any more: that tax is, indeed, the price we pay for civilisation.  That, then, for me is the first point where morality comes into it.  We pay taxes for a good reason, we obtain public goods as a result, and it’s pretty contemptible to take the goods and weasel out of paying towards them.

But the crunch point for me isn’t there, in the dealings HMRC has with the individual citizen, but in the relationship between the state and the multinational corporation.  The hollowing out of the state by offshoring profits to tax havens (as described, for example, in Richard Brooks’ The Great Tax Robbery) seems to me to be contributing to all kinds of inequality and unfairness (see some of the examples quoted by the Tax Justice Network).  Is the relationship between the state and the multi-national analogous to the relationship between the state and the private citizen?

Well let’s think about it.  For one thing, the multinational may well have more money.  (Walmart is bigger than Norway, Apple is bigger than Ecuador…)  They may be able to bring influence to bear which the private citizen would be unable to exercise by the exercise of their single vote.  They may be able to persuade governments to modernise any inconvenient rules (for example) “to better reflect the way business operates in a global economy“, costing the economy £450 million this year, rising to £805 million in 2016/17 against not a penny of quantified benefit.

The tax wizard might be right that there is no moral failure in a corporation arranging its affairs to pay the least amount of tax according to the law of the land.  But if the corporation has the ability to influence the making of the law by which it is taxed, is there a moral failing in its doing so?

In tax policy-making, perhaps it is politicians who are failing to make moral choices when they allow themselves to be influenced?  Or perhaps it is our fault, as citizen-stakeholders, for not holding our politicians to account?

It’s not an easy thing to do – is anyone actually doing it? (Margaret Hodge?  Any time her name comes up in the news my twitter feed comes instantly alive with tax wizards complaining about or mocking her.  Similar animus is shown towards Richard Murphy)

So what are the rest of us, those of us who aren’t tax wizards and are pretty sure the “no equity” thing is a crock, to do?  Well, fellow muggles, here’s my attempt at a muggle moral maze.

  1. If it is morally justifiable to arrange your tax affairs so that you pay the least amount of tax possible under the law, and
  2. It is morally justifiable to influence tax policy making so that laws which would tax you more heavily are not passed and laws which are favourable to you are, and
  3. It is morally justifiable to say that it is up to parliament what laws they pass, then,
  4. Logically it must then be the moral responsibility of the citizen stakeholder to exercise the only power which remains in their hands…

So to arms, citizens!  Any time someone asks you for their vote ask them a simple binary, muggle, question: are they in favour of tax competitiveness, or of tax justice?

Posted in Bit of politics, Tax Justice | Tagged , , , | 3 Comments »

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Don’t be a muggle.

February 7, 2014

Here we go again.  Tax wizards get to have opinions about tax and are listened to by HMRC and the Treasury.  Well, sometimes, anyway.  And the rest of us – the tax muggles – can just stop worrying our pretty little heads about our tax codes and pay up when required.

Yes, HMRC has published some lovely HMRC Stakeholder Research … which, as Richard Murphy points out, may have been conducted by Ipsos Mori, an independent organisation, but was conducted using a sample “provided by HMRC”.  Er… I might not have got very far in my academic research, but that one rings all the ethical bells they’ve been at pains to install in me!

So who are the hand-selected stakeholders whose opinions are so important to HMRC?  Why, they are:

  • corporate stakeholders (30 per cent are voluntary and community sector, 30 per cent are agents mainly representative organisations, 40 per cent are businesses, associations or industry groups)
  • politicians (including Members of Parliament as well as members of devolved assemblies) ␣
  • journalists (both national and regional).

Hmmmm…. sounds more like market research to me.  You know, where you go to your biggest customers and check whether your corporate brand is on the up or not.

Maybe we just differ on what we mean by “stakeholder”? There are dozens of academic articles on stakeholder identification and stakeholder salience backed up in my reading queue.  I’m pretty sure, though, (without getting even half way down the list) that “stakeholder” doesn’t actually mean what HMRC seems to want it to mean in this report.

Look at it this way.  It’s a perfectly legitimate object for a large organisation to want to know how it is seen by the people who will influence its future.  If you were a government department, you’d want to know how MPs and journalists viewed you.  If you were a government department dealing with finance, you’d also want to know how your biggest payers viewed you.  It’s no different from a TV channel taking more notice of its advertisers than of the people who watch the programmes.  We’re all stakeholders in the channel, but you’d expect them to take more notice of, you know, the ones with the money.

Oh, and look here: HMRC did the same survey with a similar group of “stakeholders” last year.  Only LAST year they asked about consultations:

Opinion was split among stakeholders on HMRC’s consultations. While most felt that HMRC understood their needs, similar proportions felt consulted and not consulted on issues that affect them. While many consultations were felt to be relevant, useful and well run there was a sense that some were a matter of “box-ticking”. These are then seen as a waste of time and potentially serve to damage relationships as feedback may not be listened to or acted on – especially if many consultations arrive at the same time so stakeholders do not feel they have the resources to respond to them all.

Stop laughing at the back, there!

HMRC have done this before, of course.  Remember the “stakeholder conference” last July?  Have a look at the link here and scroll down to see the names of the “stakeholders” who were invited.  Who represents you in that list?  (The Daily Mail?  The Prince’s Trust?? TaxAid???)

There’s the thing.  There are nearly thirty million people paying income tax in the UK.  Aren’t they – aren’t we – also stakeholders of HMRC’s?  Of course we are.  The difficulty is, how do they find a way of talking to us?  We express our opinions via the ballot box, but which of us voted for “tax competitiveness” (and how do we vote against it?)

But look at the “future challenges” identified in the first piece of “stakeholder research”, and quietly ignored in the second:

The main challenge facing HMRC, according to its stakeholders, is improving its public perception and trust. In particular, this seemed driven by a negative perception that HMRC does not treat all customers and taxpayers in the same way (particularly comparing its treatment of ‘ordinary’ individuals or small businesses with its attitude towards large firms…)

If HMRC doesn’t talk to the ordinary, the small, the muggle… then we have a problem.

Posted in Bit of politics, HMRC | Leave a Comment »

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Due Consideration

January 10, 2014

I have to admit, I didn’t get far looking at the “consultation” on the 2014 Finance Bill.  Being an impact assessment specialist I started with those, at page A1 (actually page 22 – of 176) of the “Overview of Legislation in Draft” document to be found here.

The first TIIN is for the government’s support-for-marriage measure, the transferable personal allowance for married couples.  A person with earnings below the tax threshold will be able to transfer £1000 of their personal allowance to a spouse or civil partner, potentially increasing the couple’s joint take home pay by about two hundred quid a year.

I got stuck at the equalities impact, which says:

Couples will benefit as a unit, but the majority (84 per cent) of individual gainers will be male.  This reflects earning patterns in the population more generally.

Now let’s just stop there for a doggone minute.  Remember when the Fawcett Society tried to bring a judicial review of the so-called “emergency” budget at the start of the coalition?  They didn’t succeed in getting the Budget overturned but they put the wind up the Treasury which was forced to concede it hadn’t done an equality impact assessment of the Budget as a whole… but it had looked at the impact of most of the measures and promised to do better in future.

So here we are looking at the equality impact of an extremely expensive change (495 million in 2015/16 and then 600, 660 and 775 million, according to the exchequer impact section of the TIIN) and the best we can come up with is that it will mostly be men who benefit, but that’s just how society works?  Seriously?

I mean, I’m not imagining it, the Public Sector Equality Duty is still in force, right? The thing that says (and I checked my memory against the Equality and Human Rights Commission guidance) that a public body like HMRC or the Treasury has to give “due consideration” to equality in developing policy?  That “due consideration” means conscious thought while the policy is being developed (and not a quick run round the equality issues when all the decisions have been taken)?  That the point of it all is to reduce, not to perpetuate, inequality?  I mean, that IS what the legislation is all about, yes, I haven’t just dreamed it?

Now it’s not perfect.  It doesn’t mean that equality has to be the overriding consideration.  The government has left itself perfectly capable of saying, in effect, “yes, I’ve thought carefully about it, but, no.”  It just has to have due consideration – is any negative impact proportionate, and are there any positive impacts that could be incorporated, and have we done everything reasonable to mitigate the negative impacts we know about?

So due consideration of the gender impact of the couples allowance might be something like, well, “it perpetuates and perhaps reinforces negative financial impacts on women by giving a financial reward to men whose partners are in particularly ill paid employment and after careful thought we have decided that our desire to encourage traditional gender stereotyped marriage arrangements outweighs the financial advantage this gives to the men affected.  We also believe they’ll share, honest.”

What isn’t – is seems to me – “due” consideration is to say, in effect, “yeah, we’re giving four times as much of the money to men;  suck it up dear.”

However since this is a consultation on how the legislation works and the TIIN is intended as a decision making tool, well, perhaps there’s time to do something about it?  Because I’m sure, she said sincerely, that the Treasury will have done some proper research into the possible gender impacts of this change and the brief line in the TIIN is just a rather infelicitous summary of some complete and careful work, right?  So how about, say, we all go here (a nifty little website that will give you your MP’s email address) and drop our MP a line asking them to bring up the equality impact when they debate the Finance Bill?  In fact, come to think of it, a Freedom of Information Act request ought to get us the underlying research in good time to inform the Finance Bill debate anyway, right?  Right?  (Goes to write FoI request.  Watch this space!)

Posted in Bit of politics, Consultation, Equality, TIINs | 1 Comment »

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#taxjustice

November 25, 2013

I was in the wrong place this morning, at the conference on Tax Justice: Are You Serious? organised by various NGOs.  It was interesting, but it was clearly a campaigning event and I’m not signing up to the campaign, not just yet.  Not because I don’t believe they’re right to seek tax justice, but because I’m not quite sure there’s any clarity there about what we mean by “tax justice”.  (A particular low point was the vehement person arguing from the floor that organisations should campaign for people to refrain from using ISAs in the same way environmentalists campaign to get people to change their personal use of resources.  Just, no, sorry – as, to be fair, the speakers quickly clarified.)

My interest in the campaign is in the interface between fairness and expertise – as the tax tweeters immediately identified when the conference was first mooted “there’s no-one on the panel who knows anything about tax”.  Richard Murphy, Richard Brooks and Prem Sikka presumably being considered not to know anything about tax because they disagree with the argument that labels Margaret Hodge a “tax prat”.

I have three suggestions for how the campaign could be taken forward, though.

1. Use the mechanisms that already exist.  The government puts its tax legislation out for consultation.  Answer them!  I do – but what would happen if a hundred thousand people did?

2. Use the opportunities that already exist.  The government asks for ideas for the Budget (the Treasury confirmed in an email to me on 21st November that

A call for suggestions for Budget 2014 will be published [on gov.uk] early in 2014, once the Chancellor has announced the date for the Budget.

Cohere around a few simple talking points and put them in as Budget Suggestions, and encourage members of membership organisations to put them in separately too.  (Happy to help if people want ideas about WHAT to suggest!)

3. Use the regulations that already exist.  The government gave a public undertaking (in a written ministerial statement) to publish TIINs with tax legislation.  The statement said that

These notes set out what the policy change is, why the Government are proposing the change and a summary of the impacts of the change.

So let’s take a look at a few – like the ones for the abolition of CFCs, and for the introduction of the Patent Box – and, oh look!  They say the policy will be subject to review.

Has anyone seen a review yet?  FoI, anyone?

Just a thought!

Posted in Bit of politics, Tax Justice | Tagged , | 3 Comments »

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Not a penny more.

October 20, 2013

The consultation into MPs’ pay and conditions closes today, Sunday 20th October.  If you do one thing today, please take a moment either to email your thoughts to ipsa (mppayandpension@parliamentarystandards.org.uk) or add them in the comments here.

This is what I sent them.

You are consulting on proposals to increase MPs’ salaries and pay . My response is that MPs should have not a penny more during the life of the current parliament.

In Mrs Thatcher’s day the pay of MPs was tied to that of senior Civil Servants:

“On 21 July 1987, the House agreed a resolution that set Members’ pay at “89 per cent of the rate which on 1st January in that year represents the maximum point on the main national pay scale for Grade 6 officers in the Home Civil Service” from 1 January 1988 and maintained that linkage from 1 January 1989 onwards.” (from http://www.parliament.uk/about/faqs/house-of-commons-faqs/members-faq-page2/)

The current HMRC Grade 6 London max is 74209 and 89 per cent of 74209 is of course 66046. This means that the current 66396 which MPs receive is very much the rate for the job and I cannot see any justification for increasing it.
Indeed the Coalition Government has operated under a narrative of an austerity crisis which overrides all other fiscal arguments: Francis Maude wants a Civil Service which is “fit for the future: faster, flatter, focused on outcomes not process, more accountable for delivery, more capable, more commercial, more digital, more effective in delivering projects and managing performance, more open, with modern terms and conditions, smaller and more unified.” Why shouldn’t this also apply to MPs? Let them have performance pay: if the economy improves, the welfare state runs effectively, the NHS works effectively, unemployment reduces and the happiness of the people increases, then they can have a pay rise. They have demonstrably failed to achieve any of these ends to date.

I reject your argument that MPs are “at the pinnacle of our democracy. This is a fact that we ought to record and respect.” I believe that MPs are public servants and should be rewarded and valued as much as any other public servant. In hard times, they need to understand they are subject to the same hardships as the rest of us, that we are “all in this together”. So: not a penny more.

Posted in Bit of politics, Consultation | Leave a Comment »

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Wizengamot

September 11, 2013

So I was at a meeting of the Wizenagemot yesterday…

Ah.  I probably need to step back a bit and explain?  You see, it’s my belief that the debate about tax is divided between two groups.  There are the tax professionals on the one hand – people like HMRC and HMT and accountants, tax specialist solicitors and barristers, tax specialists in large businesses and policy thinktanks and lobby groups.  People who understand that a painting can be “plant” and whether or not a jaffa cake is a biscuit.  Let’s call them the tax wizards.

And then there are the people who don’t understand that “there is no equity about a tax” but think that there ought to be some kind of principle of “fairness” involved.  People whose “idosyncratic and ill-informed” views about tax are “a joke to those who understand the subject”.  The tax prats .  The citizen stakeholders.  People who pay their taxes and don’t understand why everyone else doesn’t seem to have to follow the same rules.  The tax muggles.

Well, if you’re a tax muggle you may not be aware that there’s an active debate in the tax wizarding world about this thing called the Tax Gap, which is the difference between the tax that HMRC collects for us, and the tax that they ought to be able to collect if everyone paid their dues and no-one made any mistakes.  And you don’t have to be a wizard to understand that this gap is never going to be zero because, after all, nobody’s perfect, but everyone is clear that it ought to be as small as we can reasonably make it.

Ah.  And there’s the rub.  Because David Gauke, the Minister for Magic doesn’t think there’s much of a problem with the tax gap at all.  He told the meeting that the UK tax gap was “relatively small by international standards”.  (Does anyone have a source for this, by the way?)

He also told the meeting that he made “no apology” for HMRC’s staff and budget being reduced, which was a bit of a brick considering that the meeting had been called by ARC, the section of the FDA that represents senior officials in HMRC, and that their agenda was to explain that they thought they could make a big hole in the tax gap if they could just have a few more people and some decent treatment for their members.

The meeting was at Portcullis House (and isn’t THAT a fabulous building!  Wow!) and involved tax wizards from HMRC and ARC, the Exchequer Secretary, his Labour Shadow and the Chair of the backbench Lib Dem Treasury Committee, as well as Richard Miller from ActionAid.  It was chaired by Vanessa Houlder from the Financial Times and was extensively tweeted here (although not at the time – no signal inside Portcullis House).

I am not sure there was any great meeting of minds resulting from the event.  The politicians spoke to their briefs, the campaigners argued the tax gap is bigger than HMRC’s calculation, and I sat there wondering (a) what does it matter and (b) when was ARC going to get back to the “give us more resources” point?

What does it matter?  Well, everyone agrees there IS a tax gap.  Everyone agrees that it is a good thing to endeavour to keep the tax gap as small as feasible.  There is some broad agreement on what elements are included in the calculation of the tax gap so we know where to direct attention.  So what does it matter in practical terms whether underpaid corporation tax is around 3-4 billion or 12 billion?  Can we just agree that it’s either “shedloads” or “a fuckton” and that in either case we’d like some of it back, please?

Which takes me back to (b).  I was surprised, frankly, that ARC didn’t drive home their point a little more strongly.  When your Minister says he makes no apology for cutting your staff and resources, surely you exercise right of reply and say, “yes Minister, but” and then hit him with your stats?  The stats you’ve politely buried in the Notes to Editors to the press release linked in the bibliography to the polite paper you’ve put together for the meeting?  Because, you know, he won’t have read that far.  Even his staff are unlikely to have read that far.  So when you have him sitting two seats away from you, you pass him another cup of coffee and give him your elevator pitch: invest £312.3m in us and we’ll bring you in eight billion quid (£8,260m)

As Saint Sir Bob apparently never actually said “give us the fucking money!”

Yes, Minister?

 

 

 

 

[note: edited 16/9/13 to add a link to the FDA reporting of the event – first link in the article]

Posted in Bit of politics, HMRC | Tagged , , , , | 3 Comments »

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Revenge of the old gits

September 2, 2013

I’m a pensioner now, you know.  (OK I took early retirement and I’m also a student, but still, I’m probably a member of the Geezer Class rather than the Bright Young Things).  So I really feel as if I ought to care about the consultation that closes today, into Pensions Tax Relief: Individual Protection from the Lifetime Allowance Charge

(Incidentally, would someone in either HMRC or the Treasury please take an executive decision on Random Capitalisation In Consultation Titles?  Sometimes they’re lower case after the first word, and sometimes (as here) they aren’t and instead have Initial Caps.  Update your style guide and do a copy edit, please!)

Yes, all right, I admit it, I found the document to be literally unreadable.  I read the beginning and the end and skipped through some of the impenetrable stuff in the middle.  Because, you know,

Individual Protection 2014 (‘IP14’) is intended to allow individuals to protect from the lifetime allowance charge (‘LTA charge’) any pension savings they have on 5 April 2014, which has been accumulated with UK tax relief with a value of between £1.25 million (the standard LTA from 6 April 2014) and £1.5 million (the current LTA since 6 April 2012)

Oh come on, you glazed over too, admit it!

All right then.  What we seem to be looking at here is a kind of grandfathering provision – the government has decided to bugger about with the amount of money you’re allowed to save for your retirement, and there are a few people who’ve saved a bit more than we’re now going to allow (but a bit less than we used to allow) who would be seriously pissed off if they were shafted by the changes.

I pause to change into my shiny ’80s Ben Elton suit and say “bit of politics” because buggering about with people’s pensions expectations didn’t seem to bother the government when they changed MY pension from being updated by RPI to being updated by CPI each year.  Nor does it seem to have bothered them that they’ve changed my former colleagues’ pensions by introducing what amounts to a Civil Service Tax so that they are now taking home LESS than they were when I left, because of the “contribution” they’re making to the pensions.  You know, the “gold plated pensions” we keep hearing about, that were supposed to make up for the below market rate salaries we got from (to my certain knowledge) the mid eighties when I joined up, till I left.  As I say, bit of politics.  Now back to your regularly scheduled consultation response.

So in general I’m not in favour of buggering about with people’s pension expectations, so protecting the people who get the fuzzy end of the lollipop on this occasion is probably a good thing, no?

Well, except, how many of these people ARE there exactly?  I mean, we’re talking about protecting people who would otherwise lose out when the upper limit is lowered from £1.5m to £1.25m, right?

Let’s turn to the impact assessment.  It’s an odd kind of consultation, because it conflates stages 2 and 3 of the consultation process – we’re being consulted about

Setting out objectives and identifying options. Determining the best option and developing a framework for implementation including detailed policy design.

Drafting legislation to effect the proposed change.

So we’re being asked about how to solve the problem at the same time as we’re being asked to look at the detailed legislation to implement the proposed solution.

The impact assessment is detailed enough that it’s been signed off by Sajiid Javid MP, Economic Secretary to the Treasury, as a “reasonable view of the likely costs, benefits and impacts of the measure” and who are we to disagree?

And what does it say?  Look at the Exchequer Impact:  It asserts that there will be an extra £100m in the tax take in 2014/15, £80m in 2015/16 and £50m in 2016/17.  Say what?  We’re going to get in a total of £230m over three years from the difference between £1.5 and £1.25 million?  How much tax relief does someone get at 40% on a quarter of a million?  40% x £250,000 = £100,000, right?  But £230 million divided by £100,000 is 2300, isn’t it, unless I’ve got my decimal point in completely the wrong place?

The TIIN says (in the “impact on individuals and households”) that

It is estimated that about 120,000 individuals will have pension savings above £1.25 million in April 2014. Of these, those who don’t have enhanced or primary protection will be eligible to apply for IP14.

I’m weirded out about why it isn’t going to save us fifty times the amount shown in the TIIN if there’s the possibility of affecting fifty times more people .  But I’m more weirded out by the assertion it’s going to cost HMRC £1m to administer – what, for this one change, affecting two to three thousand people?  What are they going to do, write to them individually, in iambic pentameter, on vellum, with a goose quill pen dipped in gold ink?

So no, I’m not going to respond to this particular consultation either.  Except to say, pick a limit and stick to it.  If the government hadn’t put the limit up and then brought it down again they wouldn’t be having to think of grandfathering provisions.

And I have a Modest Proposal on the “simplicity and fairness” front – wouldn’t it be a lot simpler to set a date after which pension tax relief is only given at basic rate in the first place? *ducks and runs for cover*

Posted in Bit of politics, Consultation | Leave a Comment »

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