Archive for the ‘Equality’ Category

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Tax havens

October 16, 2015

I read this article in the Observer last week and immediately thought “yes!  This!” and tweeted the link:

Essentially, if I understand him correctly, Zucman argues that we should measure the profits of international companies in the same way that the US measures the profits of American companies trading in more than one of its states, by allocating profits in proportion to the customers of each state rather than by the location of the seller.

But, just as I thought “yes!  This!” to Piketty when I started reading Capital this summer, I nevertheless don’t think Piketty’s taxes on wealth are any more likely than Zucman’s taxes on companies, because neither of them addresses how tax law is made.

It may, indeed, be obvious to you and I that taxing the rich on what we used to call their unearned income (and isn’t THAT a term we ought to bring back into use?) and taxing companies on the proportion of their profits commensurate with the customer base that is located in the country doing the taxing, rather than in the tax haven where they have planted their brass plate, are reasonable and equitable.  But, frankly, you and I don’t make tax law.

As you may remember, I have been groping towards this question in this blog for some time, characterising a difference between tax wizards and tax muggles.  I’m now groping towards putting some academic language around this thinking, of which more, I hope, later.

But let’s look at a practical example.

The other recurring theme here is the VATMOSS VATMESS.  You’d almost think, wouldn’t you, that I agreed with the principle that VAT ought to be charged according to the location of the customer and not the seller, because is that not the very essence of the scheme Zucman proposes for international company taxation?

Well, yes: in the same way as the old joke about the country deciding to switch from driving on the left to driving on the right, and deciding to phase it in by making the switch only applicable to lorry drivers.

In other words, we have a principle that might be a better way of organising international taxation being applied piecemeal to a tiny corner of international trade.  A tiny corner least able to understand, apply and implement the change; and a tiny corner least able to contribute to the making of the regulations which burden it, because it consists of stakeholders not given an equitable voice in the stakeholder community.

I’m thinking aloud here, or, at least, groping towards an argument.  Feel free to join in, cheerlead or otherwise contribute in the comments.

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Citizens and tax justice

September 15, 2015

How are citizens to engage with tax policy?  One method, the one which led to the foundation of this blog, is to seek out and respond to tax consultations.  In theory, any citizen can find, read, consider and respond to the government’s proposals for the tax system via the list of consultations published on the gov.uk website.

In practice…?

Well, a few weeks ago I saw a couple of tweets about a proposal to charge fees for taxpayers to challenge HMRC decisions at tax tribunals.  It started here:

and more detail came from this:

Because here it is: the actual consultation document is on the Ministry of Justice site under the splendid title of “Enhanced fees for divorce, possession claims and general applications in civil proceedings and consultation on further fees proposal

Now, I don’t know about you, but to me this does not immediately say “there’s a section about tax tribunals!  You need to read this, honest!”  It does not come up if you filter the “open consultations” section of the “consultations” page on gov.uk by the “tax and revenue” policy area, for example.  How were we to know it was there?

Having found the page (from the links provided on twitter) I was rather taken aback to see it described, in the overview, as “the government response to the consultation on enhanced fees for possession claims…” and it took me a while to work out that it was the final paragraph that must refer to the tax tribunal proposals (“In addition, we have today published a further consultation on a number of new fees proposals. This consultation proposes new or increased fees in a range of court and tribunal proceedings and the detailed proposals can be found in chapters 3 and 4 of the document provided below.”

The “document provided below”??  There are some documents “below”, three listed under the heading of “previous consultations” and seven under “related documents”.  It is not at all obvious which document contains the new proposals.  Where, then, are we to look for details of the proposals on tax tribunals?

Well, I’m an Impact Assessment wonk, so I started with the final document, the Impact Assessment for the “introduction of fees” to (amongst others) the “First Tier Tax Chamber, Upper Tier Tax Chamber” (IA No: MOJ008/2015)

What do we learn from this?  Well, first of all the perceived problem seems to be that the tribunals don’t cover their own costs and that government action is required to “reduce the burden on the taxpayer”.  Now to me this is begging rather a number of questions.  When, firstly, did we require courts to cover their own costs?  Isn’t the cost of justice precisely one of the reasons for having a tax system in the first place?  Isn’t it part of the deal we make in living in a functioning state, that the state will collect money from us in taxes but in return will provide us with security including a system of justice?  In other words, I reject the basic premise of the IA: this is not a problem that requires government action.  Collecting fees from applicants for justice is not justice: it is commerce.  It is the Ritz Hotel model of equality, where we all equally have the right to dine at the Ritz but only those with sufficient cash in hand are able to exercise that right.

Next, “what policy options have been considered, including any alternatives to regulation? Please justify any preferred option.”  Now this looked promising, at least in the sense that there are five options listed.  They are, however, different strands of the SAME proposal: there is a “do nothing” option, option zero, and then there are five separate options listed, the second of which is the tax chamber proposal.  These are not alternative options, they are different elements of the same proposal, the proposal to impose fees.  There is no suggestion that the perceived “need” to make the tax tribunal cover its own costs might be met in several different ways.  Off the top of my head, you could meet the court costs by a grant from HMRC, by a charge to anyone losing a case where tax at stake was more than £x million, by a percentage levy on the losing side in proportion to the tax at stake or by, I don’t know, starting a court tv service, televising the tribunals and selling bloody advertising. My point is, those are four different alternative options.  “Do this or don’t do it” isn’t presenting options at all: it’s a statement of intent.  Particularly when you say, as the government does in the impact assessment (under “Will the policy be reviewed?”) that once charges have been introduced the decision “will not be reviewed”  Why the hell not???

Turning to the “evidence” base, the scant material has been repeated five times so it looks as if someone has given it consideration, but a cursory glance at the actual material suggests otherwise.  Look at the bottom of page 15 where the evidence base for the tax tribunal proposals begins.  It reads:

45.  When cases are first issued in the First Tier Tribunal, they are assigned a case category (Paper, Basic, Standard or Complex) by the tribunal.  This is

However if you turn to page 16 hoping to find the end of that sentence, you will see instead what appears to be a misallocated footnote numbered 11 and then section 46.

This is a miserable, shoddy excuse for an impact assessment for what seems to me from reading it to be a miserable, shoddy excuse for a policy.  The consultation closes today.  There was an article about it in last week’s Taxation, so I expect at least some tax practitioners will have been alerted to what is proposed.  But, honestly, how would it serve justice if someone wanting to challenge the imposition of a fixed penalty of £100 for a late return were to be required to pay £50 for the privilege of challenging the state’s view of the case?  Follow this link to the electronic form…. Oh.  Actually the bloody thing closed at noon today.  No, it doesn’t tell you that on the consultation website.  But it does on the gov.uk landing page.

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Three more things

September 9, 2015

Three more thoughts, at a little more leisure, after Sunday night’s call to arms on the government’s consultation on the gender wage gap (see previous entry).

Firstly, how is it that gov.uk still doesn’t produce the list of open consultations in a usable format?  Seriously, look at the list here which shows you all consultations which are currently open.  At the time of writing there are 119 and, if you scroll down the list, you’ll see that they are in fact in date order.  But they are in order of the date on which they were published.  To find out when any of the consultations close, you have to click on the link to the specific consultation, open up the new page, and look for the closure date.  In the great scheme of things that might not seem like much, but it means that you can’t extract a list of open consultations, order them by date of closure, and then concentrate your efforts on the ones which are closing soon to make sure you don’t miss something.  You’d almost think they didn’t want consultations responses from individual citizens…

Secondly, on the format of the consultation, what on earth was the thing with the electronic form all about?  Why do you have to provide an email address, a snail mail address AND a contact phone number in order to respond?  Any one of three ought to be sufficient, surely?  And, while I can see it might be administratively convenient to have responses on an eform so that you can easily aggregate the responses, I can’t say that I came away from it with any sense of having contributed to a serious debate on the issues.

Third and finally, what were the issues?  In retrospect, this was a consultation on whether and how the commitment to require employers of more than 250 staff to publish their gender pay gap details was to be fulfilled.  The gender pay gap in this context is the difference between the average hourly pay of male and female employees.  So you can see that a firm with a largely female workforce in something like a caring profession, perhaps with a largely male boardroom and management cadre, might have a substantial pay gap explained by the makeup of the workforce.  You can also see how companies might be temped to game the figures by adding a few highly paid female board members to their roster, and I should mention here that I’m open to non-exec positions…  Ahem.

However the condoc tells us that the National Statistics Office uses the median hourly rate (excluding overtime and bonuses) to calculate the gap.

Why exclude overtime and bonuses?  There have been a number of high profile court cases about female high flyers in the feral professions nevertheless being denied the seven figure bonuses paid to comparable males.  Let’s add that in, surely?  And excluding overtime surely again offers chances to game the system by paying men for overtime not available to women?

The main point, though, is whether it’s more useful to have the pay gap measured by use of the average or the median rate.  Say you had 100 female employees earning £10 an hour and ten male managers on the kind of salary that averages out as £60 an hour, with three male and one female board members on an hourly equivalent of £200.  The average hourly rate for women would be ((100 x 10) + 200) / 101 = 11.88.  Most women earn £10 an hour, but the one very highly paid woman raises the average slightly.  The men average ((10×60)+(2×200))/12 = £83.  In this very crude example there are fewer men in higher paid positions and a lot of women in lower paid occupations – the wage gap is 83-11.88 = £71.12

If you use the median hourly rate, you find the one in the middle.  You rank the women in order of hourly salary and pick the middle one:

200

10

10

10…

(I’m not going to list that 100 times but you get the idea.  The middle woman, the 51st on the list, still gets £10 an hour, so that’s the median hourly rate.)

The men:

200

200

60

60

60… etc etc

Again, the middle number (the seventh man) gets £60.  The wage gap is £60-10=£50.

These two figures tell you different things.  (As well as the median and the mean, you might also want the mode, the most frequently occurring number, but in this artificial example it gives the same figure as the median)

You could, for example, envisage tweaking the figures.  If the company took on some men in its general workforce and appointed some female managers it could fairly easily arrive at a median wage gap of zero.  Appoint another female board member and you might wind up with an average wage gap of zero.  And perhaps those are the kinds of actions we might want to encourage businesses to take; I don’t know.

My point is, though, that this is what the consultation ought to have been about.  What IS the real gap between men’s and women’s pay, how best can we capture and promulgate it, in order to nudge companies to do something about it?

What a missed opportunity.

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Luck of the draw

September 6, 2015

I’m writing this rapidly, at around half nine on the evening of 6th September, because – while idly flicking through twitter – I saw a tweet from @Govt_Women (“the official feed for the UK Government Equalities Office”) reminding people there’s a consultation on the Gender Pay Gap closing in three hours.

Actually according to the consultation document here, it closes at 11.45pm tonight, so you’ve still got a couple of hours, just.

Here’s my brief summary of the condoc:

  • the gender pay gap is the gap between *average* salaries for men and *average* salaries for women
  • pay discrimination doesn’t wholly explain it (because “pay discrimination… is already unlawful” – bless!)
  • causes can include women being concentrated in lower paid occupations, women not being promoted to senior positions, and women losing seniority if they take time off for childcare

The consultation, however, is purely on how the tories achieve their manifesto commitment of requiring employers of more than 250 people to publish the figure.  It’s already in the 2010 Equality Act, but it’s a “power to introduce regulations” power.  The consultation is on what the regulations should contain.

Responses are requested on an eform which you can find here, and it’ll only take you a few minutes.  Let’s try to get a few hundred “just get ON WITH IT”s in the last hour???

 

 

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The Taxman

August 28, 2015

Fair warning, if you ever meet me face to face and start telling me about the Laffer Curve (the idea that taxing above a certain level stops people bothering to getting out of bed) you should know that I consider this theory to be entirely exploded by history.  This history is admirably illustrated by The Beatles’ song “The Taxman“, and I will more than likely sing a few verses of it at you until you admit defeat.

George Harrison could do as he liked, of course, but for the rest of us, times have changed, and the use of the term Taxman to refer to members of Her Majesty’s Revenue and Customs, and, by synecdoche, the institution itself is now somewhat offensive.

I say “somewhat”, because there are few absolutes in linguistic useage (I am aware that I have used the term myself when I have been unable to think of an alternative) and I say “offensive” because HMRC had a 58% female workforce (when they had 74,000 staff: I’m assuming this was a couple of years ago – anyone got more recent figures?)

“The Taxman” is a term which includes female tax inspectors?  Yes, quite: and “who for us men and for our salvation came down from heaven” never bothered me in the creed either.  It’s an archaic usage: get with it grandad and just stop it please!

Let us be practical, however.  What can we say instead of the lazy sexism of “the taxman”?

Well how about:

  • HMRC
  • the Revenue
  • Customs
  • taxfolk
  • taxpeeps
  • the taxers
  • taxbods
  • tax professionals
  • taxworkers
  • the tax office
  • tax officials
  • tax inspectors
  • HMRC officers
  • tax/customs authority

Pick an appropriate one for your context (and, no, using one inappropriate to context will not persuade me that I’m asking the impossible).  And, please feel free to add your further suggestions, serious and… more left field…. in the comments.

 

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Accessibility?

July 27, 2015

Don’t mind me; I seem to have reached the Grumpy Old Git stage of my convalescence.  This morning, for example, I thought I would read the Tax Assurance Commissioner’s new Annual Report – I know, I know, but there’s only so many episodes of Bargain Hunt and Time Team you can watch before your brain melts and dribbles out of your ears altogether.

Here it is: on gov.uk of course, on a page of “collections”, where the 2012-13, 2013-14 reports are collected along with the new one, for 2014-15.

Click on any of them, however, and you get the message that “This file may not be suitable for users of assistive technology”.  Now, wait a minute, wasn’t the government’s own website supposed to meet the government’s own standard for accessibility?  Why is the report a PDF document (which is a bugger to get to a reasonable size for comfortable reading) rather than HTML, which – as the government’s own Service Design Manual points out – is a more accessible option:

For written reports, the native format of the web (HTML) should be your default option. PDF can be an excellent display format, but without additional effort it can be inappropriate for users of screenreading software.

A pdf document should only be used where there is “no other option“:

HTML is quicker, easier and more widely usable/accessible than PDF, but where no other option is possible this PDF guidance should be followed.

I’m lucky enough not to require use of specialist software to read this document: I’m just pissed off that the text shows up on my laptop in a font too small for me to read comfortably without a lot of fiddling about, and that it took me a good ten minutes to find the control to increase the magnification.

But I wonder why there are so many HMRC and HMT documents which pop up as PDFs instead of HTLM.  Is there really “no other option”, or is there a default to seeking an easier life and not worrying about it till someone makes a fuss?

Answers on a postcard…

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Here we go again: equality impact assessment

July 17, 2015

The Summer Budget OOTLAR (Overview Of Tax Legislation And Rates) contains 124 pages, including 110 of TIINs (Tax Information and Impact Notes). They are signed off (on page 12) by David Gauke as containing “a reasonable view of the costs, benefits and impacts of the measures”

No, bear with me, it’s important.

Remember 2010, when the Fawcett Society took a judicial review against the coalition’s “Emergency” Budget? Although they were denied permission (mainly, as I understand it, on the grounds that the Budget had been debated by Parliament by the time the judicial review proceedings were launched and, as any law student knows, Parliament trumps judges).  However the Treasury were pretty much caught with their trousers down as regards conducting equality impact assessment of budget measures and promised to do better in future.

One of the “doing better” changes was to include reporting on equality explicitly in the TIINs that accompany any changes.  The equalities impact field in the TIIN is the only guarantee we have that the Minister responsible for making the decision has had the question of the public sector equality duty put before him or her at the moment of decision.

In that light… David Gauke’s view of what is a “reasonable” view of the equality impact doesn’t have a great deal in common with my own, shall we say?

Take for example page 24 of OOTLAR where there is the table of impacts for the changes to personal allowances. In the equalities impact field there are figures showing clearly that there are more lower paid women than men and more higher paid men than women. The public sector duty in the equalities act requires the government to have due regard to the need to eliminate unlawful discrimination, advance equality of opportunity and foster good relations between those who share a protected characteristic and those who don’t. The equalities impact field of the TIIN is the government’s evidence it has done so: on this evidence it has noted the facts of inequality but given no consideration to advancement of opportunity.

Or look at page 27, which has the table of impacts for the reduction in corporation tax.  It is noted that by 2020-21 the change will give away an anticipated £2,475 million.  The equalities impact shows “changes to the CT rates affect corporate entities and therefore do not have equalities impacts” in spite of the fact that this single measure gives away an enormous chunk of the tax base, for an unquantified economic benefit of making the UK “more attractive as a destination to locate business activity.” They can probably get away with this, because the judicial review proceedings held that equality could be considered on a measure by measure basis rather than looking at the Budget as a whole.  But a bit of common sense and political nous might lead us to wonder whether that was a good decision, when consideration of whether a corporate tax cut is a priority over, say, tax credits for those in working poverty is left unaddressed.

Then there are the changes to inheritance tax: “the government has no evidence to suggest that the measure will have any significant adverse equalities impacts”. (p34) This is not the public sector equality duty and does not provide evidence that the government has paid “due regard” to the right issues. Does “due regard” require consideration of what evidence the government doesn’t have, but could reasonably acquire?

The “exploding head” moment for me came when I reached page 118: yes, the idea of HMRC having power of direct recovery from bank accounts is back!  And apparently “will not impact disproportionately on people with any of the legally protected characteristics” – so the government is confident it won’t be trying to take money directly from the bank accounts of people in mental distress or illness, are they?  We have been here before when HMRC thought they would only be using the power around 17,000 times a year and I suggested, well, in that case, why not limit the power so that it can ONLY be used 17,000 times a year?   So that they would have to prioritise the serious cases and not introduce mission creep.  And it would be used to recover debts from individuals, businesses and partnerships, so I suggested a three year trial of the power applying it only to non-natural persons, ie to companies and LLPs and the like, before they let it loose on the rest of us.  I observe that the current proposals are suggested to affect

 11,000 individuals (including self- employed taxpayers) and businesses a year.

And yet (look at the last field of the table of impacts) the power won’t affect small businesses?  I believe someone’s trousers are on fire.