Saturday, March 23, 2013

Tax and how it hurts (part 1)

A constant source of irritation in this country is tax, whether it be income tax, corporation tax, council tax or maybe the reviled bedroom tax.
This week, in the Chancellor's budget speech we heard "blah blah blah" (or words to that effect) on the subject of tax.
For example; Corporation tax is to be reduced to 20%. Nice! If you have a company earning you a few millions or whatever, you will pay 20% tax on the profits. Of course, the profits will be managed shrewdly and, dare I say, minimised.
So, 20% tax rate. That is the same as you will be taxed on your hard earned wages.
Never mind, let's ignore the rate for now because, in the case of many companies, it will be irrelevant anyway. Look at the record of Starbucks, Google, Amazon et al.
I know tax avoidance is legal; if the government can't frame a set of rules that cover all the loopholes, rather than create them, then they have no business running an enterprise as large as the United Kingdom.
And to think, most of the numties in Westminster went to expensive schools and colleges, graduating with degrees in the likes of Economics, Law, etc. And they can't come up with a set of taxation rules that stop billions of pounds leaking out of the country annually?
To be fair, we shouldn't put 100% of the blame on the inept government. A large share of the blame should be apportioned to those robbers that once were trumpeted as the "Captains of Industry". It seems to me that their collective record borders on the stupid. They run a company for so long, until their incompetence overtakes them and they find themselves staring at declining balance sheets.
"Hmmm. What can we do to continue giving the shareholders a nice return? I know! Flog the company and distribute the winnings as a dividend".
So the company is flogged off, usually to a foreign investor, the board take a handsome salary/payoff and the government clap hands at the "inward foreign investment".
The new foreign owner immediately takes steps to re-locate to somewhere else and the taxes that had previously been going to the Exchequer now disappear.
Now go to Part 2...

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