City, Hedge Funds, speculators; when IS it ok to lower their taxes?

[Isitmebut]

I keep hearing that the Conservatives have Osborne lowered taxes for Hedge Funds and deprived essential UK services of taxes, is this strictly true, or is the government helping to keep the WHOLE UK fund management competitive with other centres, starting to ‘eat our lunch’?????

Does it matter to some politicians that the tax is paid by INVESTORS i.e. you and me, using Pension Funds and Hedge Funds (seen as ‘alternative investments’ and sometimes used by UK fund managers within their own funds), not the fund managers themselves?

You decided from the FACTS and try to find out of our whole UK domiciled fund management industry, including all foreign firms based here and those managing all our pension funds, how many are even designated ‘Hedge Funds’ and what percentage share of all UK domiciled fund management business, they have.

”Budget 2013: Chancellor scraps stamp duty for funds”

“Chancellor George Osborne has moved to increase the competitiveness of the UK asset management industry by abolishing a stamp duty reserve tax for UK-domiciled funds.”
www.investmentweek.co.uk/investment-week/news/2256176/budget-2013-chancellor-scraps-stamp-duty-for-funds

”Announcing the measure in today's Budget, the Chancellor said the move would help increase the attractiveness of the UK asset management industry, pointing to its key role in both the Edinburgh and London economies.”

"We have a world beating asset management industry, but they are losing business to other places. We will abolish the Schedule 19 tax," Osborne said.”

^”IMA chief executive Daniel Godfrey welcomed the move to scrap the tax.
"Abolishing stamp duty on funds is crucial first step towards creating a level playing field with Luxemburg and Dublin," he said.”^

”Rob Mellor, PwC asset management partner, said: "This is something that the industry has been requesting for some time."

"It is great news for the UK asset management industry as it levels the playing field with other European fund locations and should help to encourage more UK and non-UK asset managers to launch UK-based fund products."

And what do the financial services tax figures show to CONFIRM Labour’s accusation of deprived UK public services losing out to helping make our fund management business more competitive, bearing in mind the tax take from Corporation tax is much lower?

Dec 2014; ”U.K. Financial Firms Paid the Most Tax Since 2007, Report Says”
www.bloomberg.com/news/articles/2014-12-02/u-k-financial-firms-paid-the-most-tax-since-2007-report-says

”The U.K. financial-services industry contributed 65.6 billion pounds ($103 billion) in taxes in the last fiscal year, the highest since 2007, according to a report.”

”Financial-services firms, which employ more than 1.1 million people in the U.K., represent 11.5 percent of total government tax receipts, according to a PricewaterhouseCoopers LLP report prepared for the City of London Corp. published today. The taxes collected are for the 12 months through April and are up 0.9 percent from the year-earlier period, the City of London said.”

No wonder Osborne looks over at the Labour benches in disbelief when in ideological desperation their MPs (who really know better) utter those inaccuracies, factually and politically invalid as similar headlines of news papers, clearly not worthy of the name.

But Labour will still go on about the MAIN “ millionaires tax cut”, which was the Conservative cut of 5% tax, from the 50% tax rate imposed by Labour, ONE MONTH before the 2010 General Election, having held the top rate of income tax at 40% for 12 years and 11 months.

But surely Labour’s Balls/Brown needs to answer why they lowered the more aptly named ‘millionaires tax’, the UK’s Capital Gains Tax, to a tapered low of 10% for ‘special’ investors (if held over a number of years) before Darling raised it to 18% before Labour left power – after which Osborne raised it for the richer members of society, to 28%.

October 2007: ”A speculator's budget?”
www.bbc.co.uk/blogs/legacy/thereporters/robertpeston/2007/10/a_speculators_budget.html

”Although many will see the reform of capital gains tax as an attempt to force the mega-bucks earners of private equity to pay more tax, its signficance goes well beyond that.”

”There will now be a single rate of capital gains tax at 18 per cent.”

”When John Major was prime minister in the 1990s, that would have been seen as the very epitome of a pro-capitalist reform.”

”But Gordon Brown when he was chancellor reformed the system so that many entrepreneurs and business creators now pay only 10 per cent tax, so long as they hang on to the relevant assets for a couple of years.”

”So for them, and private equity, this reform represents a steep tax rise.”

”However for many ordinary investors in the stock market or property, there will be a big cut in capital gains tax.”

”They currently pay up to 40 per cent tax on their capital gains, and that will now fall to 18 per cent.”

This Labour correction to a post 1997 Labour rather extreme Capital Gains Tax cut for special entrepreneurs, is still very useful for any business, especially Private Landlords up to that point paying 40% CGT compensating via their Buy To Let homes for the lack of government building of council/social housing (with or without the then new immigration flows) – and no doubt contributed to the fact the UK for the first time has more Private landlords than Council/Social.

But for a Labour party so obsessed by “tax cuts for millionaires” when “those with the broadest shoulders need to pay more”, why only raise the Capital Gains Tax to a flat rate 18%?

I suspect the answer is within the following article/book review/link by the BBC’s Robert Peston, when the Labour Party actively courted Hedge Funds, Private Equity Funds and City institutions to fund their General Election campaigns.

“Who Runs Britain?” by Robert Peston
www.socialismtoday.org/122/peston.html

“As the Labour Party moved toward a more neo-liberal agenda in the 1990s, Tony Blair and Gordon Brown began to embrace the free market, ditching clause IV part four of Labour’s constitution.”

“The leadership courted the rich and famous for financial backing rather than relying solely on trade union money. Blair was adamant about outspending the Tories in the 1997 general election. Paul Blagbrough, former City executive, became Labour’s first finance director, working alongside music entrepreneur Michael Levy, whom Blair had known since the early 1990s. Levy was instrumental in securing hefty donations from wealthy individuals, some of whom were rewarded with knighthoods and peerages, obtaining £12 million in donations to fight the 1997 election (although £1 million had to be paid back over the Ecclestone affair). Levy was made a lord in 1997.”

”Some of the largest donations came from private equity. Sir Ronnie Cohen and Nigel Doughty, for example, have donated £2.8 million between them since 2001. Cohen co-founded Apax - a private equity firm behind the leveraged buy-outs of companies such as Waterstones and Virgin Radio. He is now chairman of Portland Capital hedge fund and an adviser to the government on ‘encouraging enterprise’ in deprived areas. Once a Liberal Party member, he moved over to Labour after meeting Blair in 1996.”

”Other contributions include £750,000 from former Goldman-Sachs partner, John Aisbitt, £500,000 from hedge fund executive, William Bollinger, and an estimated £17 million over the past decade from supermarket tycoon, David Sainsbury. Sainsbury became a lord in 1997 and was given a position in the cabinet. Paul Drayson, a healthcare entrepreneur, donated £1.1 million after being appointed to the House of Lords by Blair. Drayson had already courted controversy by donating £100,000 to the Labour Party before his company had won a £32 million government contract supplying a smallpox vaccine. In May 2005, he became a junior defence minister.”

So the answer to my opening title when is ok to lower taxes for speculators; the answer appears to be when it is a Labour Party is in government, when recent political history shows that socialists were MORE TAX RELIEF GENEROUS TO ‘SPECIAL’ COMPANIES than the Conservatives, either side of the last Labour administration.

Who'd have thought, given the rhetoric over this parliament.

I think you will find all political parties pandering to the rich and famous, their mates with the bribes.
No surprises there.
I don't think anyone believes labour hold any original trade unionist principles anymore.

The HSBC whistleblower tells us that in 2008 after years of seeing several years of potential tax evasion he SENT files to the HMRC Tax Evasion authorities, he EMAILED, he CALLED, those authorities and the authorities testified before parliament yesterday that details would have been passed to a (then) minister – what does a person need to do to get a Labour tax evasion crusaders attention whilst IN government, rub their ‘kin noses in the documents?????

Yet for some reason ‘dodgy’ details didn’t come to the UK’s attention (from France) a few months before the LAST General Election under Labour, and now doesn’t raise its head a few months before THIS General Election, funny enough for a Labour opposition desperate to take the electorates mind of THEIR last 13-years in power and lack of vision for the next 5-years.

Is this because they now know there are more Conservatives on the list of people using tax avoidance/planning than Labour’s e.g. Lord Paul, who was close/funded Gordon Brown’s campaigns, and this fits in so well with their business/wealth general election ‘attack and tax’ strategy for the next 5-years?

Re HSBC’s Lord Green, why is Miliband wasting time asking ‘what did he know about HSBC’s operation in Switzerland in the years up to 2008’, is he SERIOUSLY expecting that in Board meetings the Swiss Directors told the other global Directors and bank head ‘we are doing illegal activities in our patch we could get arrested for, is that all right with you’?

With any global operation over numerous countries, illegal ‘stuff’ happens, and while nearly every time the people running those companies did NOT know about it, as a board THEY ARE ULIMATELY RESPONSIBLE FOR THOSE ACTIONS – and that is the grey line that policy clueless Miliband is trying to exploit for his own sad political ends, by trying to dump yet MORE ‘stuff’ onto the Conservatives, on yet MORE ‘stuff’ that went on under their 13-year watch.

Unfortunately for Labour all banks are not like the Co-op, full of like minded, incompetent, apparatchiks, where a government bringing in LIGHTER bank regulation can turn the OTHER blind eye for Labour Party donations.

The "dodgy" Hedge Fund industry, once courted as donors and enjoyed very low Capital Gains Tax under a Labour administration, has spoken out against Miliband's anti business rhetoric, primarily aimed at the Tories for political gains - believing there are more taxes being paid to this government for public services, than under Labour.

“Hedge fund fight! UK riled up over rich investor taxes”
www.cnbc.com/id/102421025

“AIMA (Alternative Investment Management Association) said that the hedge fund sector in the U.K. (500 firms, 40,000 employees) generated an estimated £4 billion ($6 billion) in tax receipts to the government, up from about £1.7 billion in 2009.”

“The group noted that £4 billion in tax receipts "could pay for around a dozen new NHS hospitals." That's a response to a Labour charge that the Tories choose hedge fund tax cuts over funding the National Health Service.”

“AIMA also said that the tax repealed last year doesn't actually benefit the hedge fund industry.”

From the 1970's penal taxes UK to modern day '75%' France, history shows that to raise higher tax revenues, the raising of taxes may hit the ideological spot - but don't expect higher taxes to pay down the annual budget deficit and accumulating National Debt.

Feb 2015: ”Britain's highest earners pay a quarter of nation's income tax”

“New figures published by HMRC show that the proportion of the nation's tax bill paid by the richest has risen under the Coalition”

www.telegraph.co.uk/finance/personalfinance/tax/11411790/Britains-highest-earners-pay-a-quarter-of-nations-income-tax.html

“Britain's highest earners pay more than a quarter of the country’s entire income tax bill, more than when the Coalition came to power.”

“Nearly 300,000 taxpayers are forecast to contribute the equivalent of £45.9? billion in income tax between them by the end of this year, equivalent to £150,000 each. The amount they have paid has risen from 25 per cent of the nation’s tax bill when Labour came to power to 27.3 per cent this year.”

“The figures will be welcomed by the Conservatives, after repeated accusations from Labour that the party has given tax breaks to the rich.”

“They also suggest that the Coalition’s decision to cut the top rate of tax from 50p to 45p has increased revenues.”

“When George Osborne announced that he was cutting the top rate in 2012, Ed Miliband, the Labour leader, described it as a “tax cut for millionaires”.”

“However, the official figures show that the number of additional-rate taxpayers has risen from 273,000 to 313,000, with income tax revenues rising from £38billion to £46.5billion.”

“A Treasury source said: “This is more evidence that Labour’s chaotic gimmick raised no money but did drive away business and investment.”

The FACT that Labour has received donations from Hedge Funds (as posts above prove) is neither a secret or a political problem, unless anyone can prove Mr Brown lowered our Capital Gains Tax to a 10% tapered low FOR those hedge funds, so whassup?

Whassup is how many times over the past 3-years has Mr Miliband accused Mr Cameron of doing so, across the PMQT despatch box for cheap political 'class war' point scoring, when the Labour Party was STILL receiving their largest donations back then from a Hedge Fund - better still, situated in the same 'Mayfair' address soundbite, Miliband used against Cameron.

”Labour ‘open to the charge of hypocrisy’ after failing to divulge hedge fund manager’s donation”
www.independent.co.uk/news/uk/politics/generalelection/labour-open-to-the-charge-of-hypocrisy-after-failing-to-divulge-hedge-fund-managers-donation-10124387.html

”Labour has received a huge donation from a multimillion-pound hedge fund manager whose identity the party tried to keep secret, The Independent can reveal. Martin Taylor has given Labour nearly £600,000 since 2012, making him the party’s fourth-largest donor, and has had at least one meeting with the Labour leader, Ed Miliband.”

”But party officials have refused to confirm Mr Taylor’s identity for several weeks despite repeated requests from journalists. Yesterday, after The Independent said it intended to publish details of Mr Taylor’s identity – without the party’s confirmation – Labour released a statement from Mr Taylor confirming he was the source of the funds.”

I guess he won't be using that soundbite again, so tick off that meaningless class war accusation from the... YAWN ...Leader Debates.

Still plenty more where that one come from, rather than discuss the lack of depth in his flagship policies.

The politicians haven't caught up with the modern world yet. For example my godson develops apps for a company in Edinburgh, last year he and his girlfriend decided to live in Spain - he still works for the Edinburgh company. If taxes rise too much then the high paid knowledge industry workers will go and pay their taxes elsewhere.

cdtaylornats ..... I suspect that many politicians don't WANT to 'catch up with the modern world', especially if brings in votes.
blogs.telegraph.co.uk/news/danielhannan/100257586/labour-supporters-admit-it-taxes-are-to-punish-the-rich-not-to-raise-revenue/

Even though there have been numerous studies to show penal domestic taxation raises far less revenues, as not only do the seriously monied people have choices where they live (and DO leave), those that remain have their own view of 'fair' before feeling they have to take legal tax planning measures.

Especially if their 'broad shoulders' are being asked to bail out an incompetent tax & spend government.

Good grief.

Showing how a small percentage of the population pays the majority of the tax is not a good thing. It's indicative of an unhealthy and unequal economy.

If, hypothetically, 5% of the population owned 95% of the wealth, you can be absolutely certain that almost all tax revenue would come from the 5%.

This doesn't mean that the 5% are 'hard done by'. It means that society is so unequal that the poor have almost no money to give.

If Labour had any practical ways to actually 'create' equality without sending money/businesses to flight and us all then wearing little green suits, smelting iron in our gardens and cycling everywhere - there would have been evidence over 13-years in power without the need for government/business/personal debt - starting with some theoretical formula on what a top government quangocrat can earn, versus a nurse.

If a UK government cannot through State Controls control inequality within the Pubic Sector to get all the jobs done, why on earth would they think they can dictate to Private Sector companies (owned by shareholders) competing in a global market place, what their remuneration packages should be.

And there is another way 'the very wealthy' contribute, without that fat, heavy hand of a wasteful State needing to gorge itself on taxpayer money - have a look at the difference between American capitalism, and Chinese 'Communism'.

Philanthropy.

“Last year, China's top 100 philanthropists donated a mere $890 million, according to the Hurun Report. America's top 50 donors, by contrast, gave away $7.7 billion last year.”
www.cnbc.com/id/101560198

Labour, accusing other parties of money 'black holes', yesterday guaranteed by the use of immediate legislation when in power, that they will raise £7.5 billion A YEAR from tax avoidance.

Now forgetting their abysmal record when in power last (as explained in my opening posts), where is the non black hole detail in this policy, that no doubt underpins their spending plans?

Getting several £billion over years has been achieved by the coalition, despite this wealth being mobile.

This is very important as;

• Labour attacks big companies because they are BIG e.g. already said they'll raise their Corporation Tax in power (as a 'starter for ten'?), so threat after threat will reduce their investment, jobs - maybe remove their taxable UK Head Office status (and taxes) elsewhere e.g. Dublin.

• Labour has guaranteed that they won't borrow to make up any budget deficit reduction and UK spending shortfall.

• If Labour cannot NOW get such previously unobtainable tax avoidance money on their watch, WHO will make up that shortfall?

P.S. Labour are also banking making the Hedge Funds pay stamp tax they accuse Osborne of helping via reforms last year, yet as my post on the 17th Feb shows, the Hedge Funds did not benefit from that reform.

So once again Labour are creating a problem to 'fix', the only problem being is that it is an industry that just needs a telephone line, a fast internet service and a desk, so can relocate anywhere - yet generated £4 bil in tax revenues here last year.

At a time when we so need revenues/spending, just how many revenue 'noses' are they going to cut, just to spite their ideological face to get votes?