CinnabarRed's tax thread

[CinnabarRed]

This may be an act of supreme arrogance on my part - if so, I apologise profusely! But it seems that a lot of people have got questions about tax policy and the morality of taxation, which is my professional field.

So this thread is your chance to ask me any questions you have in this general area. I promise to explain what I know, be honest and clear when I don't know the answer, and distinguish between facts (for which I will provide a reference) and my opinion.

So over to you! I'll be back in the morning to answer any questions posted tonight.

PS: I won't be providing taxation advice to anyone!

Sorry everyone, have the flu. Will post again when I feel less like dying....

get well soon!

yes, hope you feel better soon :)

Likewise from me!

Hi everyone. I?m feeling a little bit more robust today, so thought I?d start to reply to some of the comments and queries that have piled up over the past few days. I?m not sure I?m going to be able to get through all of them today, so apologies if it takes me a little longer to get to your particular point.

RaggedRobin ? "Since posting that, I?ve been discussing some of Cinnabarred?s post with friends who have more knowledge than me in the field (wouldn?t be hard!) One friend who researches corruption in Africa felt very strongly that Cinnabarred?s call for corruption to be stamped out in developing countries doesn?t appear to make any link to the manner in which tax havens are complicit in corruption and corrupt activities, either by actively courting dodgy dealers to secure their business or by developing legislation such as ?flee clauses? that prohibits any kind of oversight or investigation."

Ah now, allow me to expand a little on my points about corruption.

First, and this might initially seem trite, the activities that your friend is talking about have very little if anything to do with tax; they?re about financial secrecy and hiding illegal cash. Now, those things are appalling in their own right, but they have nothing to do with the tax status of the jurisdiction concerned. I don?t say this lightly, but I?m very concerned that if campaigners focus on tax and only tax then they risk missing what I think is the bigger issue. The bigger issue is finding ways to force high-secrecy jurisdictions, whether they?re your traditional tax havens or not, to stop money laundering (i.e. the criminal act of hiding or whitewashing the proceeds of criminal activities). International pressure from sensible governments (relatively speaking!) seems to do this most effectively.

Secondly, there are tax havens and then there are tax havens. At the ?nicer? end of the spectrum, you have places like Switzerland, the Channel Islands and Gibraltar (Luxembourg and Ireland, for example, really aren?t in the international banking game at all). They all have anti-money laundering legislation at least as powerful as our own. Switzerland, for example, has received plaudits over the past couple of weeks for rapidly and effectively freezing bank accounts linked to the Mbarak and Gaddafi families, preventing them from accessing funds to flee their troubled states. In the middle of the pack come places like Lichtenstein, the Cayman Islands, Bermuda and Barbados, which are unfortunately less compliant but are taking active steps to clean up their act. And then at the really unsavoury end you have places like the Turks & Caicos Islands, which are so rotten through and through that the UK has recently repealed their right to home rule. As an aside, I haven?t been able to find a single company that does business in the T&CI because they?re so unstable and corrupt.

Finally, only the real top echelons of corrupt governments are capable of creaming off enough to get involved in hiding cash in offshore accounts. The vast majority of corruption takes place at a local level and the illegal cash stays at a local level ? soldiers demanding fees to allow travellers to pass on roads, officials taking bribes to win contracts, police officers in the pay of criminals to look the other way, registrars demanding a month?s wages before they?ll register new businesses, tax official taking a percentage off the top of tax bills. I believe that this low level but all pervasive local corruption is at least as damaging as high level government corruption, and not one iota of it will be tackled if we spend all of our time focussed on the big ticket stuff. Steven D. Levitt and Stephen J. Dubner write well on the subject in their book ?Freakonomics?.

BaggedAndTagged ? "Why does the US tax its citizens wherever they live in the world (i.e. even if they're not resident in the US) but most other countries don't. I know they only pay the difference between what they pay where they live and US rates, but it seems most other countries don't even do this. Therefore, a UK citizen living in the UAE pays no income tax on their UAE salary, whereas a US citizen would have to pay US tax. Is it simply because it's too difficult/expensive to administer or are there other reasons?"

There isn?t a good, logical reason that I?m aware of. I suspect it?s because the US can get away with it due to being the most powerful economy in the world. As an aside, anyone born in the US is automatically a US citizen for US tax purposes, even if the child?s parents are non-US citizens. This can create all kinds of problems when babies come early to holidaying couples. In practice, the US doesn?t chase such children for tax when the start earning, unless they happen to come to the US on business ? then it can get really messy.

Takver ? "through the 1980s a substantial amount of cash was taken out of local govt pension funds because it was (conveniently) assumed that high rates of share growth would continue, and therefore they were over-funded.... it is a very important point to be aware of now that public sector pensions are being represented as an unfair drain on the country."

A couple of points here. First, your comments relate only to defined benefit pensions schemes, not defined contribution ones. And it wasn?t just public sector pensions that were allowed ?holidays? in this way, virtually all private companies did the same. The difference is that private companies have been quietly closing their defined benefit schemes to new members for years, so they have less of an issue (although still a very big one, alas).

Secondly, public sector pension schemes aren?t actually much of a drain on the country right now. The fear is that they?ll be a massive drain in the future when the current crop of workers starts to retire en masse.

Thirdly, when (well informed rather than ranty ) commentators talk about the "pension time bomb", they don?t mean public sector pensions as such. What they?re talking about is an aging population, fewer young people entering the work force ? which means that even our state pension provision is potentially at risk. Public sector pensions are only one part of this.

For what it?s worth, I don?t know what the answer is. Encourage immigration of younger workers to the UK? I do think public sector pensions are more generous than the country can afford long term.

Takver ? "More practically speaking, I think that it is quite possible to visualise a situation in which British people had considerably fewer material goods, but that wealth was more equally shared (particularly with regard to land and housing), and imagine that overall net happiness could easily be higher - whilst at the same time we were consuming a smaller share of the world's resources."

I entirely agree. If one compares the average wage in a given jurisdiction to the earnings of the top 1% then the biggest gap is in the US (i.e. the biggest discrepancy between the highest and average paid in the economy), with the UK in second place. The rest of Europe, Japan, Canada and Australia all have much smaller gaps, and the Scandinavian countries have the smallest of all. Interestingly, when ?happiness indices? are prepared (which are interesting but hardly scientific) then Finland generally comes top!

Himalaya ? Loads of food for thought, thanks.

"Multinational companies are operating across multiple jurisdictions and have considerable leeway to organise their tax affairs to stay within the laws, but minimise the tax take. As long as this is not transparent it is difficult to mobilise citizens to call for changes in the law if the results of this are unjust."

I have two points here. The first is that the affairs of multinationals are transparent to the tax authorities. They have powers to demand information from companies regarding all their cross-border transactions (and the same is true for virtually every other country now). Believe me, the Revenue makes very good use of these powers.

The second point is that of course citizens should call for changes if the results are indeed unjust, but in very many cases citizens simply don?t have enough tax knowledge to judge whether the results are fair or not. The tax authorities, parliament and the courts together have a far greater understanding of whether tax laws are unjust. Parliament writes tax law, the Revenue administers it and the courts interpret it where there?s uncertainty or injustice. That?s the rule of law.

"The base of the transfer tax campaign argument as I understand it is the 'sunlight thesis' of doing things openly and transparently. There is good reason to think that more nefariousness (or at least behaviour that is not in keeping with a company?s image and public positions) will go on the more things are behind closed doors and not in public."

No. Forgive me, but your understanding is incorrect. If I may, I?m going to answer this in two separate postings (because this is a complex area and each post will stand on its own merits ? to keep the different but equally important strands of thought separate). The first posting will explain what transfer pricing is. The second will explain why Christian Aid?s analysis of transfer mispricing is fundamentally flawed.

"Citizens who use the public services that depend on those tax revenues are also stakeholders [in company accounts]- and it is part of the social contract between business, state and individuals that each contributes -- businesses depend on public services for roads and infrastructure, security, a healthy and educated workforce, the rule of law etc.. All that costs money and so it is part of their responsibility to pay taxes. Putting some public numbers on that seems fair enough, to enable informed public debate."

Yes, all fair points. I take the view that the cons don?t outweigh the pros, but I can understand how you could come to the other conclusion.

What is transfer pricing?

Transfer pricing is how companies in the same group calculate the prices at which they provide goods and services to each other (because they're all in the same group they can't negotiate freely in the way that unrelated companies would).

Let me give you a hypothetical but fairly typical example.

CinnabarRed Group PLC has a manufacturing company in Taiwan that makes widgets. The Taiwanese company transports the widgets to a group company in the Netherlands, which acts as a central distribution warehouse for all of Europe, and also sets the European marketing strategy for the group. The group has subsidiaries in the UK, France, Germany and Spain, all of whom buy widgets from the Netherlands company for sale to their end customers. However, the Netherlands company is responsible for actually shipping the widgets direct to the end customers. In addition, the UK runs an R&D centre, which researches new and better widgets for future production.

Some of key questions are: how much should the Taiwanese company receive for manufacturing the widgets? How much should the UK sales company pay for the widgets it sells to its end customers? How much should the UK sales company pay the Netherlands company for its distribution and marketing services? Which company or companies in the group should pay the UK for its R&D activities? And how much? (And that?s leaving aside any question of which company owns the valuable intellectual property and manages the group?s finances.)

Leaving tax aside, in theory the group could set whatever prices it thought was best.

Entirely understandably, what the tax authorities really don?t want you to do is artificially divert profits from high tax countries (like the UK) to low tax countries (like the Netherlands).

So the tax legislation says that, for tax purposes, transactions have to be on arm?s length terms (that is, the prices that independent unrelated parties would agree to be fair). In fact, many companies want to use arm's length pricing because it means that group company A can't argue that it's been shafted by group company B if A's results are poor and its managers don't get their bonuses.

What?s an arm?s length price? There aren?t easy answers to that. The OECD recommends that prices should be benchmarked against comparable unrelated prices (CUPs). The problem, acknowledged by everyone, is that often there simply aren't valid CUPs. To counter this, the OECD has provided guidance on how to analyse economically how much value each function in the process contributes, and says that each company should be rewarded based on which functions it performs. (It?s called functional analysis.)

And that make sense when you think about it ? it's right that a factory which simply manufactures widgets to someone else?s design and order deserves to make less profit that one which takes the entrepreneurial risk of designing widgets and finding customers for them.

Even functional analysis is more of an art than a science. Generally what happens is that you choose a selection of CUPs for comparison with your own activities, adjust them to take account of the fact that they're similar but not identical to you, then average them. If your prices are at or near the average then you should have arm's length pricing. The Revenue invariably (and entirely reasonably) challenges the CUPs you've chosen, the adjustments you've made to them and the functions that you claim to undertake in each jurisdiction. Because it's so complicated, a transfer pricing enquiry from the Revenue can take literally years to argue out.

(One of the reasons that the Revenue gets so cross about transfer pricing is that if a UK company genuinely moves some of its functions abroad so that there's genuinely less activity going on in the UK then it's almost impossible for them to argue that UK profits shouldn't fall. This is one of the most common ways that companies move profit out of the UK, most often to places like Switzerland or Ireland. The only true way for the Revenue to counter is to argue that the functions haven't really moved. I do occasionally see ridiculous examples where companies claim that high value activities are now all done in Switzerland but then when you review the Swiss operations you find that there's really just a part time man and his dog in a tiny office doing bugger all . However, the vast majority of companies really do move activities.)

Why Christian Aid's Transfer Mispricing reports are fundamentally flawed

Christian Aid commissioned international trade pricing expert Simon Pak, President of the Trade Research Institute, to analyse EU and US trade data and estimate the amount of capital shifted from non-EU countries into the EU and the US via 'trade mispricing'.

In itself that's not an unreasonable thing to do.

The first problem was that through no fault of his own, Pak was unable to access adequate data for his analysis. The second problem, which Pak himself acknowledges but which tax campaigners don't, is that the methodology Pak applied to the inadequate date was flawed.

What Pak did was this:

1. He took detailed trade statistics published by the EU and US. These are widely considered to be robust. I have an issue here.

1. He then assigned the types of trade into about 100 different categories, on the reasonable basis that different categories of trade require different levels of skill so will be priced differently. I also have an issue with this because some of the categories he chose were odd, to say the least.

1. He then performed a statistical analysis of each category to determine an arm's length range within each one, assuming that anything outside the defined range was mispriced. I have a massive issue with this!

1. He then took all "underpriced" imports to and "overpriced" exports from the EU and US (by his pricing definition) and assumed that they represented illicit capital flows out of the developing world and into the EU/US. Again, I have massive issues with this.

1. Finally, he applied the relevant country's tax rates on "illicit capital flow" (again, by his definition) to calculate the tax lost to the developing world at $160 billion per annum.

1. The reports then assert (and this is nothing to do with Pak) that the flows from the developing world into the EU/US must be routed through tax havens, without providing any evidence to support this.

Let me explain why the flaws are so huge as to make the result meaningless.

First, the trade statistics don't separately identify trade between related companies and trade between unrelated parties. Clearly there's a huge difference. Trade between related companies could be manipulated for tax purposes (because it would benefit the group as a whole to pay less tax). Trade between unrelated parties can't really be manipulated for tax purposes - it can, of course, be manipulated through a fraud perpetrated by the unrelated parties where they privately pocket the difference, but that's not a tax matter - and by definition it's not something that multinationals can possibly get involved in (although I suppose corrupt individuals within multinationals might be - but you can hardly blame the multinationals for that).

Secondly, Pak's statistical analysis took all of the data per trade category and calculated what's called the interquartile range. (Which is, very broadly, the stuff that falls within the middle 50% of each category.) He assumed that anything outside the interquartile range was mispriced. Now that's a load of old crock, because it's a methodology guaranteed to give a result.

Let me demonstrate. Suppose there are 11 boys aged between 3 and 4 in a nursery, and that their heights (in cm) are: 102, 104, 105, 107, 108, 109, 110, 112, 115, 116, 118. The interquartile range is 105 - 115 cm. Now, as it happens all 11 children are within the normal range for 3-4 year old boys. However, using Pak's methodology then four children are "wrong" because they fall outside the interquartile range - the 2 shortest and the 2 tallest. Clearly that's absurd. But it's what Pak did.

Thirdly, 100 categories sounds like a lot, and suggests that they must be very detailed. But two categories provided around 75% of the "mispricing". Unsurprisingly, these were also the categories that included the most diverse products. The biggest "mispriced" category was "nuclear reactors, boilers, mechanical appliances and computers", which according to Pak gave rise to £20.5bn of mispricing. The second biggest was "electrical machinery, sound and TV recorders, telecoms equipment" which was £13.7bn. (The third biggest was "ceramic products" with £2.7 bn - so you can see that there's a massive jump between the top 2 and the rest.) Now, I'm sorry, but how you can possibly compare the pricing of nuclear reactors to the pricing of boilers is utterly beyond me. One is cutting edge, highly regulated technology; the other is boilers. No wonder there were wide ranges either side of the interquartile range! Is there mispricing? No idea - you simply can't tell using this methodology.

Fourthly, Pak only considered "underpriced" imports to and "overpriced" exports from the EU/US. What? He simply ignored "overpriced" imports and "underpriced" exports, both of which would result in flows of funds out of the EU/US! You can't just ignore the half of the data that you say is mispriced and not expect to be called on it.

Fifthly, what was the end result of all this flawed statistical work from Pak? Not what you'd expect form the headlines. Fully 80% of the "mispriced" flows into the EU/US came from countries classes as high or upper middle income countries. Not from the third world at all. Just over 3% flowed from low income countries. And in fact the biggest "illicit" flows into the EU came from the US, Japan, China and Turkey. The biggest "illicit" flows into the US came from Malaysia, Japan, China, Canada and Mexico. There's not a single third world country in the top 10 for either. So all that Pak's results demonstrate is that rich nations are largely trading with other rich nations. It certainly doesn't prove that greedy multinationals are systematically stripping profits out of the third world - quite the opposite. How can you strip out profits from the third world if you're not doing business there in the first place?

Finally, as a general rule taxes are much higher in the developed world than in the developing world. (That's true even allowing for the fact that headline corporate tax rates are broadly similar, or even lower, in the developed world. The reason is that the developed world taxes a much wider base of profits then the developing world.) So it makes absolutely no sense for a multinational to shift profits from low tax countries to high tax countries, if the object of the exercise is saving tax!

So to summarise:

• The reports start with flawed data
• They then apply flawed methodology to the flawed data
• All the end results of the analysis can possibly demonstrate is that largely multinationals aren't trading with the third world at all and therefore can't be systematically stripping profits out
• In any case, it doesn't make sense from a tax perspective to move profits from the third world to the first world anyhow.
• there's no evidence whatsoever, anywhere in the reports, that tax havens are involved in any tax abuse (it's just taken as a given, which annoys me greatly).

RaggedRobin ? back to you!

"The Office for National Statistics has just released its estimate that the Royal Bank of Scotland and Lloyds banking group alone have been bailed out to the tune of £1.3 trillion. This does not include the figure for bailing out Northern Rock and Bradford and Bingley. I'm afraid I just can't get excited about the banks' £50 billion taxes when I read those figures."

In comparing the £1.3tn cost of the bail out to £50bn annual taxes, you?re not comparing like with like. The £1.3tn will be returned to the taxpayer at some point. Either through repayment of exceptional loans (Lloyd?s, for example, paid back £61bn in exceptional loans last year. It?s still got £91bn to go) or via the sale of shares in the banks currently held by the Treasury (the Treasury is talking about Northern Rock being taken private again as early as next year).

Sure, we?re paying interest in the £1.3tn ? say, £30bn of interest per annum. Of course that?s shed loads, and of course it?s a drain on the economy ? I?d be an idiot to argue otherwise. But it?s still less than the taxes that the banks contribute and, as I argue above, the bail outs saved the country from complete financial meltdown.

"Cinnabarred says that it is not the case that losses will still be offset for the large corporations who will be exempt from these taxes. The government's discussion document seems to state otherwise, with options being suggested and affordability being discussed."

You?re misunderstanding the point I was trying to make. The point here is that the banks don?t get it both ways, based on the latest conversations from Treasury. Either they elect for their branch profits to be exempt and then branch losses won?t get relieved, or the branch results get tax effected in the UK either way. That?s a different argument for what should happen with the brought forward losses.

"Finally, Cinnabarred dismisses the term ?race to the bottom? ...but I'm afraid I don't see how this 'emerging consensus' of 'good practice' differs from the concept of the race to the bottom."

There are loads of practical examples in the public domain showing how tax havens are being pressured to clean up their acts. Off the top of my head:

• Tax havens are signing Tax Information Exchange Agreements (TIERs) with loads of non-tax havens. TIERs oblige the signatories to provide information about taxpayers. So if the UK wants to know information about a taxpayer that it believes is salting illicit cash in Grand Cayman, say, Grand Cayman can?t withhold it.

• Switzerland has agreed to start withholding income tax on interest paid to non-Swiss account holders and pay the income tax collected to the jurisdictions being swissed.

• Lichtenstein is blabbing left, right and centre to any tax authority that will listen about undeclared bank accounts.

• The EU code of conduct group has declared the business tax regimes of Jersey and the Isle of Man as illegal under EU law. Both are now obliged to reform their regimes by 2012. The code of conduct group will have to agree whatever new regimes are written before it can be adopted.

I should also add that since Christmas I have been engaged by two tax havens to reform (or in one case, create) their tax regimes to bring them in line with international norms. Clearly I can?t tell you who they are, but I see it as very encouraging .

"Oh and one more (naive) question... about banks upping and leaving. Can the banks who are now owned or part owned by the government actually, legally do that? Would anyone have them?"

In practice, no. The shareholders, being the Treasury, would no doubt block it, although if they didn't then moving abroad certainly would be legal. Once they?re out of public control then it's anyone's game. They would just move their head office to Ireland or Switzerland. I have absolutely no doubt that pretty much anywhere would love to have them....

Right - enough from me - I'm monopolising the thread - back to you!

Cinnabar - glad you are feeling better. I just 'name checked' you on my Peston / Monbiot thread .

Glad you?re feeling better. Lots of interesting discussion!

?Now, those things [financial secrecy and hiding illegal cash] are appalling in their own right, but they have nothing to do with the tax status of the jurisdiction concerned.?

I just can?t agree that the tax status of the jurisdiction has nothing to do with the amount of corruption/illegal shenanigans happening in tax havens. The analogy is not quite right, but it?s something like saying a heroin addict who commits crimes does so because they are a criminal and not because they are a heroin addict. My impression is that tax havens exist to maximise profits by withdrawing from the contract with society that other jurisdictions try to uphold. When the aim becomes profit at any cost then issues of legality also begin to take a back seat. The tax haven status and the criminality have the same root imho.

It is very heartening to hear that measures are beginning to be put in place and pressure is being put on tax havens, but I really hope that it will not just be a case of tinkering around the edges. Society just can?t afford to be drained of financial resources in the way it has been.

?In comparing the £1.3tn cost of the bail out to £50bn annual taxes, you?re not comparing like with like?

Well, if we are thinking of what banks are contributing at the moment in taxes, then I think it is valid to also consider the amount that banks are taking out of the system too. We are not benefiting from the full £50 bn of banking taxes if £30bn is lost straight away to pay the interest on money loaned to the banks. And the banks may well have to pay it back when they can, but that doesn?t help the people losing jobs and services now.

Anyway, all the best with your work in reforming those tax havens. I hope it is the beginning of a sea change in the way financial services are legislated for globally.

cinnabarRed - great stuff but I question your analysis of the £1.3T "debt" included from the banks. Isn't it just to do with the reclassification of RBS and Lloyds as public entities that put them in the ONS figures and didn't the ONS previously find the financial bailout had a negligble effect on UK net borrowing?

The way I understand it, the figure includes the banks' liabilities, net only of their most liquid assets. There will of course be loans and advances and other less liquid assets balancing those liabilities that aren't accounted for in the ONS figure.

My ultimate point being the govt is not paying interest on this "debt."

The equity stakes held by the government in the two banks are indeed under water (Lloyds up, RBS down) but will only be sold once there is a sustained rise in the stocks above the purchase price.

meanwhile, the central bank funding (ca. £70B not counting guaranteed bonds) is rapidly being paid down by Lloyds and RBS and will be gone by end of 2012.

In my eyes, it will be the Northern Rock loan (ca. £22B) that hangs around the longest since it's at the "bad bank" the government is holding onto and will only be repaid as the mortgage portfolio matures over the next 10-20 years.

The APS scheme incidentally only covers RBS (no one else ultimately participated - Lloyds paid a fee for the implied coverage but didn't formally enter it) and is highly unlikely to ever be tapped.
Off top of my head think RBS has only run up about £25B of the £60B loss it would have to bear before the insurance starts paying out.

Another point I find relevant when talking about RBS and Lloyds is that they will likely be exempt from UK corporate tax for many years to come because of their massive deferred tax assets. I predict this will become another political football, though it is just a fact of corporate tax law.

Some interesting statistics were published by the Oxford University Centre For Business Taxation (or the Centre For Business Non-Taxation, as Richard Murphy wittily calls them. But there's bad blood between them because Murphy calls them biased and they call him uninformed).

Anyway - here's some stuff from Oxford University, that was compiled from HMRC anonymised data. My comments are in square brackets.

1. In 2010 the UK had the lowest corporate tax rate in the G7 and the 7th lowest corporate tax rate in the G20.

1. For more than 25 years, the UK CT rate has been well below the G7 average.

1. However, UK CT revenue has consistently been above the G7 average. [This is because we have a wide tax base to which we apply a relatively low tax rate.]

1. The top 1 percent of all companies by size pay 81% of UK CT.

1. By far the largest share - 87% - of CT is paid by multinational groups (only 13% is paid by companies from purely domestic operations).

1. Financial services companies (i.e banks) paid £46 billion of CT in 2007/08, falling to £36 billion in 2009/10 [presumably due to tax losses incurred in 2008/09 - but £36 billion is still a BIG figure].

1. Around 14% of all companies making a book profit (i.e. that have positive Earnings Before Interest & Tax in their statutory accounts) do not show a charge for tax in their accounts [there can be several reasons for this: group relief from other group companies; tax deductions in excess of profit due to specific reliefs such as R&D credits; non-taxable income such as gains from the disposals of subsidiary companies. However, tax avoidance is another possibility].

1. There is evidence that the largest 100 companies in each sector pay less tax (as a percentage of EBIT) than the sectoral average [which does seem to add some weight to the argument from campaigners that the biggest companies participate in some form of tax avoidance.]

1. Real Estate and Mining companies pay the highest tax rates (that is, they pay the highest percentage of their trading profits over as tax) at 35.9% and 34.1% respectively. [That actually surprises me, given the heat from tax campaigners over extractive industries "stealing from the poor through tax avoidance". I would expect that some of this is due to sector specific taxaxtion rather than just CT, but does seem to show that mining is the last sector that needs country-by-country reporting].

Out of interest, the lowest is post and communications at 6.67% of trading profits paid to HMRC as tax. Utilities also look very low at 12.5%.

Banks are 6th highest (out of 30 sectors) with 21.9% of their trading profits paid to HMRC. [That quite surprises me too. I didn't expect the banks to be quite so tax paying, given that the sector is dominated by big players who have the resources to try to avoid tax if they want to.]

Thanks CinnebarRed. This thread dropped off the bottom of my watchlist while you were away. Thanks for your educational reply.

Can I ask what is it you do proffessionally?

Cinnabar- thx for replying.

Can I point you in the direction of the "Banks pulling out of the UK" thread. Would be good to get an understanding of the implications of HSBC moving its HQ back to HK.

Himalaya - I head up small team of people that help governments to set their tax policies (Disclaimer: we're all employed by one of the Big 4 professional services firms).

I used to specialise in how tax policies effect taxpayer behaviour; but at the moment I'm entirely sold out on minimising tax avoidance and ensuring compliance with the "international norm".

Anyone want to talk about the Budget?

Yes, what is your opinion of it?

How true are these claims that we will be the best place in Europe for business?

Overall, it's a remarkably positive Budget unless you're an oil company or a bank.

I do think it will stimulate growth, especially for small businesses.

Will the UK be the best place in Europe for business? Hard to say, but I think the announcements will certainly make it more attractive than it is at present.

Good news, CinnarbarRed. That is very encouraging.