Robert Peston on THAT Monbiot Tax Heist Article

[jackstarb]

Finally - Robert Peston has given his opinion on George Monbiot's 'Tax Heist of the Century' article.

Is Cameron giving companies the mother of all tax breaks?.

IMO - Peston gives a balanced and pragmatic view of what's actually proposed and why.

No doubt anti-Tory conspiratory theorists will continue to prefer Monbiot's view.

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.]

How odd - I was just trying to make sense reading Murphy's Blog on this. Have you read it? It's scary how he deals with his detractors in the comments section.

There was an article in The Economist about the growth in the French Diaspora in the UK and especially London. They seem to some here because of the finance industry, lower corporation tax, and fewer French people.

I read Murphy's blog religiously!

I wish he won't obscure his occasional excellent points with the meaningless guff he more usually spouts....

Case in point: he's arguing that the reason January's personal tax receipts were up on the prior year is because of the 50% income tax rate. Er, no, Richard. Because January's tax deadline was the last one before the 50% tax rate kicks in... Surely a man as well informed as you should know that?

Apart from anything else, he posts upwards of a dozen articles per day. How can he possibly read and digest so much information? It's taken me the best part of the morning to verify the points I've made above.

CinnabarRed - Banks are probably paying about the right amount of tax

The French like London because it is ace

As far as I can tell (and it is very heavy reading) Murphy doesn't deal with Peston's point that:

".. that corporation tax would raise £43bn in the current fiscal year, compared with £150bn from income tax, £99bn from national insurance, and £81bn from VAT. Personal taxation is so much more substantial than corporate taxation."

And yet we get more corporation tax than the average country. - That seems to suggest that our broad corporate tax strategy ok.

TCNY - I argue that the banks are paying the right amount of tax in my thread here:

www.mumsnet.com/Talk/politics/1154984-CinnabarReds-tax-thread

Come and take a look!

Jackstarb - I've tried very hard but I just can't follow Murphy's logic that the Oxford report supports his theory that the corporate tax gap is £12 billion. Either he's far too intelligent for me to follow his logic, or he's talking garbage.

I've seen your thread - it's very good - the link I posted was more in support of your point than anything else ;)