Can someone please remind me…

… What 50% of nothing is?

Goldman Sachs is reviewing its London operation, a move that could eventually see entire departments shifted overseas.

The bank is understood to be considering its options in the wake of the UK’s windfall tax on bankers’ bonuses, a new 50pc top income tax rate, and increased banking regulations.

The world’s most powerful investment bank has asked an internal team to examine various strategies, including whole divisions being uprooted and taken offshore.

A number of large of London based Hedge Funds have already relocated to Geneva with more predicted. You may not like the financial sector bonus culture, but the fact of the matter is, no matter how big the City bonus pot is, the Government will get its grubby mitts on 40%. Where do you think the burden will fall if the Goldmans of the world desert the city for more favorable tax regimes?

Another fine mess

Way back in December 2005 I prefaced one of my own favourite blog posts with the following quote:

ENERGY giant Shell has slashed investment in its future North Sea oil drilling programmes by a third, blaming the doubling in oil production taxes announced by Chancellor Gordon Brown in his recent Pre-Budget Report.

Rather irritatingly, I didn’t keep a link to the original source.

From this, one could quite reasonably conclude that El Gordo cannot be completely absolved of blame for the current situation in the oil market. But fear not! From today’s Telegraph we read that Laurel and Hardy have leapt to the rescue!

Oil industry leaders are anticipating more North Sea tax relief after the first signs of a Government U-turn. Modest tax changes were announced yesterday as the Prime Minister and Chancellor intervened to try to boost flagging production.

Gordon Brown and Alistair Darling took the unprecedented step of making a direct appeal to oil industry leaders to increase output and accelerate developments. They took members of Oil and Gas UK, the industry trade body, by surprise by asking to join what was planned as a routine meeting of the organisation near Aberdeen yesterday.

They held out the prospect of regulatory and tax changes to attract more North Sea investment and provide the incentives to develop new discoveries which are little more than ‘puddles’ compared with the giant Brent and Forties fields.

Well, not quite. As is usual with New Labour, you have to dig a little deeper….

Crucially, the tax cut announced yesterday affects only older oil fields, which are covered by a separate tax regime, and does not reverse this new windfall tax.

This is hardly surprising. Over the past decades the North Sea has become one of the Government’s biggest corporate tax cows, generating more than £230bn in revenue since 1968. The Treasury is expecting to make around £10bn this year from oil revenues, though experts at Grant Thornton think this could rise as high as £16bn due to higher oil prices.

However, this windfall has come at a price. If, as thought, it is responsible for depressing production in recent years, it has helped make the UK a net oil importer two years earlier than expected.

This is yet another example of Gordon’s complete inability to think through the consequences of his punitive taxation policies. Stupid, grinning, one-eyed wanker!

A picture paints a thousand words

Sorry it’s been so long. I started a new job this year and my free time is dwindling rapidly.

Piss poor excuses aside, I was spurned back into writing thanks the the inimitable DK’s post on the the current taxation and expenditure figures from HMRC.

The figures themselves are a bit grim. They do make for some wonderful charts though.

Our first chart shows us the yearly total tax take:

You have to wonder exactly how sustainable these increases are.

So let’s break down some of main categories:

So let’s summarise. The following chart shows us the real percentage increase across all the taxation groups in the HMRC report from 2001/2 to 2007/8:

New Labour are taking almost 41% more tax than they were 7 years ago. Where the fuck has it all gone?

Gordo scraps another tax relief

He just can’t help himself:

Film partnerships – schemes that offer tax relief to individuals investing in films – appeared to have been killed off today following a surprise announcement from the Government.

Money generated through film partnerships has helped to bankroll a range of hit films including Girl with a Pearl Earring and Bend it Like Beckham.

But the schemes have been targeted as part of a fresh tax avoidance crackdown by the Chancellor.

Film financing experts said a statement slipped out quietly on the Inland Revenue’s website appeared to target a new arrangement under which individuals can secure tax relief by investing in films.

The scheme is based on so-called generally accepted accounting principles, or GAPP. It had been formulated by the film financing industry following the demise of a previous, similar scheme.

Interesting advice from the bear pit

I recently received the following comment from someone claiming to be an HMRC employee:

I would insist any taxpayer having difficulties with HMRC should complain in writing because self assessment forms are being piled in storerooms without being recorded as received against the taxpayers records.

(I took the liberty of tidying the spelling)

This was posted on my Sympathy for the Devil post detailing the unhappy life of the tax office personnel (”units”) under Gordo’s tax credits regime.

It seems like nothing much has changed in 11 months. Paint me surprised

HMRC stick the boot into construction

HMRC have unsheathed their “disguised employee” sword and are wielding it against the construction industry:

Many contractors in the construction industry, and their recruitment agencies, face uncertainty over payment terms as a result of a decision by Her Majesty’s Revenue and Customs (HMRC) to discontinue a tax arrangement it had with Gabem, a composite company provider.

The action is a clear indication that HMRC is now fulfilling the Treasury’s threat in paragraph 5.85 of the Budget’s Red Book to crack down on what it describes as ‘disguised employment through managed service company schemes’.

At issue is HMRC’s refusal to renew Gabem’s Construction Industry Scheme 5 (CIS5) card, and instead grant the company CIS4 status. The key difference is that CIS4 does not allow clients to make gross payments to Gabem, and increases their administration processes.

…

A notice on Gabem’s website said:
Business continues following court hearing on 18th July Gabem Management Limited administers single-person limited companies (including handling tax and payroll) for more than 11,500 operatives, some 65 per cent of whom work in the construction industry. Recently, HM Revenue & Customs made a decision that would affect the way Gabem is paid by agencies. Since the decision allowed insufficient time for the company to change its IT systems and make arrangements for clients to change their own payment systems, Gabem sought a court injunction to grant relief until a legal remedy could be found.

Let there be no doubt that this policy, designed to destroy the self-employed business sector of the UK, comes directly from Gordon Brown. It all started with IR35 and is steadily progressing through every major business sector that supplies flexible short term employment.

UK businesses take note: Gordon Brown is not your friend. Despite his entrepreneurial friendly rhetoric he is drowning UK plc in red tape. The truth is he hates the self-employed and he won’t stop until we are all oppressed little worker drone wage slaves.

Flat Tax – A simplified view

Socialist opponents of flat tax will often use the arguments that progressive taxation is a fairer form of redistribution and that flat tax would unfairly compensate the well off.

I thought I would challenge this assertion by looking at some actual figures. The table below lists a selection of salaries from £10,000 to £200,000 along with the actual tax paid for this tax year. The marginal tax rate is simply the percentage of that gross wage that goes straight to El Gordo.

I should point out that these are income tax calculations and do not take into account any means tested tax credits that may be awarded to lower earners. The tax figure includes NI contributions.

The next table illustrates a flat tax system. The rules are simple: the first £18,000 of your salary is tax free. After that the tax rate is 45%. NI would be scrapped. 45% sounds like a lot, but check out the figures and see for yourself:

Obviously, the first thing you notice is that salaries below £50,000 will benefit enormously from this structure. The second thing that jumped out at me was that this system is more progressive than the our current taxation system. Wages from around £85,000+ would attract more tax than they do currently, and the higher you go, the more painful it gets.

I suspect that the above figures would not work in reality as the net tax take to the Treasury would drop dramatically (If somebody could find me a salary distribution scale for the UK I might be able to guesstimate the net effect).

With that in mind, I tweaked the input parameters (all two of them) to see if I could create a little more balance: a £12,000 tax free allowance and a tax rate of 42%.

This time the lower earners are still much better off, the middle income earners are pretty much unaffected and the higher earners still pay more than they do now.

Tax Credits could be scrapped. Thousands of civil servants would no longer be required. Self Assessment tax forms would only have two numbers to fill out. And finally, the lefties would get what they always wanted: a proper progressive tax system that redistributes wealth to the low paid. Automatically. No forms to fill out. No “means tested” shite to put up with. You simply get to keep what you rightfully earned.

Surely that is better than what we have now?

Ken Livingstone says something sensible shock!

I couldn’t agree more:

Gordon Brown should call a snap general election if he becomes prime minister, says London Mayor Ken Livingstone.

Mr Livingstone says Mr Brown would face claims that he did not have a mandate for his plans unless he went to the polls soon after succeeding Tony Blair.

Just give us an opportunity to vote that wanker out of office and off the face of the planet.

Then he goes and spoils it all by going all… well… “Ken Livingstone” on us:

He suggests the current £8 congestion charge in the capital should be raised to £20 for cars which give out two or three times the “normal level of carbon emissions”.

Still, it’s a start.

Pure Rubbish

It is amazing how charging for certain services can completely change your attitude. Water meters for instance. While staying with some friends in Scotland recently, their son put the shower on then came down the stairs to watch TV while he “waited for it to warm up”. He sat there for nearly 20 minutes before my patience snapped. Generally, in Scotland water rates are built into the council tax and nobody is metered. I lived in Scotland and I too used to have the same attitude. The fixed and relatively cheap cost meant I could waste as much of it as I wanted. Who cared? The stuff fell out of the sky. On the West Coast of Scotland, a hell of a lot of it falls out of the sky. What’s the problem?

I also find myself cringing when I visit people who live in a region that does not recycle refuse. You would think therefore, that I would be in favour the following proposal:

HOMEOWNERS face paying a second tax for their household rubbish to be collected as part of a range of proposals to reform council tax, The Times has learnt.

Charges for non-recyclable domestic waste are being actively considered by Sir Michael Lyons as part of his inquiry into local government finance.

We are incredibly wasteful as a society and anything that encourages less waste must be good, right? If my council tax had not almost doubled since 1997, I would be less cynical. Instead I feel that this is just another revenue generating ploy that has nothing whatsoever to do with recycling targets.

If the Government is serious about recycling then it should be starting with the companies who manufacture the goods we purchase. They should be “encouraged” to use more recyclable materials and to cut back on wasteful packaging.

Instead we are run by a bunch of socialist tossers for whom taxation is the panacea. If they insist on charging ahead with this scheme, then they have to address the following issues:

• How to control the massive increase in fly-tipping.
• How to stop people from dumping their rubbish bags on their neighbours pile.
• How to handle the billing: Do we pay per bag or by weight? Do you trust your council to count or weigh your rubbish accurately?
• How to deal with people already claiming council tax rebate and who probably cannot afford the extra charge. Will they have to claim a refund? Will they create yet another means tested benefit?
• Will the current fixed charge for refuse disappear from our current council tax bill?
• How will they deal with people who simply refuse to pay? Will they leave their rubbish to fester on the street or collect it anyway and take them to court?

Other user charges he is considering are hotel and bed and breakfast “tourist taxes” and wider congestion charges.

At this rate, you won’t be able to crack off a loud fart without being hit by some sort of Greenhouse Gas Emission Tax.

Brown wants to Tax computer use

Reading The Times on May 1st, you would be forgiven for thinking that they had the wrong month:

EMPLOYERS could be forced to police their staff’s use of office computers or risk facing a punitive new stealth tax on themselves and their employees, The Times has learnt.

Tax lawyers and Opposition MPs are seeking urgent clarification of the scope of new taxes on business computer equipment, which Gordon Brown introduced without fanfare in his Budget in March.

…

The new taxes are the result of Mr Brown’s controversial decision to scrap the Home Computing Initiative, a tax break that let hundreds of thousands of people buy computer equipment at cheap rates through their employers.

Under the rules that replace the scheme, office computers used in part for non-business purposes are treated as a benefit in kind, meaning that employees will have to pay income tax on them, and employers will have to pay national insurance contributions for them as well.

On a computer bought for £2,000, an employee paying higher-rate tax would face a £160 bill each year and an employer would have to pay an extra £51.20.

This is not a bad April Fools joke. Either Brown has completely lost the plot or he is finally showing us his true colours.

Today, HMRC attempt to give some much needed clarity:

Treasury sources insisted last night that rules that had come into force last month requiring employees and employers to pay additional tax for personal use of office equipment would, in practice, affect almost nobody.

Although the new law makes clear that only “insignificant” personal use of company computers will be exempt from tax, the Treasury now says that almost all private use of such computers is to be treated as insignificant.

A Treasury source said: “The chances of anybody having to pay a tax charge on personal use of a business computer are virtually zero.”

“Almost nobody”? “Virtually zero”? Are we all clear now? Good.

Clarity my arse.

The source admitted that the law had been drafted more widely, but said that it was designed to prevent fraud or “blatant overuse” of company computers.

“Blatant overuse”? What the hell does that mean? Why is it such a problem that Brown feels the need to control it with a punitive tax?

If employers are happy to allow their employees to use their computers for personal use outside of work hours, what fucking business is that of Gordon?

I’m off to blatantly overuse my employers PC before it’s too late.