Reward for failure 31: tax advice – an utterly unproductive activity

“Tens of thousands of our cleverest minds are engaged in the utterly unproductive activity of advising their clients how to avoid tax”: Edward Lucas, The Economist  

This site has recorded far more instances of rewards for ethical, commercial or financial failures but the editor stopped searching at 29. A typical example filed two years ago stars Lin Homer and John Manzoni. Another exampleThe message: in Britain you can break the law or be colossally inefficient and yet still be promoted and/or rewarded: “Former MP Jacqui Smith, who lost her Redditch seat after being involved in an expenses scandal has been appointed chair of University Hospitals Birmingham NHS Trust. Edgbaston MP Gisela Stuart was quoted in the Birmingham Post at the time as saying “It looks to me as if we are rewarding failure and I have raised this with the Health Secretary”. A few covered on this site were: Goldman Sachs, Dave Hartnett, London Midlands Rail and Hector Sants.”  

Though his views on security are unappealing, Edward Lucas (the Economist), probably expresses the views of many when he writes; Cosy deals with Google leave us all worse off. 

He opens:  

edward-lucas“My thrifty delight in collecting stamps on my Café Nero loyalty cards used to be a joke in my family. When I discovered last year that the company hadn’t paid corporation tax since 2008, I collected my accumulated four free coffees with a snarl, and have not darkened its doors since. I don’t go to Starbucks either, and use tax-dodging companies such as Amazon and Facebook with a heavy heart. It’s not just that these companies abuse loopholes in our tax regime: it’s that our government colludes with them — as demonstrated by last week’s sweetheart deal between George Osborne and Google”. 

And later: 

 “By creating a climate of favouritism, coupled with occasional bouts of public shaming, we debase our collective tax morality. As I hunt for missing dividend slips and tot up my expenses for my own tax return, my diligence and honesty are not encouraged by the feeling that all this is optional: were I only a million times richer, I would have a nice lunch with HMRC or the chancellor himself, and sort out a deal that makes us both look good”. 

His alternative: 

“A good tax system is simple, sweeping and severe. There should be no room for lobbying by the powerful; nor should politicians be able to dole out favours to companies or activities that they want to encourage . . .  Other countries do it better. I used to live in Estonia, which boasts one of the best and simplest tax systems in the world.

esthonia-tax

Ed: see http://www.emta.ee/?id=29268 

Corporate profits and individual income are taxed at a flat 21%. Your tax return appears on your computer screen with almost everything already filled in (Estonia is a pioneer in e-government) . . . Estonia spends only 0.34% of its tax take on collection and administration. We spend more than twice that”. 

Edward Lucas concludes that it may not be possible to adopt Estonia’s system overnight, but any attempt to make Britain’s tax system flatter, simpler and broader will bring benefits. Tax lawyers and accountants are all but unknown in Estonia, because a system with almost no loopholes gives them no scope. And though the tax industry will hate it, “their howls of protest will be the best sign that the policy is succeeding”. 

 

His reference to land taxation has been published on the Thomas Attwood site– together with a link to Martin Wolf’s presentation on monetary reform to the Economic Affairs Committee. One reader comments that a flat tax is unjust to the poorest.

 

 

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Posted on February 25, 2017, in Conflict of interest, Corporate political nexus, Taxation, Vested interests and tagged . Bookmark the permalink. Leave a comment.

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