Tax black hole | Comment is free
the stranglehold now exerted by the City over New Labour which has been persuaded that this financial enclave is central to the economic interests of the UK as a whole. Yet it is nothing of the kind. By bending over backwards to encourage hedge funds and private equity firms through the most egregious tax liberality (most recently the absurdly low 18% tax rate on their income from their "carry" or share of the gains on mammoth deals, less than half the income tax rate payable by top earners), the government has turned the UK, and specifically the City, into a gigantic tax haven for the internationally mobile business elite. But by sucking talent and capital from other parts of the economy, it has been bought at a very high price. As the credit crunch is exposing, City profits on invisibles cannot compensate for the steady, continuing decline of Britain as a manufacturing nation. The volatility and excesses of the finance sector are outweighed by the million jobs lost in manufacturing in the last decade, the stagnant industrial output, the £7bn-a-month trade deficit, the weakness of manufacturing investment, and a so-called "knowledge economy"R&D restricted to a very few sectors. The UK has even refused to allow the deduction of tax from interest payments within the EU which would hugely restrict the effectiveness of tax havens because a basic rate tax (probably 20%) would already have been deducted from that income before it reached the tax haven. There can be little doubt that this was stymied to preserve the UK as a tax haven with its City links to its overseas protectorates and crown dependencies. Equally, maintaining fiscal independence from Europe may be a populist move, but in reality it enables the international corporations to play off the EU and other countries against each other in constantly bargaining for the lowest tax rates. The fact is, the UK can no longer afford either the prohibitive cost of the tax privileges of the City cuckoo-in-the-nest or the collateral manufacturing damage inflicted on Britain as an industrial nation.
the stranglehold now exerted by the City over New Labour which has been persuaded that this financial enclave is central to the economic interests of the UK as a whole. Yet it is nothing of the kind. By bending over backwards to encourage hedge funds and private equity firms through the most egregious tax liberality (most recently the absurdly low 18% tax rate on their income from their "carry" or share of the gains on mammoth deals, less than half the income tax rate payable by top earners), the government has turned the UK, and specifically the City, into a gigantic tax haven for the internationally mobile business elite.
But by sucking talent and capital from other parts of the economy, it has been bought at a very high price. As the credit crunch is exposing, City profits on invisibles cannot compensate for the steady, continuing decline of Britain as a manufacturing nation. The volatility and excesses of the finance sector are outweighed by the million jobs lost in manufacturing in the last decade, the stagnant industrial output, the £7bn-a-month trade deficit, the weakness of manufacturing investment, and a so-called "knowledge economy"R&D restricted to a very few sectors.
The UK has even refused to allow the deduction of tax from interest payments within the EU which would hugely restrict the effectiveness of tax havens because a basic rate tax (probably 20%) would already have been deducted from that income before it reached the tax haven. There can be little doubt that this was stymied to preserve the UK as a tax haven with its City links to its overseas protectorates and crown dependencies. Equally, maintaining fiscal independence from Europe may be a populist move, but in reality it enables the international corporations to play off the EU and other countries against each other in constantly bargaining for the lowest tax rates.
The fact is, the UK can no longer afford either the prohibitive cost of the tax privileges of the City cuckoo-in-the-nest or the collateral manufacturing damage inflicted on Britain as an industrial nation.
(Not New) Labour MP Michael Meacher.
The CIF comment thread is unsurprising.
...sucking talent and capital...
European Tribune - Une explication de la crise financière: l'Anglo Disease
...sucks in talent, resources and money...
I know, it could easily be pure coincidence...
