The popularity of the CSR has left Ritchie in a blue funk:

I admit that I feel sick this morning. Now that may be because I have both my sons off school, feeling quite unwell and I am coming down with what they have got. But I do not think I am sick because of them: I think I am feeling sick for them, and millions of other young people of their generation.

The papers are full of analysis of what George Osborne had to say yesterday. It is very obvious that his cuts focus most heavily on the poor, on women, on children, on the disabled, on those with learning difficulties, and because so many from racial minorities work in the public sector, on them as well. I’m sickened that my children will have to spend their teenage years in a country that will be torn apart by the deliberate choice of the Conservative Party and the Liberal Democratic Party in this country. I make clear, that is a choice. I know that we could have had a Green New Deal. I, and colleagues, have shown we can afford it. I know it could have rebalanced our economy.

What really sickens me is that I know that I will see my sons going through their teenage years without there being hope in our country. What hope will there be of employment for them? What incentive to create a business? What reason to take on the debt of going to University? In essence, what am I going to do apart from firing them with the desire for a different world to motivate them to play a full part in this society in which they live when those who are leading that society at this point of time have rejected all hope for the people of this country in their sacrifice to the bankers of this country?

WTF, mates?  It's hard to imagine a greater load of old guff if you tried.

The fact is, when the Ritchies of this world are bellyaching about the iniquity of restricting welfare benefits to £25,000 per year, most everyone else is just shrugging and getting on with it.  OK, so public transport will be more expensive.  Benefits will be lower.  Taxes will be higher.  VAT will go up.  But we'll make do and mend.  We'll keep calm and carry on.  The world won't end and we'll still be living in one of the richest, happiest, greatest countries in the world.

I trust that Ritchie can adopt a slightly sunnier disposition when playing with his kids.  Mine have a fabulous childhood and have lots to look forward to.  The very idea that their futures effectively ended on Wednesday is completely and utterly bonkers.  And it's a blatant lie.

Filed under: Other blogs with tags deficit, idiots, public sector, richard murphy
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Ritchie bleats about the cuts:

And benefits are restricted to £25,000. There will be a real rise in child poverty. A big one.

For real?  Does he honestly believe that a family on benefits can't possibly escape from poverty on cash benefits of a mere £500 per week?  Given that there are other non-cash benefits that aren't affected by the headline cap, such as social housing and other sundries like free school meals and free prescriptions.

I mean, I appreciate that there may be people who don't have the financial acumen of educated chartered accountants like me and Ritchie, but it's absolutely taking the mickey to suggest that people on £500 a week of handouts can't survive without falling into poverty.  Particularly when you take into account that many of the expenditures working people have to make - commuting costs, savings - don't even need to be in their budgets.

It's an absolute kick in the teeth to hard-working people.  And it really demonstrates just how out of touch Ritchie is with ordinary people.  He's been totally captured by his socialist paymasters, and it's eviscerated his ability to think objectively.  It's sad.

Filed under: Other blogs, Taxation with tags deficit, richard murphy, savings, welfare benefits
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Thank heavens the ICAEW group over at LinkedIn is open to chartered accountants only. It spares me the embarrassment of my fellow accountants' views being aired in public.

Their latest idiotic argument is over a recent advertising campaign for the ACA.

Just seen an almost 2/3rds of a page ad in the Times promoting the ACA Qualification - "exclusive to the ICAEW - a world leader of the accountancy & finance profession" - yet nowhere in the text is there any mention of the word Chartered or even Accountant - or an explanation of the initials ICAEW. Are the Institute so dismissive of the Chartered status now that every qualification to seems to have similar (in fact when most laymen are totally confused about these initials whether clients or employers, we should be clarifying what is an ACA compared to e.g. an ACCA, whether to help those in practice or those applying for jobs as this advert seems to be about) or are we concerned that because we have E & W next to ICA we don't look global enough even for a UK marketing campaign ?

And the discussion continues:

Well I guess that most of the people who work for the Institute in Milton Keynes and Moorgate Place are not CAs. This is the result. And to be fair, the Big 4 don't exactly help do they?

This view is mental.  There's no reason at all to suppose that chartered accountants would be appropriate for many of the roles undertaken in Milton Keynes and Moorgate Place.  And they'd cost an absolute fortune, which would necessarily be reflected in members' subscriptions.

I think you may have a point or else someone at the ICAEW is confused about what the ACA designation means. On the website ("Train for the ACA" page), it says, "The ACA is the leading business and finance qualification, and your first step to becoming a chartered accountant." First step to becoming???

Yes, it is the first step.  First you pass the ACA exams and then you must demonstrate with your training records that you have undertaken sufficient practical experience to qualify.  No experience, no chartered accountant.  I think these days you also have to do some sort of ethical exam.

I'm sorry to be so harsh on fellow chartered accountants.  But I find it outstanding that, of all the things chartered accountants could find to talk about, they manage to express views so utterly feeble and trivial.

It's depressing.

Filed under: Institutes, Other blogs with tags icaew, idiots, linkedin, qualifications
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The TUC's Nigel Stanley, who is a nice enough bloke, but should probably stay away from tax policy work in future, has been writing about pensions tax relief in the Guardian ¹

Pensions tax relief is the pensions world's dirty little secret – a conveyor belt that shovels money in the direction of the better-off. While the government has put some limits on how much can be claimed – and that's worth at least one cheer – they have done nothing to reduce the fundamentally unfair nature of pensions tax relief.

Few understand how it works. If you put a pound into a pension, the tax authorities will take that pound off your taxable income, thus reducing your tax bill.

Standard rate taxpayers would have paid 20p on this pound – so for every pound they save they get 20p knocked off their tax bill. It therefore costs 80p to save a pension pound if you pay standard rate tax.

But as higher-rate tax is 40%, higher-rate taxpayers get 40p back for every pound they save, so it costs them just 60p to put a pound in their pension. Fair?

Tax relief does not come free. For every pound the government gives back in tax relief it has to collect in other taxes and the costs are staggering. Before the rules changed, tax relief on pensions cost more than £36bn a year. Three-fifths of this (close to £22bn) went to higher rate taxpayers, but 25% – nearly £10bn – went to the top 1% on more than £150,000 a year.

The new 50p tax rate for earnings over £150,000 gives us the ludicrous situation that the super-rich get 50p back for every pound they save. In other words we have a pensions "bogof", whereby the wealthy can buy one pension pound and get one free while the deal for standard-rate taxpayers is only five for the price of four.

In future no one will be able to claim tax relief on more than £50,000 a year of pension contributions. This will raise £4bn a year, and does come from the better-off. But the new rules do nothing to change the fundamental unfairness of tax relief.

This is because people can still claim at their marginal tax rate. The super-rich keep their pensions bogof, but there is now a limit on how many items they can take through the till. But there is no need for a whip-round for these distressed gentlefolk, for they can still buy £50,000 worth of pension for just £25,000.

He's falling into the Ritchie trap of presuming that all your money are belong to us and that what you get to keep is yours only by the divine mercy of the government.  Under this distorted, crackpot view of the universe, because we tax rich people at 50%, every £1 that you are permitted to pay out of pre-tax income costs you only 50p but is then topped up by a donation by the state of 50p.

This is of course mad, because if you earn £10, your tax would be £5, and you'd take home £5.  If you are allowed to pay £1 out of pre-tax income then your tax is £4.50 and you take home £4.50.  You're always taking home less than you would have done, and the state tolerates this because it's in the long term interest of the country.

If we imagine a much poorer person who earns only £2 but pays tax at 10%, they pay 20p in tax and take home £1.80.  For them to contribute £1 into their pension, they would pay 10p in tax and take home £0.90.

We should accept this settlement, even though Stanley and his nutty union buddies cry foul, because you will observe that the richer person still pays substantially more tax than the poorer one.  You will remember that the richest 5% of earners pay 45.5% of total income tax, even after taking account of the current tax relief arrangements.

And we should further accept pension contributions out of pre-tax income because it binds higher earners into a common settlement with everyone else over pensions.  Without this, there is the risk that higher earners will simply give up on pensions altogether, leaving everyone poorer.  To a certain extent we have already seen this with defined benefit pensions, as directors joining companies after their defined benefit pension plans have been closed to new joiners have a real incentive to close the schemes to future accruals as well.

There's also a profound unfairness that Stanley unsurprisingly overlooks.  As I mentioned a week or so ago, public sector pensions can cost in the region of £6.50 for every £1 contributed by the employee.  The £1:£1 that Stanley thinks is so unfair pales into insignificance compared to this largesse.

If he's serious about fairness, his union colleagues will demand that public sector pension schemes be scaled back significantly, given how grossly unfair they are for the taxpayers that fund them.

Filed under: Other blogs, Politics, Taxation with tags defined benefit, guardian, nigel stanley, pensions, public sector, tuc
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Ritchie has a new tax gap report.  It's been fairly comprehensively reviewed by Worstall here.

Rather than rake over the very detailed comments that Tim has made, virtually all of which I agree with, I'll focus on one that he's missed.  Ritchie has studied the apparent decline in the headline tax rate paid by UK companies.  But he has used the consolidated corporation tax charge, adjusted only for outliers, deferred tax and goodwill amortisation.

But this leaves in it all tax paid overseas.  So it's a nonsense to compare a company like Anglo American, which makes most of its money in South Africa and South America, with GlaxoSmithKline which makes the lion's share of its profits in the US.  Both are listed in London, for sure, but they are global businesses with global profit profiles.  It's a fallacy to compare them side by side without taking account of their specific situations.

It's also amusing to note that Murphy excludes as outliers any company that has reported taxes greater than 50% of profits or has reported taxes when loss-making.  Yet, he'd be the first to excoriate any company that reports low taxes compared to corporate profits!

Filed under: Other blogs, Taxation with tags anglo american, glaxosmithkline, idiots, richard murphy, tax avoidance, tim worstall, tuc
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Would you like £200?  It's yours if you're a drug addict or alcoholic, but there's a catch.  You've got to consent to a course of long-term contraception. If you're a man, that means the snip.

This has got virtually all left-wingers and a lot of right-wingers very upset.  How dare Project Prevention, a US charity, muck about with our fertility like this?  Needless to say, they're all wrong.  This is a pragmatic and compassionate solution to a very sorry state of affairs.  And the social liberals, who think they're so kind to everyone as they hose other people's money all over the place, are - yet again - making everything worse.

People generally find anything to do with reproduction or body parts icky.  As a result, our policy in this area is a mess.  We don't let women sell eggs commercially, we don't let men sell sperm commercially, and we don't let people sell body organs, even ones that they don't need.  The thinking behind this, inasmuch as it exists at all, is that people need to be protected from themselves because they're incapable of making such profound choices about their own bodies.

This is paternalistic nonsense.There is clearly a market for high quality sperm and eggs.  Clearly, some women are prepared to pay more for, say, the sperm from a good looking, youthful, Oxbridge educated chartered accountant than from some bum-faced footie fan who needed the (paltry) money available.

And the consequences of our squeamishness are appalling.  Newsnight showed a number of children whose lives had been ruined from birth by their parents' drug habits.  A mother was in tears as she recalled her own weakness - taking crack even as her baby was crowning.  And her nine year old son had the mental age of a five year old, directly as a result of her own abuse.

We are to blame.  We are worse than the US, because we have a higher level of welfare benefits than the US.  We take money off hard-working middle-class people and hand it to poor people with no strings attached.  And, while many use the money to better their lives and work their way out of poverty, many use the money to subsidise their drug habits.  We don't test welfare recipients for drugs, so it's our fault that drug addicts spend the money we give them on their habit.  Our welfare system presumes that recipients are rational, sensible people who can make proper judgements in their own best interests.  So why do we suddenly doubt that a drug addict can make judgements in their own best interests? And, if we do, why do we give them benefits with no strings attached?

The left-wing argument is intellectually incoherent.  It's cruel to babies, expensive to taxpayers, does nothing for addicts and blights society. We should applaud Project Prevention for having the courage to take action where we, collectively, have chickened out.

Isn't it also possible that many addicts, faced with the reality of being presented with a choice between their future as a reproductive human being and a drug addict choose to quit drugs?  Project Prevention might be the jolt they need to convince them that drug-taking is a bad life choice.

Filed under: Ethics, Politics with tags drugs, newsnight, project prevention, welfare benefits
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It's rare that we catch Richard this happy:

Fantastic!

Accountants do not have a right to legal privilege when trying to undermine the revenues of the state.

However, his happiness is misplaced.  For lawyers do, as he puts it, have a right to legal privilege when trying to undermine the revenues of the state.

Now, not all "undermining the revenues of the state" is illegal, or even undesirable.  If, for example, a tax agent informs his client that they have not been taking up a tax concession to which they are entitled then that will undermine the revenues of the state.  But it's not illegal.  It's merely doing what Parliament intended.  You'll remember that it's this issue that got HMRC's knickers in a twist when they were trying to distinguish abusive tax advice from ordinary tax advisory work.  And failing.

In any case, tax avoidance schemes must already be disclosed to HMRC under the DOTAS rules.  These require the scheme promoter to disclose the basics of the scheme to HMRC (so they can, in most cases, close the loophole) in certain prescribed situations.  But, where the client has legal professional privilege, he must waive it and disclose the scheme to HMRC himself.

The reason for this construction is that LPP is the client's right, not the lawyer's.  So the client must waive his right because the lawyer cannot.  In that regard, Ritchie is wrong to say that accountants want to "have the right to legal privilege".  They want their clients to be able to seek professional advice before undertaking a significant transaction and for that advice to be disclosable to the officers of government only in certain prescribed situations (e.g. DOTAS).

Of course, not all pieces of tax planning need to be disclosed under DOTAS.  And it's that additional advantage which allows naughty lawyers to advertise themselves as having better protection than other types of professional.  It's unfair that lawyers can get an advantage in the marketplace over other, equally well qualified professionals.  And that's why the Court of Appeal case is disappointing to accountants.

Filed under: Other blogs, Taxation with tags legal professional privilege, richard murphy, tax avoidance
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There's a curious article over at CiF today.   It tells, in the first person, the story of a manager at a quango that is about to be abolished. Yet, as is so depressingly common at The Guardian in recent years, not everything is quite what it seems.

Nicholas Milton explains how his family will struggle to afford childcare costs of £537 per month on his wife's salary alone. However, the article doesn't make it clear that he freelances as a journalist (it is in his profile), nor that he stood for Parliament - Labour, natch - at the recent General Election.

It's long been an axiom of mine that anyone who spends more than £500 a month on anything should be banned from the Labour Party for life. Certainly, he should have the good grace to shut the hell up about it, while so many households are facing much greater hardship.

The comments are good too. Most seem totally baffled as to why the Commission for Rural Communities was ever considered a good idea. What, with its vision that to

maximise our impacts, we will maximise our strong, relevant evidence base, listen to rural communities, work in partnerships and promote effective solutions.

Is that worth raising tax for? It's basically a conduit for taking taxpayers' money in order to campaign for more taxpayers' money to be spent in rural areas. Why bother? Most rural dwellers on CiF hadn't even heard of it.

As they say, with friends like this, who needs enemies? Other quangos that were fortunate enough to survive yesterday's bonfire must be very worried if this is the best defence their brethren can muster.

And ordinary folk must be outraged that it took near financial meltdown to convince government to stop pissing our money up the wall.

Written on my Android mobile phone. Article may be edited later.

Filed under: Other blogs, Politics with tags deficit, government, Nicholas Milton, public sector, quangos
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So the European Commission has issued its Green Paper on audit.  The big firms, accountancy bodies and other assorted regulators now have eight weeks to respond to the 38 questions raised.

The questions run the full gamut of petty prejudices about the audit process.  And like a bad horror franchise, a few old friends, which we thought we had killed off in earlier episodes, are now back to haunt us.  So the Commission ponders whether it would be a good idea to force audit rotation, ban non-audit services or take the power away from shareholders to appoint auditors.  Never you mind that audit rotation was quite possibly a major culprit in Parmalat, many non-audit services are actually required by local regulation or the fact that we want shareholders to be more, not less, responsible.

Also returning is the idea that auditors aren't sceptical enough. Oh, puhleese.  Then there are some new horrors.  The Commission suggests that the creation of "pure audit firms" might be nice, despite the inevitable impact on audit quality.  It's also disappointing that the Commission seems to believe that the audit tendering process creates a conflict of interest.  Shareholders recruit auditors to check up on management and shareholders pay for them.

With a question to answer every working day of the week before the consultation closes, responses will need to be cobbled together fairly quickly.  The Commission plans to hold an event in the New Year to reflect on comments received. 

Filed under: Auditing, Politics, Regulation with tags auditor rotation, european union, non audit services, parmalat, scepticism
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One of Ritchie's favourite bugbears is libertarianism, which he blames for much of the world's ills, including poverty, tax evasion and, most likely, England's catastrophic failure to score against lowly Montenegro.  But while his view of what libertarianism is more than ordinarily warped, including the totally bonkers claim that he himself is the truer libertarian, it is worth drawing a distinction between two forms of libertarianism.  I call these forms the 'idealogical' form and the 'pragmatic' form.  And I lay them out in their raw formulations, for discussion purposes.

Idealogical libertarians are libertarian from the belief that it's structurally a better way to organise the world than under our current authoritarian political model.  They believe that people are intrinsically free and it's a moral outrage to enslave them in artificial social structures that impinge on their liberty often to their own detriment. And even if you can identify an individual who might benefit from state intervention, most often the price - forcing others to contribute against their will - is never a price worth paying.  Conversely, if they are happy to contribute voluntarily, then the state should back off and let them.

I don't think I'm really an idealogical libertarian, although I feel some of its allure.  I characterise my views as a bit different. And, because I can't think of a better term, I call this the pragmatic libertarian position. That's not to say that idealogical libertarianism is not pragmatic, but rather that the position is reached more from pragmatic reasoning than from moral axioms about personal freedoms.  The pragmatic libertarian believes that we should have less government because government is so profoundly bad at everything.  It's inefficient at running many public services - not because they're hard to run but because government is simply bad at running them. So, bearing in mind medical ethics, government should always seek to 'first, do no harm', recognising that quite often doing nothing is the best course of action.  Beyond maintaining a system of ownership rights and some basic baggage to enforce and support that, there isn't an awful lot that government can do better than private enterprise, so it shouldn't try.

I'm afraid I'm much too lazy to attempt to wade through political philosophy to identify whether this is an accepted dichotomy.  And I'm sure it's horribly flawed, so I welcome any thoughts and reflections in the comments.

Filed under: Politics with tags libertarianism, liberty, richard murphy
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