Saturday, 25 February 2017

A new scrappage scheme for policies?

Chris Grayling MP has declined to comment on whether a scrappage scheme will be introduced to take old banger policies off the road. Sadiq Khan - Mayor of London, which has the highest number of redundant policies - has called for a £515m scheme to be introduced.

Taxes on virtue-signalling polices were cut in 2001 as at the time they were considered to be lower-carbon form of government. However recent research suggests that stupid ideas cost thousands of lives a year.

The Society of Policy Manufacturers noted that newer policies tended to produce less smelly gas than older policies, while Greenpeace said that Grayling needs to stop talking out of both sides of his mouth.

Capitalists understand price signals and suggest a steep and steady increase in the tax rate payable on policymaking, to encourage policy drivers to switch to lower-impact alternatives.

Friday, 24 February 2017

Endgame for Drax?

Drax is a great name for a villain:  and for anyone who gives a toss about the way 'green' subsidies are thrown about, Drax plc can certainly be cast as one of the villains of the piece.  Drax and its fellow industrial-scale wood-chip burners receive nearly £1 billion a year in subsidies for generating electricity that way, and are not required to proffer CO2 emission permits or pay the carbon tax - on the pretext that wood-burning reduces CO2 emissions.

Except, it doesn't - it increases them, even by reference to coal (which is the obvious comparator, since it is coal-fired power generating capacity that is essentially being replaced by biomass-burning).  It's basic physics, plus a little logic.  A perfect example of crass policy-making at its most perverse - whatever view you take on (C)(A)GW.  The way they get away with it, BTW, is under the utterly demented 'carbon accounting rules' which allow them to account only for the CO2 emitted in the manufacture and transportation of the wood-chips - and to ignore the CO2 emitted during actual combustion, which is nowhere recorded.  To repeat, wood-chip burning generates more CO2 than coal burning: and in answer to the riposte that eventually, if you replant the forests, it all balances out, the answer is that 'eventually' is several decades at best, but maybe 100 years or more.  Meantime, all this is happening by the many millions of tonnes of mostly North American forest per annum.

There have been a number of people saying this patiently for quite some time, mostly from the green side; although of course the hatchet-faced subsidy-farmers and their 'green' lobby the REA are all in favour.  Well, after all, a billion is a billion ... 

Yesterday, the fairly universally-respected Chatham House has published what everyone knows to be the truth (here and here).  Even the Beeb has picked up on it (though silence from the Grauniad at the time of writing).  The REA's response is risible.

Why does the government (which, by the way, knows all this too) continue to load up our electricity bills with these subsidies?  Easy.  (a) the UK depends on biomass to meet its 'binding' EU renewables targets; (b) in a world of windfarms and ever decreasing coal, it depends on the reliability of biomass (inter alia) to keep the lights on in winter; (c) Drax and its smaller confreres are up shit creek without the subsidies, which greatly exceed their profits.  I don't know whether Drax - a FTSE 250 company - would go under without the subsidy (and remember, if that is withdrawn then by the same logic Drax should also be paying the carbon tax which would compound their woes).  But withdrawal of the subsidy would certainly impact massively on its fortunes.

I can't see the status quo continuing indefinitely.


Thursday, 23 February 2017

Where should you flee Brexit too if you are a Capitalist Corporation?

So this is easier than you may think to decide. There are five major considerations that any company has to take account of:

Regulatory Environment, Tax, Employment, Language, EU exit potential

For the first, this is how seriously a country takes enforcement or regulatory rules and therefore how much time and effort you will have to put into pretending your company is operating there.

This is quite a hurdle, Ireland for example are saying you have to have significant operations in-country to count. This is not surprising, given how close to death Ireland came in the 2008 Financial crash.

What this means is that very few countries are able to offer the light regulation (this means a brass plate address a la the Cayman Islands). The EU Countries that do are Malta and Luxembourg. Neither of these places really wants large movements of people to them.

Of the other major Countries, Germany, Ireland, France, Holland, Iceland and Lithuania  offer a more challenging regulatory regime, but at least you could actually move people there. Here though both Employment and Language come into play. Ireland apart language is a real issue and notably in France employment issues too - not point being a capitalist company if you can't sack the staff or only hire contractors. The employment element rules out most countries.

Then of course, France and Holland may exit the EU themselves, so why move there for only a temporary escape.

So when it comes down to it, there is only really Luxembourg, Malta and Ireland as serious places to go. Luxembourg ins hands down as many financial services funds are already domiciled in Luxembourg to pay no tax. of course, if you have actual people and business to move then there is Ireland but there regulations mean that is a long process that you really should have started already.

For how long though will the EU put up with Luxembourg offering its companies and UK companies a no-tax jurisdiction within the heart of the continent? Also, when the Financial Transaction tax hits, how much will that hurt the EU trading companies - why bother moving now only to come back later?

As a final thought, due to the above I fully expect to see Luxembourg and Malta veto any moves towards allowing UK passporting or other deals with the EU. They will push for hard Brexit all the way as for them it is a one-way bet.

Wednesday, 22 February 2017

That Exodus from the City to Europe

As we tremble in our boots at the prospect of all those City firms upping and offing, the runners and riders for the Wannabe European 'Capital' City stakes are bimbling around somewhere near the starting line, bumping into each other, in the mud.  It looks like heavy going.

And here is what the tip-sheet says:
From Paris to Vilnius, Milan to Madrid and Frankfurt to Valletta, regulators, local authorities and sometimes national governments are clearing a path for the exodus many feel is coming ... or even Amsterdam ... Dublin is a serious contender ... Appealingly low-tax Luxembourg ... Milan is also making a pitch, particularly for technology and financial firms, with ambitious if probably unrealistic plans to turn the Expo 2015 space into a global tech hub.  Small, user-friendly Valletta, in Malta, fancies some insurance business, while Lithuania’s Vilnius and Riga in Latvia, want a share of fintech and support activities.  “We have the talent and we have the infrastructure,” said Latvia’s finance minister, Dana Reizniece-Ozola. “Everyone wants to put themselves on the map.”
Jolly good stuff, chaps.  Nice to see a united front.  And we all certainly fancy a bit of business.  By the way, I've been to Latvia, and Riga is very nice.  If you like little old Hanseatic League towns.  A bit like L├╝beck.  Or King's Lynn.

Already on the map, really - for a nice bit of tourism.  Good luck with the global finance.


PS, to be fair, that Grauniad article also gives a list of good reasons why it ain't gonna happen.  And they didn't even mention Civil Code and FTT.

PPS, the other day I watched Luxembourg's promotional video clip.  You know the way that in TV ads for BUPA private hospitals, the word CLEAN swims in and out of the picture, subliminal-message-wise?  Well for Luxembourg, the subliminal onscreen message-word was SAFE ...

Tuesday, 21 February 2017

Mugged by the Tories

Cast your minds back if you can to the 2015 general election. Faced by the possibility of a son  of a communist agitator becoming Prime Minister, propped up by a nasty rabble-rousing single-issue nationalist minority party, the country re-elected the incumbent with an increase in the number of seats. No longer would the Tory PM have to get permission from Nick Clegg to cut the deficit, reform the public sector and the economy, to breathe life and vim into parts of the country moribund after so many years of ignorant socialistic self-defeating rule. Markets would be freed, the public sector refocused on the essentials, assets privatises and taxes cut. The country voted Conservative and the country would thrive.

One of the big discussions in 2010, you may remember, was about Labour's "jobs tax" - a proposed increase in National Insurance "contributions". The Right correctly argued that increasing the cost of employing people reduces the chance that people will be employed. Labour lost that election, quite spectacularly.

Since then we have enjoyed years of firm Tory/Liberal and Tory rule, by what we were led to believe were neo-Thatcherites in softer makeup.

One of George Osborne's triumphs was to increase the personal allowance to take more people out of income tax liability. Championed by right-wingers and lefties alike, this was a bold departure from the Brownian era of fiscal drag on steriods. No more stealthy increases by holding down the thresholds, but a genuine burden reduction. 

Come 2015 the Tories felt confident enough to go a step further. They announced  that the squeeze on relatively higher but still unspectacular earnings had gone far enough: they promised that if elected with a Parliamentary majority they would increase the threshold for paying 40% tax until it reached £50,000 a year.

Well, I have just had a look at the numbers. Very excitingly I am due a £500 a year tax cut when the new thresholds kick in in April. £500 a year is a pretty good tax cut, right? And the threshold isn't even close to the eventual £50k level. There should be plenty more scope for reductions in upcoming  even if my salary doesn't move much.

But wait, what is this? The tax calculator site says that my monthly take-home will be *less* rather than more. Surely some mistake? Ah, I see: my NI "contributions" have bounced by £1000. 

The other day I received a letter encouraging me to donate money to the Tory Party. They had to be kidding, right?

By-Elections - the end of the populist surge?

There are 2 by-elections this week. One in Copeland and one in Stoke.

The Copeland one is about as uninteresting as it gets. A safe Labour seat, Labour are running their traditional 30-seconds-to-save-the-NHS campaign. It is a slam dunk hold for Labour. I doubt many of the people there even know what a Tory is, some kind of baby-eating animal their parents used to scare them with when they were angry. For reasons of needing to fill newspaper columns there seems to be a move to suggest the Tories might win...I mean really. Even when the Tories were led by William Hague and IDS they were not losing seats in Surrey.

As for Stoke, it could have been a bit more exciting if UKIP had a decent candidate, instead the new leader seems as error-prone as previous UKIP candidates and thus is not making much headway. Plus the Labour candidate is also poor meaning the net result will be a very low turnout and thus a likely Labour hold too.

You can get 3-1 for both seats to be holds. At least it means we get to keep Mr Corbyn as our commie-entertainer in chief for a few more months at least. But the likely press angle will be that this is the end of the Populist surge - hhmmmm...that we will have to wait and see about.