Monday 27 January 2020

Labour still lost - Lisa Nandy and her incredibly clever tax ideas

I don't quite have the quality of post for today that Mr. Drew was able to produce over the weekend. But this snippet from the Labour leadership contest got me thinking a little about both how stupid these people are but also what tax policy could mean in 2020. 

In the Mirror article, Ms Nandy says she wants all companies to pay minimum wages after benefits are calculated so that big companies have to support workers at this level and moreover to add a special tax which is in effect a top up tax for paying such low wages. . Whilst to Ms Nandy this sounds good and suitably comradely, it would create some rather odd outcomes. Tesco would likely get a very large new bill, as would any big employer. Smaller employers with higher wages, I don;t know such as say a large global investment bank or Facebook or Apple, would not get hit at all. So in effect it would be a tax on employment - just what the economy ordered. 

Of course, in a wider context a policy like this is even worse. It would further drive companies towards automation and reducing work numbers.

So how do we tax these pesky companies. I think a lot of progress has been made with BEPS (Base Erosion and Profit Shifting) which is an international agreement that has been spread worldwide. This has really pushed hard on the easy use of international tax structures and and upgrade is on the way. 

Then of course the reality becomes that you have to tax what is done in Country to have a hope. for me this means a greater lean towards consumption taxes and complex transfer pricing well as perhaps higher import and export taxes, especially on digital goods. In return, there needs to be a reduction in employment taxes and also business property tax where the alignment is well out of kilter with value.

All of this is worthy of a longer post which I will get too - certainly more quickly than the vacuous Nandy will come to any real conclusions on tax policies!.  


Anonymous said...

The global elite will attempt to distract from tax arbitrage the same way that the UK left, an 80% owned subsidiary of that same elite (though most don't know it, they never think about who funds "campaigners"), have done. Look ! A squirrel!
Distract and Divide.

(Real median wages fall over 20 years, real house prices more than double)

"Look at the pay gap between (Asian newsreader) and John Humphrys!"

"Why aren't there more black FT100 directors?"

"Why do men earn more than women?"

(Thousands of young girls are abused in Rotherham, Manchester, Rochdale, Telford, Oxford, Manchester)

"Let's make Hollywood films about those awful nuns in Ireland!"

"What about paedophile priests!"

"Jimmy Saville!"

CityUnslicker said...

too true anon.

Anonymous said...

Labour have form with taxes on employment, though the last time they were more blatant:

andrew said...

They need to seize the nettle and start pushing for UBI.

Matt said...

Higher import taxes on digital goods will go down a storm with the US as most of those caught in this will be the US tech giants.

Good luck with any sort of balanced trade deal after that. If you think that being in the EU would have made any difference, take a look at what is happening to French wine exports to the US.

Anonymous said...

UBI, Universal Credit, Tax Credits etc are all worthy in themselves as they try to sort the issue of inequality. It's an issue that has long vexed people e.g. one Winston Churchill from his early years. (Is Boris Winston?)

UC, an Ian Duncan-Smith idea, has the effect of giving massive subsidies to employers to keep people off the unemployment roll. Large parts of tax go towards Housing Benefit (now called Housing Element) plus the Child Element which replaces Child Tax Credit but supplements Child Benefit.

There is a move this April to redress the employer subsidy but raising minimum wage by over 6% while keeping increases in benefits to under 2%. If there is the will over the next few years that gap ("to make work pay") could be increased.

But the vested interests in receiving tax subsidies are not just people, companies large and small love them too. In fact it could be argued that the benefit system is the reason for wage rates to be repressed for so long.

So whatever system is used to create a social safety net, it needs housekeeping every so often. The present tinkering is not housekeeping.