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UK Trading Companies, UK Corporation Tax

February 7, 2012

How often have we heard of flagship UK businesses paying little or no UK corporation tax? A lot.

It is not, however, a subject loved by the companies themselves or their shareholders. If tax can be avoided off-shore, then the companies themselves and their shareholders can benefit – and the UK government and UK public services suffer.

There have been some high profile cases in the last few years. Amazon recently has been exposed for registering its UK operation in Luxembourg and gaining a tax-competitive advantage over UK booksellers. Vodafone were exposed for using Luxembourg to avoid tax, then doing a cosy deal with HMRC.

The real question is why the UK should tolerate any tax evasion by companies who are trading and making money within Britain. Trade in Britain and you pay tax in Britain. That should be the expectation and the requirement.

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Liberal Unionism in 2012

January 14, 2012

This post first appeared on Lib Dem Voice.

There’s no escaping history in our party, and current debates of nationalism, unionism and secession should prompt Liberal Democrats to delve back into the Gladstonian past.

The Liberal Party split over the Union. Gladstone favoured Home Rule for Ireland, Liberal Unionists didn’t, and ultimately joined the Conservative Party. This cemented the Conservative Party as the party of the Union, and it is a position the Conservative Party still holds.

The purpose of this article is, however, to challenge the Conservative Party’s stranglehold over being British.

The existing Conservative argument goes that a Conservative Britain is a Britain that stands proud and takes no nonsense from anyone on the other side of the Channel. In contrast, Liberal Democrats, as a pro-European party, don’t stick up for Britain, they sell out, and they give away our national identity. It is a superficially compelling argument. It is a Conservative argument for a Conservative vision for a unionist Britain. It is certainly not the only unionist vision.

The rise of nationalist Scotland and the success of Ireland within Europe and the Euro demonstrate the problem of Conservative Unionism. Ireland has demonstrated the effectiveness of independence from Britain within Europe. The SNP share a similar vision forScotland. The EU offers full national identity with the chance for economic self-determination. The EU, as a group of independent nations, respects and values national identity. Cross the Channel to France to see how they combine a full commitment to Europe with retaining their French identity.

For the Irish and for many Scots, identity is achieved by being Irish and Scottish within Europe. The flaw of Conservative Unionism is about the Scots being British rather than being Scottish. Britain is the identity, they say, and the Union is run from Westminster. The Conservative government of the 1980s and 1990s opposed devolution.

In contrast, Liberal Democrats are practical unionists. We share much with Labour, whose record under Blair has been impressive. We have supported the cause of devolution for decades. We have played a constructive and important part in setting up the Scottish Parliament. The new Home Rule Commission set up by Willie Rennie and chaired by Sir Menzies Campbell will work through how the Scots can further shape their own future while sharing risks, security and international relations in an uncertain world.

Liberal Democrats believe in the Union with devolution just as we believe in the EU with subsidiarity. We see a world with global, European, national, regional and local problems, and we seek to build political structures where decisions are taken by the right people in the right place. We are unionists because we believe in Britain with our shared language, our shared history and our shared culture.

The debate on Scottish independence gives the Liberal Democrats a golden opportunity to set out a distinctive unionist vision for Great Britain. Unionist within Europe. Pro-European, totally committed to being at the heart of the EU, sticking up for Britain and better preserving and enhancing our Scottish, Welsh, Irish, English and British identity.

The Options for British Decline

December 11, 2011

David Cameron has decided, on behalf of the Conservative Party, to isolate Britain– either temporarily or permanently –from all other continental European countries. This course of action is just one of two options that Britain can take as it manages its decline as an empire.

Since 1945, Britain has given freedom to its former colonies and lost its empire. Its key ally since then has been the USA. Britain has slowly failed to build alliances with other European countries, it wasn’t in at the beginning of the European project, and has been a rather detached bystander as the EU expands and grows together.

Britain now finds itself drifting politically out into the Atlantic, with its linkages into the EU severely damaged. However, its alliance with the USA is also becoming weaker as Britain becomes weaker. Britain shares a great deal with the USA, but so does the EU. As the EU’s relationship with the USA becomes more equal, Britain’s relationship with the USA becomes more one sided. Britain on its own is no longer a dominant European economic power. The special relationship is in decline. Historians may write that the usefulness of the USA/ UK alliance lasted from the end of the 2nd World War to the fall of the Berlin Wall.

Our international world is increasingly based on large economic blocks with large populations. This is a relatively recent development, driven by China, and it is very hard to see how small countries will ever again challenge the economic superiority of economic blocks like the USA together with Canada and Mexico, China, India, and the EU.

There are two strategic options for Britain.

The first is the progressive option: to join the EU block, pool sovereignty and help to make the EU a great force for good in the international world.

The second is the conservative option: it is to remain British. This is the route favoured by eurosceptics and the majority of the public at the moment. There will be permanent economic decline but the British people will have signed up for that in return for feeling that they are in control of their own destiny.

There are times in history for big choices. This is one of these times. The dominant political force of the 20th century, the Conservative Party, is now totally eurosceptic and set on a course of nationalism. Liberal Democrats favour joining the EU block.

There will be an In / Out Referendum at some point in the future. It’s time that the options and their consequences are more thoroughly debated.

Referenda and General Elections

November 5, 2011

It’s time for some clarity among Liberal Democrats on the issue of referenda.

General Elections decide the government. Going in to these elections, all parties issue a manifesto and tell the voters what they will do if elected. So the first thing to say is that if the new government has promised a referendum within their manifesto (or within the coalition agreement), then there should be a referendum. And vice versa, if there is no mention of a referendum on a listed issue, then it is for parliament to decide.

This leaves the unknown in politics. These are the issues that spring up unannounced and unplanned. Scottish independence could be one, succession to the throne of the United Kingdom another. Let me try to set out some rules for deciding whether these decisions should be taken by parliament or by referendum enabled by parliament.

National Decisions

Is the decision Strategic? – is the decision of national importance with long term implications over many parliaments that cannot easily be reversed.

Does the Government not have the Authority to take the decision? – if Government feels that it doesn’t already have the mandate from the country, then a referendum is a possibility.

Must the decision be taken by this parliament? – there must be a valid case that the decision cannot be taken by the next government with a new mandate.

Can the decision wait for a few months until a referendum decision? – when the decision is not too urgent or destabilising for the delay in having a national referendum.

Is the decision Controversial? –there is no clear consensus within government or cross-party for a decision by parliament.

If the answer is yes to all these questions, then a national referendum should be considered.

Non-national Decisions

These additional questions need to be answered.

Is the decision specifically affecting only part of the UK? – leading to nationally enabled local referenda for one-off decisions.

Does the Government not have the Authority? – where the government has no mandate to impose a decision on a specific local area, and where the local decision making body does not have the authority to take the decision.

The Liberal Democrat Code

October 17, 2011

I’ve written before, and it’s been written by others, that Labour and the Conservatives are parties of interest. By which I mean that they exist to support and advantage the interests that support them.

In contrast, the Liberal Democrats exist for the whole population, in terms of aspiration, or of opportunity, or of freedom. The Lib Dem interest favours the disadvantaged, it favours the sweeping away of barriers that block aspiration, it favours fairness. Our two great successes of this coalition government, the pupil premium and raising the tax threshold both demonstrate this philosophy.

So what should Liberal Democrats do when we are in a coalition with a party that takes a very different attitude to lobbying and decision making?

The great danger for Lib Dems is that our ministers are viewed just the same by a sceptical public. Today Dr Fox, tomorrow a Lib Dem minister? The mud sticks on all politicians, irrespective of party.

It is galling for Lib Dems to be tarred with the same brush as other parties on this issue. What’s the solution? Do we work forcibly within government to introduce changes? Yes, of course. But doing that won’t alter the Conservative Party. They will always remain a party of interests.

The option for the Lib Dems is to establish our own Code. To bring recommendations to our party conference that are tighter and more transparent than any other party, and to thereby demonstrate that Lib Dems are different.

We’ve done that unofficially on expenses. The argument now is whether we take that one step further and introduce our own Code, a best practice for our Ministers that other parties ignore at their peril.

Aspiration for All

October 11, 2011

‘Nobody from whatever school they come from, whatever background they come from, should be discouraged from trying to do good things with their lives. Aspiration, ambition, hope, optimism is always important, but it’s especially important in the teenage years.’ Nick Clegg, at Charles Edward Brooke School for Girls in Camberwell, as part of the Speakers for Schools initiative by the BBC’s Robert Peston.

Nick Clegg, speaking to girls at a comprehensive school inLondon sets out in a compelling way not only the aspiration for young people, but also the distinctive political philosophy of the Liberal Democrats.

Many non-Liberal Democrats will share these aspirations for all. But it is important to set out how the political philosophy of the Labour and Conservative parties narrow and marginalise these aspirations compared to other priorities.

Both Labour and the Conservatives are parties representing interests. For Labour it is the Unions, who fund them and who play an often decisive role in choosing their leader. For the Conservatives, it is the interests of money and the protection of power and influence of those who already have it. In both cases, it is possible to be a member of these parties and believe in aspiration for all. However, this idealism masks the true motives of each party, which is to fit aspiration for all within the context of how it affects their core supporters and backers.

It is not possible to represent interests at the same time as truly representing everyone.

Liberal Democrats do not represent vested interests. The party’s core beliefs include:

‘We champion the freedom, dignity and well-being of individuals, we acknowledge and respect their right to freedom of conscience and their right to develop their talents to the full. We aim to disperse power, to foster diversity and to nurture creativity. We believe that the role of the state is to enable all citizens to attain these ideals, to contribute fully to their communities and to take part in the decisions which affect their lives.’

This true liberty of aspiration based on equal chances to develop skills and character irrespective of background or schooling, can only be found politically within the Liberal Democrats.

Putting Liberal Thinking Into Practice on Taxation

September 27, 2011

This post first appeared on Lib Dem Voice.

Liberal thinking on tax is based on both that the state has a duty to protect the poor and vulnerable, and that the state brings the best out of each individual.

The practical aim of Liberal Democrats is therefore to help to lift the less well off towards the average. This is not achieved only by handouts – which would be Labour’s priority – but by having a tax system that encourages work and aspiration for the lower paid.

Liberal Democrats are implementing the manifesto commitment of a £10,000 tax threshold. This is a figure rather than a principle. The more compelling liberal philosophical argument would be for the tax threshold to be set at the full time annual minimum wage. (See Nick Thornsby’s blog 1st August 2011)

No-one should underestimate the fundamental shift in attitude and approach that will flow from this idea. It encourages aspiration, it clarifies the role of benefits as a safety net and it stops the bad practice of the state taking with one hand while giving with the other.

Raising the tax threshold reduces the amount of income tax the state receives. A consequence of this in difficult times like now is that the 20% band could narrow, and the 40 % band will start lower, so that the tax tipping point is some level above the average wage.

Liberal thinking would support this, because Liberal Democrats believe that the poor should pay proportionately less tax than the better off. This is the principle of progressive taxation, and on this point, Liberal thinking differs from Conservative thinking.

The debate about a 50% income tax for the very rich should have one guiding principle. The very rich should under no circumstances be paying proportionately less tax than anyone else. All pragmatic discussions about the levels of income tax or capital gains tax for the very rich should be within the context that they pay their fair share as part of either being British, or living and working in Britain.

These ideas on tax are just an example of putting modern policy questions within the context of historic liberal ideas. When people ask ‘What do the Liberal Democrats stand for?’, I want people to know the answer.