On what basis should democracy work in order to be fair and deliver good decisions?

I have given this some consideration, indeed I first came up with this idea travelling back from Poznań to Warsaw some twenty years ago in the car with the late Sir Peter Kemp, if you will forgive the much dropping of name.  He vehemently disagreed with me, but I have found in due course of time that I certainly do agree with myself.

The best way of all would be to give people a vote between 1.0 and 2.0, where everyone gets the 1.0 for having a soul and being a person, and the proportion of the second possible 1.0 is determined by which percentile of taxpayer you are, adjusted for awards for charity work or other merits, because it’s not all about money, it’s also about effort. So for example the average person would have a voting value of 1.5, Lord Billiam Nandnor, Elox Mustang, or Jess Bezamemucho, or whatever their names are, would give 2.0 apiece, and someone who simply scrounged off the dole and drink herself silly every day under a tree would still get 1.0 to acknowledge that there, but for the grace of God, go all of us.

It’s not a huge distinction, to give twice as much say per person to the hard hitters of an economy than to the drains on resources, but it would be at least something with the potential to improve the decisions now being made. Which is, of course, not saying much. But can we really believe that Gates, Musk et al are really as many multiples wiser than the poor as their income disparity might tempt us to believe? Probably not. Probably these success stories of humans have their weak areas and even some people with no incomes may be very clever indeed. Hence a bigger different than double between the greatest and least of us would be unfair and invidious.  At the same time, it is a nice way to thank people for paying more taxes than average to allow them a bit more tune-calling and to set the voting algorithm so that they get it. This is only human – if someone invites us to a feast and they are paying, is it fair to complain that they are the ones who set the menu?

To put a lot into society and have no more say than someone who puts the minimum in, or worse, seems unfair to me. Sir Peter countered, channeling Churchill, that democracy was an awful system until you compare it with all the others. He thought that despite having different gifts and different levels of effort we have to assume our fellow men and women are all our equals, and that an assumption to the contrary was not only unworkable technically (this was a good twenty years ago and then he may well have been correct on that matter) but also morally reprehensible. The attempts of this erstwhile formidable mandarin of the civil service and ally of the Iron Lady to make me a bit more human and democratic whiled away a good part of that journey and are an enduring fond memory.

For sure I accept that we are all equal in the sight of God. But I don’t accept that we all have equally valid opinions or that the quality of decisions made by people who have no “skin in the game” (I assume Twister is the game the person who devised this saying had in mind) So this idea blends having one “soul vote” (for the avoidance of doubt, gingers would be deemed for this purpose to have souls) with the “no tax’n w/o rep’n” idea. It’s a kind of compromise which means every one can whine but because everyone is whining we know it’s kinda fair. Maybe it would improve the quality of decisions made by the electorate, also.

A person living in a different country could also split their soul vote to their country of oranges and put the tax part of the vote into the country where they are currently sitting like a lemon. But they wouldn’t be allowed to switch it back and forth like a yo-yo, even though in theory the soul can travel at speeds higher than C, 300,000,000 metres per second, which is a good deal faster than any existing yo-yo. Now wouldn’t that be better than the current system, whereby I am denied a vote in the UK because of not being there despite listening to the PM program most days, and also not allowed to vote in Poland because only citizens can vote for president and parliament, and even local elections I was immediately disbarred from from 31st January because the UK is leaving the EU. In order to even be a stakeholder in democracy, which I currently am not, and not by choice, I have to adapt my identity. Everyone else’s identity is sacrosanct, mine apparently not. I am not entitled to have any say at all on how my taxes are spent, but I pay more tax than the average person who does have a say.

So my idea could only be an improvement to democracy and very far from the illiberal and undemocratic system which John Major’s nemesis told me it was.

Your views on the idea profile of democracy are welcome in the comments below.

Opinion Piece – Amazon and Google and the prickly question of UK Corporation Tax

Luxembourg (Photo credit: epha)

This week has seen the issue of corporation tax paid – or rather not paid – in the UK come to the boil, after simmering for several weeks with the articles of various MPs from various parties in various newspapers. It has now made the front page news and there has been an open harangue on three companies, Starbucks, Google and Amazon in the Public Accounts Committee by a group of British MPs headed up by Margaret Hodge.

The argument of the Committee is that these are companies who have made a good deal of turnover in the UK but they haven’t paid any tax. The way in which this has occurred is that they haven’t shown much by way of profits in the UK. They are now being told by Mrs Hodge that she doesn’t believe that they have not made profits in the UK given so much turnover, she thinks that profits are being salted away to other countries, like Luxembourg or Holland, using various techniques such as management charges, royalty fees, transfer prices, etc.

There are of course laws which are set up to determine whether profits in the UK are being assessed fairly – there is transfer pricing legislation and the Inland Revenue are able to investigate whether Transfer Pricing has been used. However, in the end what Mrs Hodge’s argument has boiled down to is the fallacious “argument from incredulity” – she cannot believe that the businesses have not made bigger profits (she seems to be oblivious to the fact that there is a recession going on out there and has been for some time, and that companies in all sectors and of all sized are bankrolling losses), and since she cannot believe it, it cannot be true.

In the case of Amazon a particular point was made – in addition to the insulting of Amazon’s spokesman Mr Andrew Cecil by accusing him of “gross ignorance” – namely when he pointed out that of course Amazon has paid taxes, only not corporation tax, they have paid VAT and employment taxes and created jobs – Hodge said that this argument was irrelevant because also the corner bookshops which would have sold those books would have created those jobs (fictional employment was always beloved by the left) and that Amazon, by making offshore structures involving Luxembourg, were making those little corner bookstores less competitive.

The fact is, however, that Amazon is not competing with little bookstores – it’s the Internet, new technology, which is competing with physical bookstores, but anyone with any kind of memory ought to be able to remember how a few large stores like WHSmiths and Waterstones already managed to put the corner shop bookstores out of business long before the Internet came along. Also if you look at markets like Poland or the Czech Republic, where they have online stores for books but not so much by way of the colossal physical bookstores the way the UK has, there the corner bookstore is alive and well. So Mrs Hodge has absolutely the wrong villain in her sights if she wishes to defend the corner store bookshop. But if she really was interested in championing them, then where was her voice railing against expansions by Waterstones and Smiths ten to fifteen years ago, which transformed that industry then just as much as the internet does now? Where is her voice against the Net Book Agreement, which makes it very hard in the UK for small businesses to deal in new books against larger companies? Tax is important, but it is only a thin layer of icing on that particular rather thick cake.

She admitted also that she wasn’t accusing Amazon of being illegal, only of being “immoral”. I am sorry, but is Luxembourg not another EU state in good standing? Is it now “immoral” to use the EU structures that were offered to us as the bait for getting us to sign up to the Single Market in the first place? Well, if there is any immorality in all of this, I can’t see it on the part of the private businesses. I see immorality and utter hypocrisy in the way these MPs, elected members of a government, blame business for their own failures. Failure in so many years of our being in the EU to sort out some kind of harmonisation in income taxes and corporate income taxes meaning that people are able to doing interesting kinds of arbitrage between EU legislations both in terms of their personal taxes and corporate profits taxes. They have had so many years and so many terms of office to sort this matter out.

In fact the answer in Amazon’s case is ridiculously simple – the UK has held a zero rate of VAT for books in order not to penalise reading, but bookselling companies paid the same profits taxes as any other kind of company. That means that book VAT in the UK isn’t even propely harmonised with the rest of the EU. VAT cannot easily be evaded, and even Margaret Hodge couldn’t deny that Amazon paid VAT, merely dismissed it as irrelevant. So what the government can do to produce a more level playing field is to put the general rate of VAT on books and reduce the profits tax for companies all of whose income comes from the sale of books. This would force booksellers who are in a lot of different businesses to be just in books in order to profit from the reduction, and it would mean that it would be of less worry who used corporate income tax reducing techniques, as they would be spending time and money reducing a smaller imposition anyway, and therefore would be less likely to do it.

Schools could be enabled to reclaim the input VAT, the students of university colleges also, therefore the impact on education would be minimised.

I wonder whether anyone in Government will consider this solution, or work towards the harmonisation of EU member state corporation taxes which we all believed back in 1993 was likely to happen before the turn of the Millennium, or whether they will continue, like Margaret Hodge, to blast other people in the private sector for doing their jobs properly while government continues to neglect its own job with impunity.








UK Trade and Investment Initiatives to support business ventures to and from Poland

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A message from UKTI

Martin Oxley sent this out for the Foreign and Commonwealth office and we are pleased to assist in its propagation.

Dear Quoracy.com subscribers,

Poland presents an attractive nearshore growth opportunity for Britain Plc. In line with the new UKTI strategy presented to government recently by Lord Green, Minister of State for Trade and Investment we are introducing a step change in the way UKTI supports British business growth.

We are taking a very proactive approach on behalf of government to provide a range of bespoke services to enable British SME’s to significantly enhance exports and also work with large corporations to win major overseas contracts and expedite their growth in market.

With our new Ambassador HMA Robin Barnett and the Embassy team we are engaging to support strong growth oriented business agenda in Poland.

With this in mind I am pleased to attach a brief outline of the services which UKTI has developed to support British business in Poland. I very much look forward to meeting you over the course of the coming weeks to discuss with you how we can assist you with your specific company needs.

I am very happy to visit you or alternatively you would be most welcome to visit us and I will provide you a tour of our excellent event facilities at the Embassy.

Kind regards

Martin Oxley

110715 EVR Expand your Business with UKTI Poland.pdf

Quoracy.com would also like to take this opportunity to congratulate our dear friend Martin Oxley on his recent new appointment to the FCO in Warsaw, and to wish him every success working with Her Majesty’s new Ambassador to Poland, His Excellency Robin Barnett. We wish you and your team many successes and a lot of fun.