Imagine you are presented with a brilliant new wheeze to reclaim your taxes from more than 40 years ago: taxes that have long ago been spent on services from the NHS to schools to welfare. Clever lawyers and accountants sell the idea to you; they spotted the opportunity at the turn of the millennium. But just like elaborate transnational tax avoidance, it only works if you are a large multinational business operating in different jurisdictions. What would you do? Balk at something that sounds so unfair? Ask: how is this possible? Or take up their invitation and ask who to call?
Lots of multinational companies made that call, and it is a huge but little-known problem facing any incoming UK government that HM Revenue & Customs acknowledges it may have to repay big business a staggering £55bn of old tax.The figure is enormous: that is nearly half the NHS’s annual budget. It’s more than the total amount of corporation tax and capital gains tax collected by HMRC in 2015. It makes arguments about whether Labour’s manifesto is properly costed look footling, and the Conservative promise to move in to surplus look wild.
HMRC now has a last shot at appealing to the supreme court on an aspect of the BAT group claims: whether the corporates are entitled not just to simple interest on repayments in the way that you and I would be if we were being repaid tax collected, but to compound interest going back to 1973. It is this claim that turns the sums from disturbingly large to public finance-busting. The revenue declined to say to what extent its liabilities relate to challenges under EU law, but a source has told us the great majority of them do.
Who will pay for the UK’s multi-billion corporate tax grab?
If Labour wins the election it could wreck its spending plans, then Labour will
look like it failed again. But as usual it wouldn't be their fault, it would be down to the city gents. I hope the British Labour Party catches onto MMT.
The UK government can, if it wishes, simply pass a rider law on the 1972 European Communities Act stating that no such sums are to be repaid since they will be reclaimed after Brexit.
ReplyDeleteThis piece is a journalist getting excited over nothing.
Does this mean that Brexit was a very good thing? Out of all the arguments made for Brexit, could this be the best one?
DeleteI voted for Brexit because the MMTers's, and many others, like Mark Blyth, put up good arguments for it. But my friends really disliked me for it. But I started to believe that maybe I had made a mistake when Yanis Varoufakis argued that we should have stayed in and tried to change the EU from within. I really like Yanis Varoufakis.
I fell further out of line with my friends when I said I hated Hilary and would prefer Trump to win. My arguments that he was the peace candidate didn't wash with then. Now he's captured by the hidden government.
My friends felt I had moved to to the right, but I hadn't. I'm a Corbyn guy, I'm more radical than they are.
I had made a mistake when Yanis Varoufakis argued that we should have stayed in and tried to change the EU from within. I really like Yanis Varoufakis.
ReplyDeleteyou can't go wrong if you do the contrary this man says. He impersonates all that is wrong with mainstream lefties nowadays, dangerous/naive ignorance and wishful thinking.
Speaking of MMT, if we wish to maximize the amount the monetary sovereign may spend for a given amount of price inflation, shouldn't we maximize the demand for fiat by allowing the non-bank private sector to use it? And not just limit its use, except for grubby, unsafe, inconvenient physical fiat, a.k.a. "cash", to depository institutions, a.k.a. "the banks", in the private sector?
ReplyDeleteSo what's more important to some prominent MMT proponents? Preserving privileges for the banks or maximizing inflation-free spending space for the monetary sovereign?
I anticipate the argument that the artificial lowering of interest rates via privileges for the banks can produce real productivity increases that lower the cost of living. Yes, perhaps, but interest rates can be lowered by ethical means such as equal fiat distributions to all citizens so even that excuse for injustice fails.