May I have one corporation tax rate - and make it zero, please?
Given that this week's "thing" is a rush to the beautiful vista of the moral high ground where one can shout his or her views on the inherent wickedness of those unprepared to render unto Caesar, I thought I'd scramble up the slippery slope and share my own views on income tax and fairness.
Britain should abolish its byzantine corporation tax policy.
I've grown deeply impatient with the conventional wisdom that wealth is something that, at its point of creation, exists solely for the use and benefit of the state, which then benevolently allows the wealth creator to hold some of his or her treasure once the authorities have raked their hands across the coin pile.
This doesn't mean I'm some sort of no-tax libertarian, either, and seeking a limit on the amount of cash we create to then hand over to people whose livelihood depend entirely on its disbursement doesn't mean that I am.
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There are more than a few exit ramps between the "tax 'em" and "leave 'em alone" signs on the fiscal highway.
As I've argued in the past, it's infantile - and downright dishonest - to mislead the public into thinking Starbucks, Amazon, Google or any of the other evil-companies-du jour pay "next to no tax" for doing business in Britain.
It's first useful to remember that these companies are involved in the collection, administration and collection of literally billions in government tax receipts (VAT, PAYE, etc.) that simply *would not exist* if the companies didn't exist.
It also merits noting that HM Treasury's piece of corporate wealth creation isn't merely limited to a tax on corporate profits (all of which, remember, were made with money that has already been taxed!).
In fact, a quick glance down the easy-to-read "sources of government revenue" table on the Institute for Fiscal Studies website (the group the tax 'em high brigade never tires of referencing) shows that we in Britain nab more than half (£25.5bn) of the total corporate tax bill of £50.1bn from the collection of "Business Rates" - the property tax paid to the local councils, pooled centrally then kicked-back out to the boroughs from Whitehall.
Try as they might - and I'm sure they have - even the most ardent tax avoiding Fat Cat isn't going to run and end-around past the local Council's Hector lest he or she find a padlock on the front door of their business the next morning.
Making corporate profits dissolve in to the organic chemistry-testing world of offshore subsidiaries and low-tax jurisdictions, on the other hand, seems relatively easy.
So here's my prescription: abolish corporation tax rates altogether. Make them zero and make that rate effective on the first day of the next tax year.
Replace it with incentivised commitments to reinvest a percentage of profits equal to the current corporation tax rate - plus a small premium - back into the UK economy.
Measure that reinvestment over a rolling three-year period (it would be very easy to do) and claw back - with attached severe and incontestable penalties that include "naming and shaming" - the amount held back or otherwise redirected offshore by the recalcitrant corporation.
Reset the nation's Business Rates to better reflect a company's enterprise value, ensuring that Starbucks, for example, pays more than Bob & Peggy's Organic Coffee Emporium. Using enterprise value also allows for a subtle discount to firms with lower gearing and debt ratios.
Link a portion of a company's turnover to a ring-fenced contribution to the National Insurance Account, again ensuring a progressive subsidisation of one of the country's key social platforms.
The collective impact would be perhaps the most extraordinary form of quasi-Keynesian stimulus Britain has ever seen - and it would come at a time when it's universally accepted that the economy desperately needs it.
Some £40bn could be put to work over the next 12 to 36 months that would engender investments in infrastructure and job creation and ignite deeper consumer and business spending in a self-fulfilling "virtuous circle" of higher revenues, better profits and more direct investment.
At the same time, the new job creation would increase HMT's two largest revenue drivers: PAYE and VAT collection, which form nearly half of the government's entire tax-take in any given year.
So there it is.
1. Re-set business rates progressively, scrap a tax that's in equal measures redundant (it comes from pre-taxed cash) outdated and impossibly complicated (Britain's tax code is the largest in the world).
2. Ensure revenue enhancements and incentives (both carrot and stick) that keep money generated in Britain working in Britain).
Critically the banking infrastructure and central bank support that would most amplify this reinvestment already exits: base rates are at record lows and the government's Funding for Lending scheme has more than £80bn burning a hole in its metaphorical pocket while it waits for a similar commitment to spending from the nation's business leaders.
Corporations aren't people.
And as much as we enjoy projecting our anger onto inanimate institutions that we deemed to have wronged us, taxing things that don't exist beyond papers filed at Companies House seems a bit ridiculous. Surely it's better to generate the money needed to fund our schools, roads and hospitals through and intelligent partnership with business than though the irrational mob led by its torches and pitchforks.
Speaking of which, I expect to be gambolling back down from the moral high ground at the pointed end of the latter.
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