UKC

Oh, I don't blame them. They're not breaking the rules, and they're not going to pay-up out of kindness.

But what it demonstrates unequivocally is that the government - or governments - and the sector are in cahoots. I can not believe for one second that given the time that has elapsed since 2008 it is not possible to change the rules so that huge profits can be taxed fairly. Fairly means that if you're making use of infrastructure and skilled labour that has been paid for by UK taxpayers in order to generate billions in profit, then you contribute to the costs at a rate commensurate with your profits.

The evidence is clear: the government does not want the banks to pay, because the status quo protects the interests of both parties sharing the power.

What a shit world we inhabit.

In reply to Jon Stewart:

In a time of great austerity it's particularly galling how these fat cats get off scot free

In reply to broken spectre:

A time of austerity indeed. Tighten our belts. What a crock of shite.

In reply to Jon Stewart:
I can't argue with any of that.

In Waterstones there were quite a few books about the current political system and how it's changed, in terms of crony-ism and transparency, I'm thinking I should go back and buy them.

In reply to Jon Stewart:

It is shit. But what approach would you take that wouldn't result in banks leaving? I don't think it's as easy as you suggest.

In reply to Jon Stewart:

Eg
http://www.theguardian.com/business/2015/nov/01/hsbc-review-hq-move-reports...

In reply to Jon Stewart:

I'm no left winger, but you've actually missed one of the worst aspects of the situation - people who have occupied influential civil service positions regularly leave to far better paid positions in the private sector. Look at the career of the illustrious David Hartnett. https://en.wikipedia.org/wiki/Dave_Hartnett

In reply to John2:
This in indeed a problem and something that can easily change. Hartnett's behaviour was obscene.

In reply to MG:

Err, just agree some rules with some other governments? And even before that you can change the rules unilaterally to put a squeeze on, to actually investigate whether there is any substance whatsoever in the 'banks will leave' story. If that's the barrier, then why not ratchet up the pressure to see where the cracks start to show? No, much easier just to assume uncritically that that's true. That will maintain everything just the way it is, lovely.

The problem is not technical, it is structural: the interests of those in power are served by the status quo.

And the position of denial is ridiculous: if human beings can uncover the structure of reality itself and probe the very neurones that generate their consciousness (these, if you miss the implication, are activities that I consider to have intrinsic value) then they can work out some rules to gather taxes to pay for public goods. The line we're being sold - which you're trying to sell me - is that it's simply beyond the wit of mankind to have anything approaching fair taxation. And that is plainly complete bollocks.

In reply to Jon Stewart:

I'm guessing the two dislikers are the ones benifitting from it then

In reply to MG:


So that's 8,000 jobs in the UK for people with skills that are transferable. I fail to see this as doomsday.

In reply to Jon Stewart:
I thought banks paid taxes, workers pay their taxes and shareholders the same? Should banks pay more tax than other industries?

In reply to Jon Stewart:

Well if you don't care about jobs, fine. But isn't jobs with little (cooperation) tax better than no jobs and no tax?

And making agreements with other governmenys isn't that easy - there is global competition for banks to HQ in capitals

In reply to John2:


I agree that's a scandal - but I don't see it trumps the issue of worldwide collusion between the banking sector and governments to rip off everyone else.

In reply to Jon Stewart:
These topics generally reach a discussion about the relative merits of privatized and public services, and whether to regulate or let the free market happen.

"Oh, but the public sectors are so inefficient and wasteful, we need the efficiency and courage of the private sector!"

"Oh, but regulations will stifle the growth of the industry!"

"Oh, but corporations are run by greedy c*&ts who would sell your mother on the corner if they could get away with it!"

The problem is people are notoriously bad at resolving discussions - most refuse to accept contrary evidence, most "evidence" is anything but, most people subconsciously abuse multiple logical fallacies, etc.
Our brains are not powerful enough to account for all major variables that affect problems that involve entire countries, or the entire planet - it's like trying to build a skyscraper out of bananas.

In reply to Jon Stewart:


It is lost revenue from the tax they pay though, better to have some rather than none and with them the clue is in their name, they are more likely to move than most.

In reply to summo:

http://www.bbc.co.uk/news/business-35166460

In reply to MG:



How you get the idea that he doesn't care about jobs?

In reply to Jon Stewart:


I seem to recall you once saying all bbc news was unbelievable?

Plus, rolling losses over. Any business can do it and many do. Are only certain types allowed?

I bet the banks employees still pay tax and the bank their NI share too.

In reply to summo:


This was my thought. In what way is using a perfectly regular and non-industry-specific part of the tax system evidence that the banking system and the government are in cahoots?

In reply to summo:

'Person changes their mind' shocker?

IYSWIM

In reply to Timmd:

Indifference to whether they are in the UK

In reply to AJM:

It's how corporation tax has worked since 1965, of course it can be changed, but it isn't some special perk for bankers.

Hang on!

Bankers!?

Boo.

In reply to John2:


What was wrong with his career, it seemed to be a logical progression?

In reply to MG:


I don't think that policy has to be set by the threat of banks moving HQs. I'm sure if every bank upped and left simultaneously it would have an impact, but if one leaves then a few thousand skills workers find a new job, big deal.


I don't buy that the net economic gain offsets having tax rules that allow business not to pay a penny if they don't want to. There are two competing explanations of the status quo here:

1. The government - indeed the governments of rich nations - are doing all they can to harness the economic productivity of the people who elected them, to provide the best systems for the allocation of resources to allow people to flourish. It happens to look utterly crooked, but appearances can be deceptive. Things are as good as they can be, any change will result in worse outcomes for all. We should be grateful.

2. The banks don't pay their taxes because the system is rigged in favour of those in power. As and individual, I have to pay my taxes because I'm just an employee, but if I get rich enough I don't have to pay if I don't want to because loopholes start to appear once I get to a certain level in the game. Same if I'm a business - as a start-up, I have to play by the rules, but once I'm big enough to cross borders then I don't have to any more.

I'm sorry, but I don't buy explanation 1.

In reply to MG:


Oh yes, my mistake.

In reply to Jon Stewart:

Or 3, governments aim at 1 which is quite tricky, particularly with banks (as they attract intelligent greedy people who will always relentlessly game the system), so this is what we get, which is what I think happens. Grand conspiracy nonsense is, well, nonsense.

In reply to Jon Stewart:




I think you only need to read Private Eye to see that number 2 is closer to the truth.

In reply to Timmd:

You think Private Eye reports typical behaviour, or perhaps the worst examples of things?

In reply to MG:

I guess the use of the word rigged could suggest he sees a conspiracy, but it's definitely very true that the authorities aren't doing as much as they could in regulating the financial sector, even where they have the power to. The reason(s) why can be guessed at.

In reply to Timmd:
, but it's definitely very true that the authorities aren't doing as much as they could in regulating the financial sector, even where they have the power to.

What are you thinking of?

In reply to MG:


I don't feel that I know enough to be able to say, but I will say that those in charge of regulating the financial sector in the UK (London) have consistently come out very badly in Private Eye, for years.

In reply to MG:


Without trying to deflect etc, I can't afford the time to post more on this as I've got things to do, but read Private Eye. It's enough to make you cynical.

In reply to Jon Stewart:

One thing I have never seen a clear answer on.
Are fines specifically excluded from the tax write downs?

In reply to KevinD:
Does this help?

http://www.hmrc.gov.uk/manuals/bimmanual/bim38520.htm

In reply to Jon Stewart:


Nope, you can roll a loss over no matter what your size. I bet Kellingley Colliery rolled a few over, but that was OK I presume?

In reply to Timmd:


this isn't industry regulation, it's a tax law that applies to every person in the country who runs a business or are self employed, where you can roll a loss over from one year, to offset profit the next.

In reply to Jon Stewart:



On the contrary, it shows that governments are not in cahoots. Gordon Brown, amongst others, championed the concept of global tax coordination but in reality governments are in competition to attract businesses. Trying to achieve such coordination would make trying to coordinate a policy on climate change look like child's play. Can you imagine that dick Juncker agreeing to unwind all the tax benefits he created for Luxembourg?

Even were it to be achieved, how the hell do you actually decide where the profits created by transactions across numerous jurisdiction are taxable?

In reply to Big Ger:

A logical progression indeed. Agree to allow major companies to pay minimal tax, personally intervening in those cases, be named as the most wined and dined civil servant in the UK then take a highly paid position in the private sector as a tax consultant.

In reply to Postmanpat:


He has been forced to do so to a certain degree. Since quite a few of the other EU countries got mildly miffed at the parasite ones.
Personally I am surprised more hasnt been made of it by the anti EU campaign.

In reply to MG:


A bit, thanks. Although it reminds me why after having had to do some law courses at uni I now run screaming.

In reply to John2:

Not as simple as is usually portrayed. The FT had an illuminating profile on him which gave a more measured explanation.
In terms of his move into the private sector, one may think this is wrong in principle, but it is considered "normal" and has many positives to it. Either way, it is hardly unique to Hartnett. It was a logical career progression.

Basically through his career he had a reputation as the "hard man" of HMRC in terms of enforcing tax collection etc.

When he took over the department he took the view that in order to maximize collection the department had to take a more subtle approach. In simple terms what had happened was that as the HMRC enforced the letter of the law but not necessarily its spirit so the corporate sector developed ever more convoluted schemes that stayed within the letter of the law but abused its spirit.

Obviously one can argue about "who started it" but Hartnett's conclusion that the "legal arms race" that resulted neither helped the HMRC maximise revenues not the corporate sector minimise them. It just made a lot of lawyers rich and gummed up the judiciary. So he went on a diplomatic offensive to try and improve relations, basically saying "If you stop taking the piss then we'll stop being so heavy handed". This was the reason for all the lunches and dinners etc. And the general view of the industry is is that it moved things in a much healthier direction.

The Goldmans, Vodaphone etc cases were amongst the most complex, high profile and costly. He took the view that rather than spending years and a lot of money to achieve uncertain outcomes it would be better to broker settlements that both sides could see as "reasonable" and HMRC resources could be henceforth be deployed more effectively. The NAO has confirmed that this was what was achieved whilst noting that the process by which it was done was not as prescribed.

If that is an accurate if simplified representation of what happened it actually seems to me perfectly reasonable. No doubt there are other versions of the story around but simply to characterise it as a senior civil servant being bought off by fine wine and haute cuisine is probably media and left wing nonsense.

In reply to summo:


I don't think the BBC has the best journalism in the world, but I don't recall ever saying they were endemically inaccurate. If you find the quote, I might defend it or retract it, but as far I recall you're confusing me with someone else.


The point I'm arguing is that the rules don't provide fair taxation, fair being:



Never said they didn't. The question is whether the tax rules are serving the public, or screwing them.

In reply to Jon Stewart:

But in this case the rule does. It very sensibly enables companies to aggregate their profit and losses over a period of years so that they pay tax over a longer term average profit. This is common practices for all industries in most jurisdictions.

The bit that is potentially iniquitous is if they are artificially shifting profits and losses between jurisdictions to benefit from different tax treatments.

In reply to AJM:


The fact that the government allows 7 major investment banks to collectively pay corporation tax at a rate of 0.06% (Paul Mason's numbers) on profits of 3.6bn suggests that they're not really trying that hard to collect a fair amount. Sufficient time has passed, and the issue has remained high profile, such that if there was any will to change the rules we would have seen it happen by now. No change.

What's your explanation? We've got "too hard" coming from the Tory camp. My view is that there is no will.

In reply to Jon Stewart:



1) If one, for now, puts aside the the issue of misallocation of profits geographically, how would you structure a tax law to disallow banks from carrying forward tax credits but allowing other sectors to do it. And why would you do this? Or would you just abandon the concept of carrying forward tax credits?

2) Given the outline of Hartnett's policy above, do you think the HMRC should revert to spending years and huge sums fighting this in the Courts with no guarantee of winning? Or should the State just appropriate some assets?

In reply to Postmanpat:

Funnily enough, I don't quite see industry thinking that this was a positive step as being terribly reassuring...

In reply to Postmanpat:


I can't see why much bigger economies can't kick the shit out of Luxembourg, no.


It might be difficult to do that precisely, but I can't see that it's impossible to come up with rules which provide a way to come up with a sensible tax bill for a bank to pay, based on how much of their profit can be apportioned to their UK activities. It doesn't have to be perfect, just sensible. The fact that the government won't or perhaps doesn't even have authority to make sensible rules to gather taxes, shows that the system is crooked.

In reply to Jon Stewart:

The first thing to do is to geographically separate government from the City of London. As long as all our MPs move to London and all our senior civil servants and judges live in London the people with power are going to have children and partners working in the main industry of London, own property in London whose value would fall if the City did badly and see the City as their best option for well paid work after they leave government.

In reply to Postmanpat:


I don't know what the tax bill would look like if we put aside the geographical shuffling. Nor do I know how the enormous losses of last decade play into this and interact with bail-outs. So, the principle of offsetting against last year's losses seems fair, but appears to have been abused because the rules allow businesses of this scale to do so.


No, I'm not arguing that enforcement is ineffective, I'm arguing that the policy is wrong and does not serve the public. Get the policy right, then worry about HMRC enforcing it.

In reply to Jon Stewart:
>
But the bigger economies also want to attract big corporates. I actually agree that it shouldn't be impossible to get the major blocks to agree to some key issues and then "kick the shit" out of the smaller ones. There are efforts being made in that direction but, as you well know, it takes more than five years to get even the big Western players to achieve this let alone the Chinese, Russians etc.


Well firstly its bloody difficult and secondly it will mean losing corporates so without coordinating internationally it's just a throat cutting exercise.

In reply to Jon Stewart:


So now you are saying that only small companies should be allowed to carry forward tax credits? Why?


Well, you said "they are not really trying that hard to collect" which suggests that you do think enforcement is a problem.

In reply to tom_in_edinburgh:

Lol, talk about a one track mind. Do you blame cancer, Aids and climate change on London's dominance as well?

In reply to summo:


I'm not arguing for inconsistency between sectors. I have been absolutely clear about what I think the government should achieve in making tax rules:


Do you agree with this policy aim?

In reply to Postmanpat:

Having attended more than one of hartnett's meetings with the private sector I can confirm that was the message he gave and it did create a change in behaviour. It introduced a mood of self policing within the private sector.

Unfortunately HMRC are now a complete mess and relations are poor. This helps neither HMRC nor the taxpayer.

In reply to Postmanpat:


I'm not saying that. I'll clarify the obvious point, if you like:


The rules which are sensible for UK business that makes a loss one year and a profit the next seem sensible. The principle *should* work for banks, but *doesn't* work because of their geographical scale (this applies to other sectors) and the unique facts of the crisis. If the sector wanted to be treated like any other, than what about the small matter of a trillion pounds of public money? That's fair across all sectors is it?


I have been absolutely explicit in talking about the policy not the enforcement. It is the government who are "not trying hard", not HMRC. Although the line between the two - and the sector - is hardly as stark as we might like.

In reply to Jon Stewart:


Well the "unique fact" of geographical scale isn't "unique" to banks is it. It is common to many big companies so essentially you are differentiating between big and small companies.
The "uniqueness" is in the bailout but which of the seven banks highlighted by Reuters received UK bailout money?



Right, so you didn't mean "collection" at all. You meant changing the laws so that some tax would be required to be collected

In reply to summo:


If you are a normal business and you have a level of losses sufficient to pay no tax for years you are dead because you don't get saved by government and the central bank fixing things to keep you in business.

It seems like the City and Banks always come out ahead in the government's schemes and I doubt it is a coincidence. The relationship between politicians, civil servants and the city is incestuous and geographic proximity is one of the root causes.

In reply to Postmanpat:


Yes, I'm saying that shuffling profits into tax havens makes a mockery of our tax rules, and our government doesn't care. You're saying "differentiate" but I'm arguing that they should be kept in line with UK businesses, i.e. paying the same rate on the profits they generate from their business in this country.

It's easier (and more ideologically appealing) to cut public services than agree rules with other governments to extract a fair proportion of tax from international businesses, because the will doesn't exist in those countries either. It's a very passive form of collusion, but collusion none the less.


My understanding is that the bailout has kept then entire sector afloat, and I also think you understand this in a lot more detail than me. So you're being utterly disingenuous by trying to dissociate the 7 banks from the bailout. Not going to wash.


I have been absolutely explicit in talking about the policy not the enforcement. Apologies if using the word 'collection' made that unclear at any stage.

In reply to Jon Stewart:


So, we just go back to the earlier issue of define the geographical location of profits and therefore tax liability without international coordination. That is not one the UK can go it alone on.
Your solution simply seems to be to assume that "big companies" (not just banks as I understand it) are all on the fiddle and should thus on this basis should not be permitted to carry forward tax credits in the way smaller companies are. Seems a little draconian.



It's kept the whole bloody economy afloat!!! Why should a solvent bank suffer from the bailout of its insolvent competitor any more than the housing company or department store for coffee shop that would have been dragged under? If you own a coffee shop and the coffee shop down the road got bailed out would you be happy if your tax treatment got changed as a result?

In reply to tom_in_edinburgh:

Not really, average joe starts a business building, he buys a van and tools etc.. he won't clear the costs in year 1, maybe not even year 2, but he is OK, he borrowed them secured against his house. He will survive and his lenders are happy. He rolls his loss over until he has cleared his start up cost. You can apply the same rule to when he expands into a 10 man show and needs more vans or a small compound/office to work from. This happens every day in the real world and has nothing to do with the banking sector at all. It is tax law or tax regulation. The builder didn't have to bribe his MP or donate to the Tories to make it happen either.


It is not a scheme, it is tax law and is directly proportional to the size of a company's loss, profit or turnover. It may look worse or more favourable, but that's only because the numbers are bigger, but still proportional.

Show me one piece of data that says companies in certain sector can roll larger losses over, or for longer? I can, farming has had some favour done recently by HMRC, not banking.

In reply to Jon Stewart:

Should all banks have been allowed to crash? It would have killed the economy in the UK for decades, possibly triggered a global collapse. Can you imagine if all of a sudden, the only money you have was what you had in your pocket on that particular day? No one would get paid, no one could buy or sell anything. The UK would have hit 3rd world level in an instant, no preparation. Back to substance living and bartering.

Protecting the relatively few jobs in those bailed out banks was not really that important compared to the consequences of a collapse.

In reply to Jon Stewart:


It's not rocket science. The portion of the reduction that's due to losses carried forward is because they've made losses in previous years, of course. And since the carrying forward of losses is standard basic tax law that applies to a wide range of businesses equally this therefore strikes me as uncontroversial.

I don't have much appetite for a discussion of the other reasons why the bill is low, it just frustrates me when otherwise sensible people start frothing at the mouth over perfectly conventional and widely applied pieces of tax law when someone mentions that bankers can use them too.

In reply to Postmanpat:

As you probably realise, I'm basing my view of Hartnett on the items that Private Eye have been publishing over a number of years.

I can quite see how Vodafone and Goldman would view their settlements as 'reasonable', but I do think the taxpayer has reason to feel cheated.

As you are also no doubt aware, Private Eye have now got their teeth into ACOBA - the Advisory Council on Business Appointments - and are claiming that senior civil servants are regularly given well-paid jobs by companies that they have helped in some way in their official capacity.

In reply to John2:

Quite Harnett seems associated with every corporate tax scandal over the last 20 or so years. He is the epitome of the OP's complaint of too cosy a relationship between government and business to me. "Oh let's sort this little matter of £xxb over dinner" The mind boggles.

In reply to summo:



That's just rhetoric. There's no evidence to suggest that would've happened. It's not as if all high-street banks would ceased trading immediately.

And it's besides the point - even if was true, then by not having any solution to it - our government has failed the people. According to many people, we're in a very similar position prior to 2008, where a collapse is possible again. There are two "proper" solutions that may work - one is to have a nationalized bank as a basic public service (whether or not it can loan money depends).
The other is to all separate out the basic functions of a bank, from the rest that are essentially gambling. This would be akin to "Local-loop unbundling" of telecoms services.

In reply to tom_in_edinburgh:


I'm going to hazard a guess that you don't have an awful lot of experience of building and running a business?

In reply to SenzuBean:

I would look to the recent events in greeece to see what happens when banks run out of money, or are close to their limits etc... It was not rhetoric, a collapse is entirely possible, less so now because they aren't allowed to be so leveraged, but not impossible.

In reply to timjones:


You are going to be totally wrong then.

In reply to Postmanpat:


"We need international coordination therefore impossible, let's do nothing, forever" would be fine if it didn't matter. If you think it's fine to govern the country on the basis that we need to cut public services without having even attempted to collect a fair amount of tax from the largest corporations who use our infrastructure and education systems to generate their enormous profits, then that's your position. It's fine, can't be bothered, nor can anyone else, it upsets the wrong people, let's just cut services and ensure that the media works in our favour to keep us in power. It's a despicable way to run the country, that's all.


No. I'm not proposing a detailed solution of what the rules should be. I'm setting out the policy aim that the rules should achieve - I don't give a toss about how. If the rules don't achieve this, they need revising, with international coordination where necessary.

if you're making use of infrastructure and skilled labour that has been paid for by UK taxpayers in order to generate billions in profit, then you contribute to the costs at a rate commensurate with your profits.

I'm afraid I can't really engage in a fascinating discussion on exactly how this can be achieved for different business structures and sectors.


This is total rubbish, as you well know. The relationship between coffee shops is not the same as the relationship between banks. Banks lend to each other, and control the flow of money into the rest of the economy. Probably the most crap attempt at diversion in the thread so far. Of course the banks are unique in this respect, and of course the crash and bailout must have an impact on the way that billions of losses and billions of profits should be treated under tax law. George Osborne sees that, but not you?

In reply to summo:


You're totally off track here. I didn't say or imply that the banks shouldn't have been bailed out, the argument is that the crash and bailout put the banks in a unique position regarding carrying forward losses that does not apply to other sectors.

In reply to AJM:

When the losses are of the scale in this sector, and the businesses only exist because the taxpayer has kept them afloat, it becomes controversial.


There's a simple principle at stake here:

if you're making use of infrastructure and skilled labour that has been paid for by UK taxpayers in order to generate billions in profit, then you contribute to the costs at a rate commensurate with your profits.

I think it's absolutely justified to be angry when the government runs the country by cutting services when this principle isn't met. Paying 0.6% (a figure I misquoted by a factor of 10 earlier, sorry!) on 3bn isn't acceptable. Your position that I shouldn't be angry because part of the reason is an uncontroversial rule that supports businesses in general is weird/weak.

In reply to Jon Stewart:




Much as I support capitalism l cant disagree with this at all.

In reply to Jon Stewart:


You do seem to have a default position of frothing rage about everything. Wolves and so on?

In reply to summo:


We aren't talking about start-up companies or tradesmen we are talking about massive corporations with a steady-state business and trillion dollar balance sheets. The size of their losses was not survivable without government bailouts and central bank interventions.

Government should have let capitalism take its course. The businesses were insolvent, they should have been liquidated. The depositors and bond holders should have lost a proportion of their money beyond that covered by guarantees. The insolvent pension schemes full of bank stock should have resulted in bankers losing most of their pensions. People should have been arrested and questioned under caution and pressured to give evidence against their bosses. The whole sorry thing should have been torn apart and when new companies came to take over everyone would have been clear that government would throw them to the wolves if they screwed up and behave a bit more prudently.

What they actually did was set up circumstances, particularly with the QE programs, designed to allow banks and property owners to not only survive but prosper while letting other sections of the economy and people without savings feel the full force of the crash. Instead of using QE money to buy bonds from banks which resulted in gains for people holding assets like property and shares they could have spent it straight into the productive economy as infrastructure schemes or on useful large scale technology projects such as fusion energy and protected non-financial businesses.

The tax write-off off is just a small part of a much larger scenario and it is not a coincidence, it is because when you take advice from bankers you get advice that benefits banks.

In reply to tom_in_edinburgh:

Your rant is pointless, as the profession or turnover is irrelevant, these are corporation tax regulations. End of.

You may have an axe to grind against banks as your post clearly tangents. But in the case of rolling a loss over, it applies to one and all.

In reply to Jon Stewart:


I know, if you read where the comment was posted I was NOT replying to you. Do keep up.

In reply to summo:

It was the 'In reply to Jon Stewart' that confused me, sorry.

In reply to MG:


Only anything to do with banks it would seem. See the Baildon Bank thread for example...

In reply to 1poundSOCKS:


Bit broader than that! Anything in the realm of right-wing policy or views, for example:

- Israel, particularly making excuses for the slaughter of innocent children
- The rest of ME foreign policy hypocrisy, e.g. Saudi arse-licking while demonising Iran
- Pretending that Jeremy Corbyn is a terrorist threat
- Retarded generalisations about Muslims

All that kind of stuff. There's a few folk on here who can tick all those boxes, and I think they're all worth a bit mouth-frothing over.

In reply to 1poundSOCKS:


Ha. Oh dear, took me a while!

In reply to Jon Stewart:

And your employer and public transport and...!

In reply to MG:

Oh yeah, I hate those as well.

In reply to summo:


Tax regulations get changed in every budget, there's no 'end of' about it.

In reply to tom_in_edinburgh:


So is that your way of admitting it is a nationally applied tax regulation that allow a loss to be rolled over and nothing to do with banks being given some special provision.

In reply to Jon Stewart:

Dont think any one on here will disagree with you.

Is bull shxt and we all know it but we all use those firms that are NOT paying those massive amounts of tax they should be paying.

Should we, could we vote with our wallets and cause a change...............???

One rule for one another for the rich.......................AGAIN

In reply to thewho:

They are loyal to their shareholders, they pay the minimum amount of tax within the hmrc framework, which being corporation tax applies to a huge number of average Joes too. The ability to roll over isn't a Tory invention, it has been in place a long long time.

Those shareholders could be you or I individually, or practically any pension or insurance policy holder.

In reply to Jon Stewart:


Bollocks, if you sit back and think about it instead of frothing hysterically, they were all vulnerable to counterparty risk and a collapse cashflow and the ability to borrow. It's you who can't see through this and want to shout "evil bankers" at every opportunity.

In reply to Jon Stewart:

So many armchair economists.
No colour government have managed to sort out the tax loopholes and downright abuse but apparently a significant portion of this forum can fix things.

In reply to summo:

Well the rules should be changed then then of course.

How ever you look at it its wrong. Morally, ethics, common sense etc etc

Unless one rule for one law applies as I said............

In reply to tom_in_edinburgh:

I really think that you don't fully understand how things work when you are building and/or expanding a business. You borrow to finance the business and its operating costs which means that you might well operate at a loss for a few years. When you get things up and running well you can allow those losses against your first few years profits.

If you are in business you're very fortunate if it's a business that allows you to operate at a profit from day 1.

If you are that fortunate you ought to have the sense to avoid snide comments about people who run businesses that are successful in the long term but may well operate at a loss for a few years in order to reach that point.

In reply to Jon Stewart:

You're welcome to your point of view. Id be quite happy for banks to pay more tax but i also recognise that setting rules is how tax works rather than aiming at compliance with vague principles.

But if you really think that "not applying different and punitive rules to one specific segment of the economy than apply in all the others":


Then you really have a whole world of weird/weak arguments left to explore yet. Given that most tax law applies across the board most sectors of the economy are probably in cahoots with the government.....

In reply to Postmanpat:
You said:


So Merill Lynch, one of those who paid no corporation tax, would just be "suffering" (by my suggestion that they should pay corporation tax comensurate with their UK activities) because their competitors were insolvent? Your position is absurd.

The position you seem to be arguing - and do correct me if I've misunderstood - is that the banks *should* be able to continue not to pay corporation tax because of the billions of losses in the crisis. You provide no justification for this in terms of policy - why it is desirable for this be the case - just "that's the way the rules are now, so it's right". Have you ever thought about what the purpose of tax is, or do you see it like illness or injury - just something that needs to be avoided?

The issue isn't about hating the banks, they're only behaving according to rules set by government. As I said in the OP, this shows that the government doesn't want to tax those profits, they've had since 2008 to change the rules. They would rather cut services.

In reply to tom_in_edinburgh:


>
So, just to be clear: in the few hours between making a decision to bail out a few key financial institutions or letting the whole system collapse and hundreds of millions in the UK and globally lose all their assets and businesses overnight and even more to unable to pay their rent and feed themselves they should have contracted the perfect system to avoid this but penalise those who were responsible. Easy right.....
What the fXck was Gordon Brown thinking? He should have made it happen....

In reply to Jon Stewart:


No, they don't pay tax in 2014 because aggregated over a period of several years they didn't make a profit. That is is completely normal globally.You are arguing that because their cometitors were bailed out and that was the ML's advantage the should pay tax. Well, it was to your fxcking advantage. So I'll call HMRC to demand they get more tax off you.


Because that's how the fXcking tax law works and has worked globally for decades. A company can carry tax losses forward to offset profits. It's designed totally rationally to stop corporate being fXcked by the taxman if they have a a crap few years. You appear to be saying that the taxman should sit back with 20 20 hindsight and analyses why they had crap years and penalise them accordingly. Mad.


No, it says they recognised the laws as they had been for decades and didn't think they should change them on a whim because they were pissed off with the banks like you.

In reply to summo:


Of course it is. The special provision was the bailouts and the various forms of direct and indirect help from the central bank. That level of intervention would justify some variations in normal tax rules to make sure the banks didn't get rich on the back of the bailouts.

You can bet the bankers had a much better handle on how all the different aspects - direct bailouts, various central bank support schemes, huge amounts of QE buying financial assets and corporation tax rules on losses - would interact than Brown and Darling.

In reply to Postmanpat:


I'm arguing that since ML had a pivotal role to play in the crisis - through dishonest trading - that their losses shouldn't be seen by the taxman in the same terms as a business who has a crap few years. The whole sector needs to be regulated and taxed such that the public gets back as much of the money as possible, while keeping the system stable. What a crazy suggestion!


I'm saying that there should be tax rules applied to the banking sector that take into account the sector's responsibility for the 2008 crash and bailout. Mad.


'On a whim', or 'over a period of 7 years following the financial crisis'? "But it's been that way for decades! Why should the collapse of the global banking system under the weight of its own greed, necessitating a bailout of a trillion pounds in this country alone change anything about the way banks pay tax?". Solid ground, that.

In reply to AJM:


You seem to be saying that consistency across sectors - even in the context of the financial crisis which provides clear justification for treating banks differently, even in George Osborne's eyes - is more important than making policy that achieves a goal. It's very strange, and I don't understand why you take that view.

In reply to Postmanpat:

https://en.wikipedia.org/wiki/Creative_destruction

It's a basic principle of capitalism. If government always protects banks and property then the system can't work. Without the destruction side you get what we have in the UK where nobody thinks they will lose money by buying houses, everybody knows you will make more money in banking than in useful industries and wealth stays in landowning families for hundreds of years.

Government should have seen the crash coming long before there were only a few hours left. It should have let banks keep trading and perform basic banking functions while in liquidation and with their management replaced by liquidators and with a government guarantee to provide confidence. The senior managers of the banks that crashed and came begging for a bail out should have left that meeting with Brown and Darling in a police van.

In a managed and orderly liquidation people wouldn't have lost everything, they would have lost a proportion of the money they had in the bank above the limit covered by an explicit state guarantee. That is a far better principle than protecting all savings in banks/debt issued by banks with taxpayer's money which is basically a handout to the rich.

Sure, we avoided some short term pain but we also avoided doing anything to correct the underlying problems and we are heading straight back to the same place.

In reply to Jon Stewart:

I see advantages to having some sort of consistency in how tax and other rules are set up. Given the system is currently set up so that the very fundamental basics of how tax works (we are talking proper tax 101 territory here) are applied evenly I think you'd need to provide very compelling evidence as to why such a change is needed.

Given that there are already special additional balance sheet taxes levied on the banking sector since the financial crisis, I cant see a need to mess about with something so fundamental to the system just because you've seen an article this year about profits you deem to be too low. Why is that better than just tweaking the balance sheet levy?

In reply to AJM:


There's enough for George Osborne to mess about with special rules for banks, that's good enough for me. I don't give a monkeys about the mechanism by which HMT gets a rough 20% of banks' profits.


It isn't, necessarily. But wasn't that levy intended as an additional measure to corporation tax, with separate goals, not to get back around the fact that banks wouldn't pay CT? Whichever, if it can be shown that despite not paying any corporation tax, banks that sank the economy and are now back making billions of profit *are* in fact paying their fair share (which means taking responsibility for sinking the economy) rather than ripping off the taxpayer, then I'll have reason to change my attitude.

In reply to Jon Stewart:

The levy was designed to "make them pay", from what I remember of the rhetoric at the time. I'm not sure there was ever any desire to declare that the losses were not only losses but "bad" losses which deserved the extra special treatment of adjusting the whole tax system to allow for them.

I've always thought it an amazing talent that the government has - convincing so many people that totally failing to manage the systemic risk in the banking system was the fault of the individual banks rather than the regulator. The banks wouldn't have needed bailing out if it wasn't for the systemic risk that failure posed. Risk within the bank should have been managed better by the banks but the real kicker was the systemic risk which the regulator should have dealt with.

In reply to thewho:




So you think the roll over rules should change. The business person who starts out with a huge initial capital investment and thus a massive year 1 loss, can't roll over?

Without some incentives for businesses to risk a loss, or to weather a loss in a poor year... Who is going to employ all the people on here who think money grows on trees? Or aren't prepared to risk self employment?

In reply to tom_in_edinburgh:

A bank can't keep functioning while in liquidation. The minute there is doubt, that's it, all over. Northern rock style. Their loan to asset ratio is so high, even a modest bank run will collapse it.

A bank is either sound or bankrupt, there is no grey area between. You can stall a bank run, like Greece did simply by closing them for a week or two, whilst you borrow enough to make good. But, you can't have a bankrupt bank open for business.

In reply to AJM:


You can call it "adjusting the whole tax system" if you like, but I call it taxing banks' profits fairly. And I don't how you could see it as "adjusting the whole tax system" when it wouldn't have any effect on any other sector. In fact, the rules are changing so that not all the profit can be offset, so it would seem Osborne and HMT don't see it as "adjusting the whole tax system". I guess I should remain open-minded as to whether this is a serious effort to address the issue, or whether it was just so that there was something that sounded like a response in the press briefing...


Yes, regulatory incompetence versus blatant dishonesty and unbridled greed. Do we need to take sides?

In reply to AJM:

'I've always thought it an amazing talent that the government has - convincing so many people that totally failing to manage the systemic risk in the banking system was the fault of the individual banks rather than the regulator'

Was it not Gordon Brown (he of 'We've brought an end to boom and bust') who was so proud of his system of 'light touch regulation'?

In reply to John2:


Are you implying that the tripartite system of financial regulation wasn't actually a stroke of pure genius, but in fact an unmitigated disaster of staggering proportions? I can't think of many people whose faces are able are to accommodate quite as much egg.

In reply to Jon Stewart:

I'm suggesting that Gordon Brown was not a fit person to be put in charge of the nation's finances.

In reply to John2:

It did seem to turn out that he had absolutely no idea what was going on, didn't it. But then, if *anyone* actually understood what was going on, then we wouldn't have a system that goes in cycles of boom and bust. No one's cracked it yet.

In reply to Jon Stewart:


As many wiser people than me have said, capitalism; its not perfect only better than the alternatives.

In reply to Jon Stewart:

But it takes a special sort of megalomania to claim to have brought an end to boom and bust.

In reply to John2:

I agree, that was insane.

In reply to summo:

I agree with that too, I just think that the version we have is utterly crooked.

In reply to John2:


I think Blair and Brown, spouted so much $hit, so often, they started to believe their own hype. Blair hasn't stopped believing.  

In reply to Jon Stewart:

Well, I'd say that changing the universal principle of being able to carry forward losses to being one only partially applied by sector would seem fairly fundamental. Also, to be fair, changing things from working on actual rules to a sitiation where rules can forever change to ensure they're fitting your arbitrary definition of "fair" is even more so!

I'm not sure what proposed change you mean, but its Christmas so I'm not going to look too deeply into something that already reminds me too much of working.

On the subject of regulation though, I do think that the banks have been very carefully scapegoated for the failings of others. Yes, unbridled dishonesty or greed or whatever you say, but actually if they had been regulated properly they'd have in theory (in practice some of the behaviour wouldn't have been possible with a regulator keeping an eye on managing systenic risk, but bear with me) been able to f*ck up their own banks with their own behaviour without it transmitting out into everyone else. The regulator defines the playing field - if they created a game where you could accidentally demolish the stadium then that's primarily their fault.

Anyway, have a good Christmas. I'm signing off for a festive break.

In reply to tom_in_edinburgh:





Ah, yes, silly me, the "government should have seen it coming". Well yes, but we're talking about the real world and they didn't so they had to make quick decisions in an emergency. Yours is actually the free market Austrian school of thought, that to avoid moral hazard the system should be allowed to collapse and will rebuild itself on safer foundations.
All very well in theory but not really viable in a democracy. In fact it would probably finish democracy off.

But, the good news is that if only the government were moved out of London to Aberdeen there would be no problem.
Merry Christmas!

In reply to Jon Stewart:

What were their "dishonest trades", as opposed to crap trades?

In reply to Jon Stewart:

You need the system to cycle. It's the natural state of things. The old die and new grow.

If you don't get cycles then the strong just get stronger and stronger at the expense of the weak.

In reply to Postmanpat:


After Northern Rock and Lehman and with the Bank of England watching the figures and GCHQ listening to the phones and reading the e-mails of key people and with the press speculating about the big UK banks fairly continually the government still didn't see the final crash of RBS et al coming before the day they turned up on their doorstep?


You can't eliminate moral hazard for banks and people with money in banks and pretend you believe in capitalism. If the state sets out to preserve banks and therefore the wealth of the rich through financial crashes then you have a system closer to feudalism.


No it wouldn't. Iceland is still a democracy. Suppose the liquidator of the bank did the maths and concluded that anyone with more than 30K in the bank was going to lose 20% of their money. There wouldn't be riots in the streets because very few young, healthy people who might make trouble on the streets have more than £30K in the bank. If you had a referendum and asked whether it was better than people with large savings lost a proportion of them when their bank crashed or that the state borrowed tens of billions to fully protect those deposits and as a result public services were slashed for years most people would go with the first option. People that put lots of money in crappy banks have made a bad investment and they should lose some of their money if the bank fails just like people who make any other bad investment decision lose money.


There would be less of a problem if government was geographically separated from the City of London because over time it would reduce the influence of the banks on government. Nobody said Aberdeen.


Merry Christmas.

In reply to Postmanpat:

http://www.nbcnews.com/id/40795080/ns/business/t/how-merrill-lynch-bankers-...

Off to bed now, merry xmas.

In reply to Jon Stewart:



Interesting, but I'm not sure it counts as "dishonest" rather than crap.
As an aside, at both ML and Morgan Stanley the positions that effectively sunk the companies were actually known about by only a handful of the tens of thousand of employees.

Merry Christmas!