Panama Papers

[Earl Aelfheah]

That's really not the point. Cameron made 5 statements all intended to mislead, or at the very least obfuscate. That's pretty inexcusable, especially when you've been calling for transparency. The story wouldn't have gone anywhere but for his attempts to mislead the press and the public.

[Loz]

rahrahrah Wrote:

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> The story wouldn't have gone anywhere but for his attempts to mislead the press and the public.

You think that if Cameron's opening gambit had have been "Yeah, I had a few grand in an offshore account a few years ago.", the story would have died? I don't think so.

[Earl Aelfheah]

If he'd put it in those words no, but I think if he'd been upfront about it, the story would have died fairly quickly, yes. By putting out a succession of obviously evasive statements, the press sensed blood and possibly a much bigger story.

[LondonMix]

I agree about that.

rahrahrah Wrote:

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> That's really not the point. Cameron made 5

> statements all intended to mislead, or at the very

> least obfuscate. That's pretty inexcusable,

> especially when you've been calling for

> transparency. The story wouldn't have gone

> anywhere but for his attempts to mislead the press

> and the public.

[DovertheRoad]

No 10 completely messed up the handling of the revelations. They've pretty much admitted they've fumbled the PR and DC has carried the can. I agree with Loz it would still have been big. It might whiff for other reasons but technically (in a legal tax sense) no evidence suggests DC has broken the law. And I'm no Tory...

[????]

The problem is that Cameron and Osbourne are hyper sensitive to the 'posh boys' criticism partly because they are posh boys and partly because their opponents ram it at them constantly. That partly explains the crap comms - and I agree it has been crap - Cameron just hoped, very optimistically, it would die down before he realised what he had to do. He should have said something like:

Yes as being reasonably well off I have investments and some of these WERE offshore as most people in a pension funds are, including all of the MPs in the H of C pension scheme for example.These are and were perfectly legal and were declared when liquidated on that year's tax return.

But as I said linking this type of investments with the Aggressive avoidance of Jimmy Carr or the fat bloke from Take That or at the illegal end with money laundering etc is just ignorant (mainly) or deliberate politcs from theose that hate the Tories (and they are legion). There is really very little to see here genuinely.

I think this will probably blow over and it brands Labour as is as very much an anti-wealth, anti-aspiration party once again (as it now is in my view) which won't persuade many of the unconverted. The narrative (false as it is) will damage Cameron but in the long term I'm not sure it does much for Labour, more for the general cynicism with politics.

The good thing in the bigger picture (the original leaks) is that there will be more scrutiny internationally on this as is also developing in Multi-National corporate tax, which is good.

[Blah Blah]

But that won't wash LondonM because the reason there are so few Americans on those Panama lists is because America had negotiated a agreement with Panama on disclosure. Take away the secrecy and lo and behold, wealthy Americans don't go there. SO there is absolutely a sense that the wealthy know that they are being somewhat immoral while the ordinary worker is locked in to a paye arrangement.

Now the wealthy in turn may argue that they use private services rather than public ones etc etc, but how much money does a person need? How much profit does a corporation need? This to me goes deeper into the psychology that now pervades business, where only the maximum amount of profit (over everything else) will do and that profit should grow year on year. Yes much of it is about shareholders and yes pension funds are the biggest investers in that, but is this really the only way we can come up with to fund those things? Really?

And we live in a moderatively wealthy country. Most of us have no conception of how most of the worlds poor live, and what little access they have to anything.

But back to Cameron - I agree with rahrah. When you are PM you should be holding high moral standards, otherwise it completely undermines your ability to form policy. I'm sure Blair is up to the same stuff as well. What Cameron can't help of course is that he was born to an expert in this stuff who made a fortune helping others to do it. But it is a fortune he has benefitted immensely from. And he needs to be humble abut that.

And I think another issue in all of this, and this applies to Blairs government as well, is that we have an economy that it too heavily weighted in banking and finance, the conditions of which were laid down by MPs who themselves have backgrounds in banking, finance, law etc. Just who are they helping in all of that?

[LondonMix]

Blah Blah, I agree that there are people who evade taxes illegally and immorally. There are also people who use offshore vehicles both transparently and as they are intended to be used when the UK government created a tax treaty. Don't try to bring America into this tough. As an American, I can tell you that the tax system is incredibly complex and influences how people invest and you shouldn't draw simplistic conclusions.

Saying that rich people should pay more tax is an entire different argument to all the rest of this. Personally, I think if people want to maintain the level of public services, everyone will have to pay more taxes. To complain about budget cuts while accepting your tax cut without complain (and the Tories have cut every working persons taxes) is extremely hypocritical. Everyone can vote, and this country has a government that is enacted public policies it campaigned on. This is what the majority of voting age people clearly want.

[miga]

But LM, do you think the rich should pay proportionally more of their income?

[LondonMix]

I believe in a progressive tax system, particularly on earned income.

VAT in this country is very high and its a very regressive form of taxation but virtually all other elements of the tax system are progressive. I'd be in favor of lower consumption taxes and increasing taxes on earned income progressively across all income groups to make up the difference.

[LondonMix]

I'd add though that many households pay no effective tax (often negative) once government payments to them are taken into consideration so its not cut and dry.

A simpler system is called for. However, there is no getting around the demographics. The working age population is shrinking as a proportion of the total population. Everyone will have to pay more tax or public services will have to be reduced to reflect the proportional changes. This isn't a problem that is small enough that it can be solved by taxing the top 1% of earners.

[????]

a quote from the Guardian that makes sense to me:

"But the lesson of the Miliband years is that public mistrust of rich Tories doesn?t automatically rehabilitate confidence in Labour. And the lesson of the past week is that the prime minister is more vulnerable on incompetence than on income tax"

[Loz]

LondonMix Wrote:

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> VAT in this country is very high and its a very regressive form of taxation [...]

There is a LOT of debate on whether VAT is progressive, regressive or even proportional.

[miga]

LondonMix Wrote:

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> I believe in a progressive tax system,

> particularly on earned income.

OK cool - I agree. The principle of people who make a lot helping out those who are struggling through progressive taxation is one I agree with. I sometimes wonder whether this is a belief held by the majority any more.

Also agree with the ticking demographic timebomb re: pensions. Given the generational wealth gap benefiting those now coming up to pension, it would seem only fair for them to give up some of these benefits. Good luck trying to get the baby boomers to act altruistically though.

[LondonMix]

Can you provide some information on that debate. The ONS statistics are pretty clear and are regularly published about what proportion of each economic quintiles income goes toward consumption taxes like VAT.

I've never heard anyone before claim here or in the US that consumption taxes aren't regressive.

Loz Wrote:

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> LondonMix Wrote:

> --------------------------------------------------

> -----

> > VAT in this country is very high and its a very

> regressive form of taxation [...]

>

> There is a LOT of debate on whether VAT is

> progressive, regressive or even proportional.

[Jeremy]

LondonMix Wrote:

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> I've never heard anyone before claim here or in

> the US that consumption taxes aren't regressive.

A lot of people have considered VAT as progressive, because it is traditionally thought of as being a tax on luxury items.

However... you can argue that some of the items it covers are actually essentials (clothes being the obvious one). And also it's debatable whether wealthier people spend a higher proportion of their income on "luxuries".

[LondonMix]

Who thinks that?

The graphics in this article based on the ONS data make it pretty clear the lowest fifth of earners lose a much larger portion of their income to indirect taxes- the majority of which is VAT.

http://www.independent.co.uk/news/uk/politics/the-graph-that-shows-how-the-poor-are-paying-more-than-the-rich-in-tax-10353982.html

[LondonMix]

Again, the lowest fifth get tax transfers back so this info isn't complete but the stand alone analysis on indirect taxes makes a fairly clear case. Is there a reason to believe the ONS data is wrong on this? Is that where the debate is? I'm genuinely interested.

[LondonMix]

Never mind the BBC explained it to me. Basically, the treasury fudged the analysis for Osborne by not looking at the impact of VAT as a percentage of income when claiming it was not regressive. Of course, methodologically that's utter nonsense. Economists never judge at tax that way. You have to look at the total tax as a percentage of income not as an absolute number to determine how heavy the burden is on each group. That percentage burden is the actual definition of regressive, progressive and flat. These are technically defined concepts.

http://www.bbc.co.uk/news/business-12111507

ETA: http://www.newstatesman.com/blogs/the-staggers/2011/10/progressive-tax-vat-poorest

[Blah Blah]

LM I will make comparisons to America if I like. The fact remains that they had negotiated a more transparent agreement with Panama and the result is less American nationals used those ofshore accounts. It was simply an illustration of levels of secrecy playing a part.

And no-one is arguing for the wealthy to pay more tax, just to stop avoiding the tax they would normally pay if they kept their wealth onshore.

The issue with VAT has been the addition of VAT on essentials like untilities which were formerly exempt. I still remember the scandal when the last Conservative government introduced that when they said they wouldn't (Major's government I think). VAT on those things is regressive. And then there is of course the other Tory invention, council tax. Can't get more regressive than that one.

[Loz]

LondonMix Wrote:

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> Never mind the BBC explained it to me. Basically, the treasury fudged the analysis for Osborne by

> not looking at the impact of VAT as a percentage of income when claiming it was not regressive. Of

> course, methodologically that's utter nonsense. Economists never judge at tax that way. You have

> to look at the total tax as a percentage of income not as an absolute number to determine how heavy

> the burden is on each group. That percentage burden is the actual definition of regressive,

> progressive and flat. These are technically defined concepts.

The IFS would disagree with you, and they're about as independent as you can find. And pretty competent economists.

http://www.ifs.org.uk/budgets/gb2009/09chap10.pdf

They describe it as 'mildly progressive'.

[LondonMix]

Loz, its not actually progressive based on that paper. The IFS determine that VAT when measured as a percentage of income is clearly regressive. It can only be described as progressive using the rather unconventional metric of measuring it as a percentage of household expenditure rather than income.

Page 197 shows how regressive VAT tax is based on its take of income.

The only thing that is being debated in everything I've seen is if the taxes impact should be assessed based on the conventional income metric or on expenditure. The text book definition of progressive, flat and regressive taxes is based on income and by that measure there isn't any data that shows that VAT isn't highly regressive.

http://www.investopedia.com/terms/p/progressivetax.asp

http://www.businessdictionary.com/definition/regressive-tax.html

[LondonMix]

Blah, Americans are taxed on their world wide income regardless of where the money is held or earned. Therefore, Americans using offshore vehicles are much more likely to be involved in illegal evasion rather than legal avoidance. That is why transparency made a difference. Its easy to draw simplistic conclusions. I was simply trying to say that the US system is so different from over here that you cannot make parallel assessments. Money I put in an ISA in the UK is taxed in the US despite the fact that I work and am resident in the UK.

But please, continue on saying whatever you like about America's tax affairs.

Blah Blah Wrote:

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> LM I will make comparisons to America if I like.

> The fact remains that they had negotiated a more

> transparent agreement with Panama and the result

> is less American nationals used those ofshore

> accounts. It was simply an illustration of levels

> of secrecy playing a part.

>

> And no-one is arguing for the wealthy to pay more

> tax, just to stop avoiding the tax they would

> normally pay if they kept their wealth onshore.

>

> The issue with VAT has been the addition of VAT on

> essentials like untilities which were formerly

> exempt. I still remember the scandal when the last

> Conservative government introduced that when they

> said they wouldn't (Major's government I think).

> VAT on those things is regressive. And then there

> is of course the other Tory invention, council

> tax. Can't get more regressive than that one.

[Loz]

LondonMix Wrote:

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> Loz, its not actually progressive based on that paper. The IFS determine that VAT when measured

> as a percentage of income is clearly regressive. It can only be described as progressive using the

> rather unconventional metric of measuring it as a percentage of household expenditure rather than

> income.

But how can you measure a non-income tax as a function of income?

Let's say we made car tax more progressive. Say ?50 for those with incomes under the tax threshold, ?70 for those in the 20% band, ?90 for those in the 40% and ?100 for those in the 45% band. By your measure (of total tax paid as a %age of actual income) it is still *very* recessive! The only way around that would be to make VAT (or car tax) a function of income, but then it is no longer VAT/car tax, it's income tax. Everything would have to be.

And it seems the IFS agrees with me. Which is nice.

[Seabag]

Isn't car tax kinda progressive already

Like if you can afford a Range Rover you get whacked at the top rate

But if you've a Nissan Micra it's way in the lower bracket