Tax Break

John Fisher, international tax consultant

Archive for the category “Musings”

Near-Death Of A Salesman

Every one a goer!

Every one a goer!

I  am prejudiced against salesmen. Shop salesmen. Company salesmen. Door-to-door salesmen. You name ’em, I’m prejudiced against ’em. I am not proud of the fact and sincerely apologise to any salesman who, attracted by the pictures or vulgar colours, has found his way inadvertently to this blog only to be insulted for his troubles.  My feelings are not entirely rational. A minor background in macroeconomics instructs me that consumer demand is critical to the future economic health of the world, that asceticism is a luxury only to be afforded by the lucky few, and that it would be an unmitigated disaster were the meek to inherit the earth.  A little, harmless porky from a zealous salesman in Europe can lead to a butterfly flapping its wings at someone pulled out of poverty in the Far East, or something like that.

I do not expect governments to share my prejudice, but events last month made me wonder. No fewer than 8 countries raised their VAT rates on January 1. The intention was noble – aiming to cut spending and raise taxes in order to reduce their deficits; VAT is an efficient weapon in the fiscal armoury, but the timing could not have been more inept. Allow me to explain by way of an example from the University of Life at Finchley.

Once upon a time in May 1984  there were Three Taxbreaks – Mummy Taxbreak, Daddy Taxbreak and Baby Taxbreak. They lived in a quaint maisonette that had been jerry-built 25 years earlier in the post-war building boom. Life was ideallic but for one solitary problem: rising damp. Mummy Taxbreak invited countless (probably two, but the passage of time plays havoc with one’s memory) workmen to try to fix the problem, but to no avail.

Then one evening, as the rain beat down on the porous front wall, there was a ring on the door-bell. Daddy Taxbreak opened the front door  to find a  young Cheshire Cat in a polyester shirt, polyester tie and polyester suit (the shoes were probably imitation-leather plastic) carrying a brief-case and grinning profusely at what had previously been  the closed door but was now Daddy Taxbreak’s face. Momentarily caught off guard by the relief that this was not yet another of those semi-literate missionaries flogging back copies of The Watchtower, Daddy Taxbreak acceded to the cat’s request to come in (it must be remembered that Daddy Taxbreak was 26 years old and had yet to learn the importance of keeping the drawbridge up at all times).

You can make a fortune out of anything these days

You can make a fortune out of anything these days

To cut a short story even shorter, it transpired that the Taxbreaks were not the only Rising Damp sufferers on the estate and the Cheshire Cat’s company was offering a revolutionary approach to the problem where, for less than £200 (an absolute fortune), they could insert little spheres of special material at strategic places in the wall which would absorb and expel the uninvited water. He opened his briefcase to reveal what looked like a Geiger counter (or what Daddy Taxbreak pictured a Geiger counter to look like) and removed a little rectangular electronic device with two sharp pins at one end. Before proceeding to prod the various walls in the main room (“More rising damp may be lurking undetected, sir”) he succeeded in pricking Daddy Taxbreak’s membrane of gullibility (Mummy Taxbreak would later claim that she was never convinced, and Daddy Taxbreak decided to believe her). “I must tell you, sir, that if you sign today, you will be able to avoid the VAT that is going to be imposed from June 1 on house improvements – this is a big saving.” Rising damp was replaced in Daddy Taxbreak’s mind by rising vomit – but he let him proceed anyway.

As he worked  his way around the room  driving his little pins into the wall, watched attentively by Baby Taxbreak, there was suddenly an almighty flash and the Cheshire Cat  was literally thrown backwards across the room against the opposite wall (there was also an almighty  bang, of course). If you are going to jerry-build a house, you might as well go the whole way and, it later became apparent, the main electricity cable had been inserted far too near the surface of the wall which now had an almighty hole in it.  As a result of this incident the Taxbreaks were subsequently able to have the entire maisonette redecorated thanks to an over-generous insurance company that insisted on paying the higher of the two estimates the Taxbreaks provided. What is more, it transpired that the entire problem with the rising damp was caused by a flower bed which the Taxbreaks paid twenty-five quid to have filled in and never caused a problem ever again.

Oh, I almost forgot the poor Cheshire Cat  (How could I?). He lived to darken more front doors. He was miraculously only slightly shaken and, eagerly accepting the offer of a drink by Daddy Taxbreak, was given a hot cup of tea. Seeing him politely off the premises, minus a sale and minus his little rectangular electronic device which was  now well cooked and residing in the kitchen bin, Daddy Taxbreak  pointed out that he was a trainee Chartered Accountant and the expansion of the VAT base on June 1, whilst affecting hot takeaway meals and home improvements, should not stretch to the service he was offering – but nice try and good luck with the next moron.

I assume, dear readers, that you do not need any further explanation regarding the VAT hikes in January, but for the benefit of any salesmen who, armed with an adequate dictionary, have made it this far, I will elaborate.

The French bought millions of these in December to beat the January VAT hike

The French bought millions of these in December to beat the January VAT hike

Since the 2008 crash, governments have had to deal with the potentially contradictory policy imperatives of deficit reduction (reducing government spending and increasing tax take) and stimulating consumer demand which fuels growth and, in turn, increases tax revenues. A great way to get people to spend is to inform them that , in two months time, whatever they are thinking of buying will be more expensive. Whatever they might not have ultimately  bought in two months time, they are likely to buy now and while they are in the mood or in the sights of a good salesman, are likely to buy things they never realised they didn’t need – thus further stimulating the economy. An announced VAT rise, clearly designed in itself to raise revenue, will do more long-term economic good in a depressed, non-inflationary economy if it leads consumers to buy now (one of the reasons VAT rises are generally announced well in advance). So what were Governments thinking when they announced VAT rises for the week after Christmas – the one period in the year when the western world never needs encouragement to spend? They should take a leaf out of Japan’s book. Shinzo Abe’s Government is upping the Japanese  rate in April. On the other hand, they don’t celebrate Christmas.

Saving Income Tax

Learning the dangers of offshore structures

Learning the dangers of offshore structures

Early in my tax career, in my role as stenographer, porter and punkawallah to the great and the good, I was instructed to join one of the senior partners at a meeting with Roy E. Disney’s right-hand man. The conversation was going well (I had a walk-on part taking notes and fluttering my eyelashes, or whatever pseudo secretaries were supposed to do in those days) until the partner dropped a fatal clanger. Discussing the need for substance in the international structuring of the proposed investment, he mentioned that the tax authorities did not take kindly to…wait for it…Mickey Mouse Companies. As the orchestral tumult of Fantasia’s  Sorcerer’s Apprentice banged about inside my head, I sheepishly looked up to observe the silent visitor barely controlling his taut facial muscles. “Please do not refer to Mickey in that way,” he eventually complained. “Mickey is very close to our hearts.”

Where did this Disney character hide her floppy ears?

Where did this Disney character hide her floppy ears?

I recalled that incident recently on a rare visit to a movie theatre (my cinematic repertoire over the last decade has been generally restricted to Messrs Batman, Bond and Potter in various incarnations, shapes and sizes). The occasion was the local release of “Saving Mr. Banks”, loosely based on the negotiations, over half a century ago,  between Walt Disney (uncle of the famous Roy)  and PL Travers for the film rights to Mary Poppins. History is written by the victors and this was a Walt Disney production, so I suppose, even though this was a live-action movie about the making of a live-action movie,  I should not have been surprised to see that bloody mouse coming out of the woodwork at every opportunity, not to mention Walt’s (you have to call him Walt – Mr Disney, we are comfortingly told,  was his father) repeated declaration that Mickey is family.

Rereading the first two books on which Mary Poppins was based before attending the movie, I was reminded how much children’s literature has changed during my lifetime. Although not in the same league as Noddy or Tintin, Poppins has its moments of political incorrectness. An example was the housekeeper’s objection to  the soot-encrusted Chimney Sweep (not Dick Van Dyke’s Bert – Julie Andrews’ platonic friend – who was an amalgam) grabbing her arm: “Ow! Let me go, you Hindoo!” Now, two exclamation marks in one short exclamation is unfortunate, but use of the ancient derogatory form of “Hindu” is unforgivable. Nobody would, for very good reasons, get away with that sort of thing today nor, evidently, for that matter, making disparaging comments about an oversized rodent. However, it would seem some things are still fair game. And one of them is “close to my heart”.

Mr Banks of the books is in a perpetually bad mood (the title of the film alludes to that, but I am not in the mood for spoiler alerts so prospective cinema-goers fear not); if it is not because the household gopher has brushed his bowler hat with  polish, it is because he has prepared him non-matching shoes. His biggest blow-out however is over his mislaid bag which his goofy wife locates in the study. Demanding to know who had moved it there, she replies: “You did, my dear, WHEN YOU TOOK THE INCOME TAX PAPERS OUT OF IT LAST NIGHT”. Later in the book she refers to “that AWFUL INCOME TAX”. Say no more; ignorant cow.

I must say that I do not remember many protests against Mrs Travers’s racial prejudice but, one thing is for sure,  there was not even a murmur over her subversive statements about taxation. Isn’t it bad enough that, as kids growing up, we burned with resentment over the annual  sacrifice of a whole early evening’s Children’s TV in favour of a load of boring nonsense called the Budget (in a dreaded election year that crime was committed twice)? Is it really appropriate for our children’s literature to be laced, Tea Party style,  with incitement to revolt? And what are they supposed to be revolting against (as French students have been asked many times in their history)?

Tax is an essential part of modern civilization. Tax is of the people, by the people, for the people.  Tax is no less critical to the moral fibre of 21st century society than Freedom, Democracy and Mandela. But we continue to educate our kids to write it off as bad. (Please note: tax accountants have not yet found a way to write-off taxation but I can assure you, as the consummate hypocrites we do not admit to being,  we are working on it). The time has surely come to excommunicate those who denigrate taxation. It is time for our youth to sport tee-shirts announcing: “My Friend is a Taxpayer” or “Tax is Beautiful” or, for the truly courageous, “I Believe in Safe Tax”.

When you see the whites of his eyes - shoot!

When you see the whites of his eyes – shoot!

While, thankfully,  the time came long ago for the banishment of racism and mockery of the afflicted, I want to stick my neck out and make one exception: Americans (other than Meryl Streep) trying to imitate an English accent. Such people should be pilloried until they give up or die or both. The most dreadful specimen in movie history was, of course, Dick Van Dyke’s diabolical cockney cock-up in Mary Poppins. It bothered me when I saw the movie as a 6 year-old and it still bothers me today. But, in the Disney World, there is one thing perhaps worse. Exactly 10 years ago this month, our family spent a week in Orlando. Despite the cynicism that, I am informed by friends and family alike, oozes out of my very essence (I am sure they are wrong), that was one of the most amazing weeks of my life, not to mention that of the kids. A few years previously we had been to EuroDisney in Paris. Mickey Mouse and Merlin in French? Forget your husband’s bag, Mrs Banks. Why can we never find a guillotine (or better still, an atom bomb) when we need one?

Charge your glasses

I preferred the Beatles' version

I preferred the Beatles’ version

The highlight of my year as a young teenager  was undoubtedly Summer Camp. It was not really a camp at all. Public (that means private) schools bearing varying degrees of similarity to Hogwarts were hired for a fortnight and staffed by post-pubescent volunteer counselors, hand-picked by the ever-so-more-mature officers of our local youth club. With average pedagogic training approaching that of an apprentice lollipop man, the fact that nobody ever died was no fault of the organizers.

When, at the ripe old age of 21,  my turn came around to be the big “I am”, I decided to play it super-tough. Making my grand entrance into the Dining Hall on the first evening (and being totally ignored by all the little runts in the process), I waited a few moments and then screamed for silence. In the words of Desmond Tutu at yesterday’s memorial service for Nelson Mandela, you could “hear a pin drop”. Proceeding in the footsteps of all my illustrious predecessors, I laid down the rules for the next two weeks: no water-bombs; lights out at 11; no late night dormitory raids; no midnight feasts. Anyone caught committing one of these heinous crimes would be sent home on the Milk Train (I think I first heard that beauty at the age of 10).

By the time I sat down with the counselors late on the second night, I was in despair. “Why are they all so damned well-behaved? Nothing is happening! Don’t they know that they are SUPPOSED to disobey me? That is all the fun.”

"I think I'll have another pint"

“I think I’ll have another pint”

That event nearly 35 years ago came back to me the other day on noticing that it was the 80th anniversary of the end of Prohibition in the United States. Although there were, undoubtedly, sound moral reasons why Prohibition was introduced in 1920 and equally sound moral reasons why it was abandoned in 1933, the underpinning of both was taxation. The introduction of a Federal Income Tax in 1913 enabled the miserable sods in Congress  to rid the nation of the scourge of liquor as the said income tax compensated for excise duties on alcohol. In contrast,  the effect of the Great Depression on revenue from income tax necessitated the topping up of the Treasury’s barrels.

Generations of politicians have publicly spoken of duty on alcohol as a Pigovian Tax or, more popularly, a Sin Tax  – one that is designed to achieve socially desirable results ie a reduction in  consumption.  That, I am sure, is very moral and reeks of the old Temperance movements.  Meanwhile, our elected elite know that they would be lost without liquor – excise taxes on alcoholic beverages in the UK, for example,  are estimated to cover around a sixth of the costs of the National Health Service. And if you ever thought that they really wanted you to be on the wagon, remember that Finance Ministers often lower duties when economic conditions are ripe so as to encourage greater demand for the stuff. White man speaks with forked tongue.

In fact, excise duty on alcohol is a violently Regressive Tax –  affecting the less well off far, far more than the top one per cent. There is, I am told, a limit to the number of beers one man can drink, whatever his station in life. And when was the last time you saw a toff walking into a pub and asking for a pint of Dom Perignon and a bag of Salt ‘n Vinegar crisps?

Come December each year, of course, the moral arguments are sent into hibernation. Drinking becomes a spiritual, even divine, experience. Indeed, around the middle of the month there is an acute feeling that companies and advisors in several European countries start to fade out , rather than break, for Christmas as alcohol levels start to rise above the eye-brows. I was rather amused  talking to somebody in Ireland the other day when he assured me that Ireland keeps going until December 23rd – according to a survey I read recently, Ireland has the second highest per capita alcohol consumption in the world; on the other hand, maybe the Irish can hold their drink (ha, ha).

For illustrative purposes only

For illustrative purposes only

I was so successful avoiding fatalities in that camp, that they had me back the following year for an older clientele. Free with the public (private) school came an ancient 1950s bus, the Green Goddess,  and its far more ancient driver, Jock. Now, if Jock had ever made it up Mount Olympus he would have teetered off pretty fast because he was in a recurring state of inebriation. In fact, whenever he took us anywhere, I put someone on Jock duty to make sure he didn’t make a bee-line for the local watering-hole. On one occasion, up in a Peak village,  he managed to give his guard the slip. Finding the Green Goddess parked with two wheels up on the pavement outside the village pub I decided to ride shot-gun on the way back to the school, ready to grab the wheel at a split-second’s notice. When I informed him that he had just driven through a red light in the town of Buxton, he exclaimed something about going forth and multiplying and continued on his (and our) way singing Scottish ditties to himself as he went (and I sat with my eyes glued to the road ahead).

It was blatantly clear that Jock drank too much – he couldn’t function properly in his chosen profession (unless, of course, his chosen profession was ‘mass murderer’, although, come to think of it, he was useless at that, too). On the other hand, drink appeared to make him happy. It seemed, from the vantage point of my then immense 22 years experience, that Jock needed drink but he also needed brakes (on his too frequently raised right arm as well as the Green Goddess’s wheels). Perhaps the ‘social contract’ on alcohol that governments have with their electorates, is not so woozy after all.

“Keep it short”

boring-computer“Five score and one posts ago my father’s son brought forth on this medium a new blog….” I could continue with the topical parody (last Tuesday marked 150 years since the original), but you get the picture, so I won’t.

100 posts is a time for reflection. It was my wife who encouraged me to give it a go in the waning days of 2011 and it is that same wife who never tires of telling me that the posts are too long. “You are an old bore”, she cautions me. “These days people don’ t have patience for that kind of thing, so keep it short”.

Old Bore? The three most enjoyable evenings I have spent in the last five years were, in no specific order: sitting in the front row of a  recording of BBC Radio’s “I’m Sorry I Haven’t A Clue” – average age of cast, 75; seeing Garrison Keillor in a one-man show at a converted church in Kensington – average (and total) age of cast, 67; and attending a  Broadway performance of Jersey Boys – average age of cast unknown but it was about Frankie Valli and the Four Seasons whose average age is problematic because one of them is dead. I suppose, my wife has a point.

On the other hand, what is wrong with being an old bore?

Is this blog likely to achieve more hits if I write pithy ten-liners, adding pyrotechnics and grainy pictures of a totally bald me in thick-rimmed, cool spectacles? Methinks, not.

But, if any of you out there in the ether (and I know you are there) think differently, just this once leave a comment.

modern abeThat was, I think, the length my wife has been getting at. The problem is that I succeeded in writing absolutely ‘nada’. The bigger problem is that it is exactly the same length (270 words) as Lincoln’s Gettysburg Address, widely considered one of the greatest speeches in history. And you can’t get more Old Borish than having a beard and being dead for 150 years, can you?

The ultimate illegal alien

Thought-provoking literature

Thought-provoking literature

While Shuster, Siegel and Kane were, without doubt, the Olympians of Action Hero Comics,  the creators of Superman and Batman – each the 24 year-old  son of Jewish immigrants from Eastern Europe – were never going to be the  heirs of Socrates, Plato and Aristotle.

Man of Steel, the latest Superman blockbuster that I ran faster than a speeding bullet to see last week, is best described as schizophrenic. The first 90 minutes – the average length of a 21st century movie – is cerebral beyond anything Clark Kent’s creative young gods could have possibly imagined, while the 53 minutes of extra time are pure, unadulterated violence, which is what they very probably did imagine. Violence and one single hell of a kiss. (Spoiler Alert – if you don’t know the Superman story by now, go back to Krypton). As our Superhero and Lois Lane embrace amid the ruins of Metropolis they are  watched admiringly by a group of misty-eyed US army officers while General Zod still lurks in the shadows ready to end any chance the studio has of making Man of Steel – The Sequel. The scene is the watermark that proves the movie is genuine, infantile Hollywood.

Whatever Shuster and Siegel were thinking of when they were penning and inking the first adventure in 1938 (whoosh, pow, thwack?) they may have subconsciously been delving into their immigrant roots. They would likely have faced discrimination as kids and young men and this alienation does come out quite starkly in this latest cinematic offering – even if Clark Kent did not sail Steerage Class from Hamburg to Metropolis.

Earlier this month the OECD (the club of rich nations except the rich nations that are not members) published the latest edition of its International Migration Outlook report. 400+ pages of taxpayers money to come to the conclusion that the fiscal impact of migration is broadly neutral – that is to say, immigrants normally pay more in taxes than they claim in welfare.

With xenophobia spreading faster across the globe than  Middle-Eastern  immigrants to Europe, that money may be well spent. Enlightened politicians of developed nations, no longer able to use anti-immigrant arguments based on the lengths of noses or racial inferiority, have in recent years  opted for the economic argument  – immigrants are a drain on social services while not contributing enough to the national coffers. This latest report deflects that contention: while there are pockets where it is true such as Germany, in the main immigration neither adds not subtracts. Having said that,  young educated immigrants are deemed a definite boon.

He presumably robbed an American of his job

He presumably robbed an American of his job

Despite being the grandson of immigrants (and, indeed, an immigrant myself) I am not sure this 400+ page of apologetics quite hits the nail on the council house door. Stating that immigration is a substantially zero-sum fiscal game does not  take into account the effect on unemployment among the indigenous population crowded out of the job market (which was the ubiquitous gripe when I was a young man and should come round once more on the xenophobic carousel sometime soon).

The immigrants a country does need are those that add value to the economy – those that bring skills and diversity of thought (and hence innovation). In addition, unskilled labour is required for the functions the indigenous population are no longer prepared to undertake. Of course, the social consequences must be considered together with the fiscal ones. While cultural diversity is without question a boon to petrified- fossil  countries, any attempt at minority cultural hegemony  must be unceremoniously rebuffed.

And while we are on the subject of the advantages of diversity....

And while we are on the subject of the advantages of diversity….

Michael Chabon’s award-winnning novel The Amazing Adventures of Kavalier and Clay tells the tale of a refugee from Nazi Europe who creates a comic strip character that fights Fascism – the immigrant’s superhero. Superman was the ultimate immigrant with  strange, suspect powers  and weird clothes – but he was also the All-American boy who paid his way and devoted himself to his adopted nation. That is what immigration should be all about. Maybe, after all,  there was more to Shuster and Siegel than meets the non X-ray eye.

Birthday Bloody Birthday

Life begins at 55

Life begins at 55

One night a couple of weeks ago I met up with an old school chum and his wife visiting for the holidays. Over one of those multi-coloured salads that replaced steak and chips as the late-night staple round about the same time our hair went grey, he mentioned that, just before coming away, eighty friends had joined him for a birthday party “including a magician”. Ever the accountant, I quickly did the calculation in my head, remembering that he and I had spent seven years in the same class, and ventured: “55th birthday party? Aren’t you planning making it to 60?”

The world has gone mad with anniversaries.

When we were young, apart from all those balloon and trifle things when we were 5 or 6,  we were brought up to expect a 21st birthday party, a wedding, a silver wedding anniversary, a golden wedding anniversary (if we were lucky), a funeral and good-bye. Jewish boys would have the 21st swapped for a 13th unless they were Dustin Hoffman in the Graduate, in which case they would get both with a bit extra on the side.

As the April 15th tax filing deadline looms, Americans may be forgiven for marking a century of the Federal Income Tax. Back in 1913 that was no small achievement, requiring the 16th Amendment to the Constitution that had previously forbidden the imposition of  direct income taxes by the Federal Government.

I might also  escape a full-blown raspberry were I to mention that, had I not been handbagged into writing an unscheduled appreciation of Baroness Thatcher a few days ago,  this would have been my 75th post (forget the standing ovation).

But when the BBC reminded me on April Fools’ Day that exactly 40 years had passed since the introduction of VAT in the UK, numbers started to whizz round in my head.

25th, 50th, 75th, and 100th anniversaries make some sort of sense (I suppose) – but why on earth do we have to ‘celebrate’ 40 years of a necessary but reviled tax, a mid-decade birthday or, for that matter, all those obscure anniversaries that appear on the Google banner forcing you to google them to understand (“The 338th birthday of Wing Wong Wu”) ?

My hunch is that it is a combination of three things: man coming to grips with a secular world; 24/7 news looking for the vaguest connection to a story;  and any excuse for a good time.

They never had it so good

They never had it so good

Once upon a time, when God’s servants and their friends ruled much of this planet, the world was something like a Mongolian Transit Camp – an utterly miserable stopover between somewhere nobody remembered and a perfect eternal destination nobody had yet visited. You got hammered during your stay in the Transit Camp (unless you were one of God’s servants or their friends, in which case you did the hammering). Time had little meaning because all there was to hope for was eternity.

One day God’s servants and their friends were pushed into the corner of the Transit Camp and scientists told the inmates that there was nothing but the Transit Camp so they had better make the most of it. And the inmates turned the Mongolian Transit Camp into the Western World.

If all man has is the space and time in which he exists, it is natural that he should try to exploit his space to the utmost (the comforts of life) while sharpening his perception of time. We all anchor time according to our own experience. Thus, at 55 (yep. I am 4 weeks younger than the other guy) my memory stretches back more or less exactly 50 years. My conception of all points in history is a function of that half century. The introduction of VAT I actually remember by chance (I got an early 15th birthday present of a new guitar from Macari’s on Charing Cross Road on March 31 before they slammed on the 10% tax). Blimey, is it 40 years already? Tempus fugit.  And everything  before 1963 is pictured in black-and-white; I remember being totally disoriented when I first saw rare World War II footage in colour.

In the 21st century we are bombarded with news. Although there appears no limit to the extent to which a story, however insignificant,  can be masticated, ruminated, milked and churned  ad nauseam, editors are always on the look-out for anything (ANYTHING) newsworthy. Used to the constant talk here of the Iranian nuclear threat and Hezbollah rearmament, I was amused on a recent trip to England to turn on local radio and hear about a female pensioner who had stolen two plant pots from a local nursery. So with material like that, if you can find any excuse (ANY EXCUSE) to delve back into history and talk about something as utterly interesting as the introduction of value added tax, you will do it.

Any excuse

Any excuse

Increased leisure in the modern world ironically forces people who have rationally refuted any meaning in life, to look for the meaning of life. When people worked 15 hours a day 6 days a week they didn’t have much time for that sort of thing and, to the extent they did consider anything, outsourced it to the local priest or rabbi (once upon a time you didn’t hear much about imams and the like in the western world). If there is leisure and not much meaning you at least need a rational excuse for the leisure. Enter anniversaries. Doesn’t matter what, where, how. Anniversaries are the excuse. Let’s party.

I almost succeeded in escaping my 55th birthday a couple of days ago. I fielded several “Happy Birthdays”  gracefully (and gratefully)   at work and a few former employees even contacted me, which was especially gratifying. My son called from Australia and we chewed the fat. Then I arrived home to discover that his 19-year-old brother had gone out, bought the ingredients for a celebratory evening meal and, with a little advice from his mother , come home and cooked it ( fish – delicious).

OK. I’m hooked. Whose birthday is next?

Losing Marx

Stiff upper lip or not, there must be some outlet for one's emotions

Stiff upper lip or not, there must be some outlet for one’s emotions

“Another decade is traveling through, and I’m here, and you are there.”

Growing up in England, I was always taught that showing emotion was a weakness. So, as I read the above line in the New York Times the other day a fleck of dust must have popped into my eye and made it, and its twin, lightly water. Written by a mentally ill and physically handicapped woman to her successful writer sister (who authored the article), it highlighted that, well before considering any human failure, the world is not a fair place. All men may have been created equal but some were definitely created more  equal than others.

As the running of the western world has been gradually wrested from the Church by rational thinkers, advances in science have done much to close the natural gap. In the moral sphere too there have been major advances in recent centuries with the individual finally achieving centrality in the scheme of things.

But the fact remains that, while we may dream of a Utopian society where all burdens and benefits of life are shared equally, the fundamentals, whether they are interpreted as God-given or Big Bang-given, do not imply that outcome. Success in life is about managing to fit your own lyrics to a predetermined tune – like fitting the “I did it my way” to the “dum-dum-di-dum-dum”.

At dinner last week with a very dear relative who can best be described as an unreconstructed 1960s socialist (and worst described as a Bloody Lefty), we got to discussing that age-old yawn – the equitable redistribution of income. The watered-down social democratic version of Marx’s “From each according to his abilities to each according to his needs” has been experiencing yet another revival with the recent social protest movements.

The Communist Manifesto of Marx and Engels, of course, had much to recommend it. The manual’s main problem was that it was a bit short on what Communism meant. What had become apparent 150 years after its publication was that Communism, as it came to be meant,  was not the ticket for two reasons; firstly, it didn’t work; and,  secondly, judging by the number of Russians , Chinese and assorted comrades who ended up at the end of a gun barrel or rope, the manual was not very user-friendly

Who said Communism is dead?

Who said Communism is dead?

What must be said regarding the durability of the equitable redistribution of income is that, despite the fact that Communism eventually accepted it had got itself wrong and gallantly fell on its own sickle, that concept still keeps knocking at the door of democratic nations across the globe (though not, it must be admitted, at 2 o’clock in the morning with an unmarked black car waiting on the street outside)

Much has been written about the merits or otherwise of  the redistribution of income. Intuitively, the average post-Neanderthal man, woman or other would tend to agree with taxes being charged disproportionately to fund health, education, unemployment and pensions – though progressive taxes can cause disequilibrium in the economy to the detriment of all.

The interesting thing is that almost all efforts over the last century and a half at leveling the socio-economic playing field, be they inspired by Marxist equality of income or Liberal equality of opportunity,  have bombed across the globe. The Economist ran an interesting article recently in which a number of studies on social mobility were reviewed. Previous studies based on a sample of two generations showing 50% of socio-economic standing as inherited, had been unfairly skewed because it was quite regular for a wealthy father to have a child who did not work in gainful employment or chose charity work and suchlike. However,  by following the fortunes of rare surnames from the 18th century to the present it was established that “70% to 80% of economic advantage seems to be transmitted from generation to generation”.

That means that, currently, all bets are off on comparative social progress. The implication is that, while efforts at serious redistribution of income –  around for quite a while now – have not worked (and, evidently, cannot work), enlightened governments should concentrate on absolute social progress. In the 1960s the miserably inadequate British Labour Government hiked tax rates on investment income as high as 105% and the nation reaped the benefits until Margaret Thatcher finally brought a sledgehammer to the Trade Unions in the 1980s. One Labour minister in that wonky administration summed up the philosophy of the time in a hurriedly conceived reply to an attack by the Press who caught him traveling in the First Class compartment of a train. It was his ambition, he retorted, that the entire nation would one day travel first class.

That was not as stupid as it sounds (although it was totally stupid to say it). If, instead of wasting endless energy  on the elusive Holy Grail of redistribution of income, the education systems of countries and their means of assessment of students were revolutionized from the bottom up to meet the economic needs of the country, while businesses were freed of all but the most essential red tape (eg. conditions of employment, anti-trust and financial sector regulation),  as well as punitive taxes, greater opportunity should bring across the board increases in standards of living. As prophesied by that jerk of a Labour minister, workers may indeed then be traveling First Class, albeit that their bosses will be traveling  Heaven Class while the super-rich will opt for Seventy-Two Virgin Class.

Did you hear the one about  Regressive Consumption Taxes? How about Flat Taxes?

Did you hear the one about Regressive Consumption Taxes? How about Flat Taxes?

Socialism has brought much to the world – spawning an important safety net for workers in Free Market economies that should never be underestimated. There has, however, also been a lot of hot air which might have been summed up by the other Marx – Groucho: “I worked my way up from nothing to a state of extreme poverty”.

Of the people, by the people, for the people

Different price. Different taste.Same effect.

Different price. Different taste.
Same effect.

In the early days of my marriage an ageing, newly acquired  relative informed me that – other than the price – there was no difference between Johnnie Walker and Tesco’s no-frills, own-brand blended whisky. The market survey was not long in coming when, the following weekend, a visitor involuntarily sprayed the contents of a freshly imbibed  glass of the stuff over our new tablecloth. In a similar vein, democracy, when stripped of all the fancy packaging, has been described as “two wolves and a sheep discussing what to have for lunch”. On the face of it, that is indeed Democracy – but it would make the average paid-up member of modern society throw-up his lunch  over a friend’s tablecloth.

We have come to think of Democracy as a one-size-fits-all commodity manufactured somewhere between the 49th Parallel and the Rio Grande, which can be exported by friendly persuasion or armoured convoy and lead Man back into the Garden Of Eden. Long forgotten are the words of that greatest of democracy’s defenders, Winston Churchill: “Democracy is the worst form of government except all those other forms that have been tried from time to time.”

Now, just as there are loads of 50-something Plain-Jane Marilyns wandering the planet, whose parents thought that something might wear off if they named them after Norma Jeane, some of the ugliest nations on Earth carry titles like the Democratic People’s Republic of Korea (North Korea) and Democratic Republic of Congo (Rape Capital of the World).

Benign dictator

Benign dictator

Democracies in point of fact come in all shapes and sizes. The “Liberal” type we tend to like owes its popularity less to democratic principles and more to the sanctity of  personal freedom. John Stuart Mill, the author of “On Liberty” and one of the fathers of modern Liberalism,  considered that a benign dictatorship could, in theory at least, deliver the same positive effect as a democratically elected government.

Which brings me to my point.

Democracy, in its various forms, has been an incontrovertible success in the development of modern society when compared with all the alternatives. But, that does not mean that , when you drill down, democracy, in all its current forms, is an unequivocal success in all respects. Take the economy. If you had a spare $10,000,000 to burn which of the world’s two largest countries would you choose to invest in – China or India? If you were trying to sort out the mess of the Eurozone (which democracy probably caused in the first place) would you have left Mario Monti in charge in Italy or gone for the current headless chicken of a Parliament? If you wanted to tame the unforgivable US deficit, would you establish a steady 10 year plan or join the Broadway Farce that is Capitol Hill today?

With the exception of India, whose problems are probably more to do with geriatric governmental  incontinence than an overdose of democracy (though the Chief Minister of West Bengal is giving New Delhi a good run for its money), there is a real democratic economic crisis arising from the short-termism of politicians. Similar to the problem with Stock Markets, where company managers have to deliver short-term returns to public shareholders at the expense of long-term strategy, governments – from the moment they are elected – are looking at the next election four of five years hence.

In the case of Stock Markets, a recent study suggested that public companies should have different classes of shares with voting shares held by a Trust that would not be affected by short-term issues. Perhaps it is time for governments to be effectively bifurcated. Governments would be elected (or not) just like now, but economic policy would be placed in the hands of an Economic Assembly. Members would be elected for a single, say, 10 year period with 20% of members being up for election every two years. The Assembly would be in charge of budgets and taxation and would make its informed decisions on the basis of requests from the Government. If that sounds far-fetched, think of Monetary Policy. Once upon a time, Central Banks of most countries were controlled by the Government. Today, the norm is for a Central Bank to be independent, charged with controlling inflation and encouraging full employment. And those guys are not even elected.

Make no mistake. I support democracy. It is just that, like Marilyn Monroe’s dress at JFK’s 45th birthday party bash in 1962, it needs to be carefully stitched to make it fit.

Did somebody mention the Renaissance?

Did somebody mention the Renaissance?

Having said all that, one of my favourite quotes of all time came from Harry Lime in The Third Man: “Like the fella says, in Italy for 30 years under the Borgias they had warfare, terror, murder, and bloodshed, but they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland they had brotherly love – they had 500 years of democracy and peace, and what did that produce? The cuckoo clock.”

What a wonderful world



Although we are a family of fairly avid readers, other than a few coffee-table staples, books do not  feature in our living room. Well-leafed and generally abused volumes are neatly filed on bookshelves in bedrooms and on our upstairs landing, or unceremoniously dumped in unlikely corners of the house (I stumbled on a haphazard pile on the staircase to the roof the other day). Some authors are more popular than others but we rarely sport a full set. We have all read the Complete Juvenile Works of JK Rowling (including The Tales of Beedle the Bard) but would be hard pressed to lay hands on more than two installments, both of which are by now missing critical narrative. Dickens, Austen, Le Carré and PD James are well represented in various fonts and sizes. But, perhaps our most preserved  set, neatly placed above our youngest son’s desk, is Terry Deary’s Horrible Histories.

Now, I am sure Mr Deary would not consider it  libelous were I to state that this is not great literature. In fact, I am not sure it passes as literature at all. With titles like “The Terrible Tudors” and “The Even More Terrible Tudors”, the illustration packed volumes  tell us, in graphically comic detail, just how horrible life was in the bad old days – pretty horribly.

Reading (or, to be more precise, leafing through)  the Horrible Histories, it is easy to be lulled into complacency about the present.

Heil Hitler!

Heil Hitler!

I am beginning to think that the world is not quite as nice a place as I would like to think it is. To be clear, when I say “world”, I do not mean the  majority of the 200 or so countries that constitute that  carbuncle on the face of modern civilization, the United Nations. One day, when those rogue nations are free-speech toting liberal democracies, Mr Deary will be able to make another fortune writing their Horrible Histories.  I am referring to cosy countries like yours and mine that think they are approaching the final synthesis in the Hegelian dialectic when all households will have at least one  TV in every toilet.

To be even clearer, I am also not referring to the horrendous actions of individuals and organized groups. There will always be outliers in every sphere of society. It is western governments that are the problem. They have become very good at repackaging old nasties in inoffensive euphemisms and glossy camouflage. And  if we, the silent majority, do not watch out – they will get away with it.

Take torture, for example. The activities at such sunny resorts as Guantanamo Bay are  regularly referred to as Enhanced Interrogation Techniques, which sounds like a project undertaken by a management consultancy firm. Even the mention of Waterboarding gets me humming Beach Boy tunes rather than thinking  of medieval Ducking Stools.

Even our own tax world has its fair share of practices cleaned and rebooted from yesteryear.

There was the 504 year sentence handed down last year to a Greek tax miscreant. Apart from the absurdity of a sentence that cannot possibly be served, what possesses any modern system to deprive a man of his freedom for all eternity for a crime that did not involve the taking of another life. We all (other than many of the members of that august institution, the  United Nations) are appalled by stories from more than 200 years back of young men being hanged for stealing sheep.  To all intents and purposes, there is not a colossal difference.

"Tell us the whereabouts of your father, boy, and we will give you $104 million"

“Tell us the whereabouts of your father, boy, and we will give you $104 million”

And what about the award  of $104 million that the IRS made last September  to a single Whistleblower in the UBS case? The first thing that came into my mind when I read the story was W F Yeames’s painting of a Parliamentarian’s  interrogation of two young children in the English Civil War, as he tries to establish  the whereabouts of their father. If there was one quality rammed into me by the British school system it was the Eleventh Commandment, “Thou shalt not sneak”. Honour among thieves was a real value and we would have rather faced the stick than split on our schoolmates. To be fair, teachers expected and respected that behaviour and often punished the snotrags that “told tales” (mind you, it didn’t stop the bloody sadists using the stick anyway). Waterboarding, at least has the possible justification that its use might save many lives. What is the IRS’s excuse?

Then, a few short weeks ago, none other than Her Majesty’s Revenue and Customs, for the second time in less than 6 months, published on Flickr mug shots of the 32 “Top Tax Criminals of 2012” .  When I was a kid, I used to pass a big blue plaque every day in our local high street that read “On this site stood the Parish Cage or Lock-up”. My (incorrect) assumption throughout my childhood was that this was the site of the local Stocks, where petty criminals would have their heads, hands and feet secured, allowing passers-by to take free aim with eggs and tomatoes from the nearby Tesco’s that had passed their sell-by dates. I actually had a taste of this as a young (innocent) adult. In charge of a children’s summer camp one rainy August, my team organized a Summer Fare. One of the star activities was throwing anything that went mushy on impact at yours truly tied helplessly to a chair.

Publishing the photos is the same concept of public humiliation that I thought had gone out with the Stocks and Public Executions outside Newgate in the 19th century. What is more, all but one of the wretched cons are behind bars already serving out their sentences and they are unlikely to be seen around town for some time to come. So what was achieved?

There is one thing, though, that can be said in favour of the British system. Publishing the photos HMRC announced that they were serving a collective 155 years and 10 months in prison. Had this been been Greece, that wouldn’t have even covered the third off for good behaviour of a single one of them.

I am not an anarchist. I passionately believe that people should not be allowed to break the law with impunity. However, the punishment should fit the crime. Furthermore, governments should think about the negative effects on society as a whole of efficient but, essentially unethical, laws and practices. There has been a lot of publicity recently about the outrage of the British Parliament over the tax practices of US multinationals. As I reported a few weeks back, Margaret Hodge – who led a Parliamentary investigation – told the representatives of Google, Amazon and Starbucks: “We are not accusing you of being illegal, we are accusing you of being immoral”. I suggest you get your own House in order first, dear.

We’ll take a cup of kindness yet

Newspaper reporter after one too many beers

Newspaper reporter after one too many beers

I have never been one for beer or pubs. Boasting one Scottish parent, my tipple has always been whisky – my interest stretching back to long-forgotten Hogmanay parties  when, as we rang in the New Year, a relative would knock on the front door and “first foot” carrying a piece of coal in one hand and a quart bottle of the golden nectar in the other.

In London two weeks ago (as I have already reported), I spent two hours hugging a single half-pint glass of warm beer in a hole-in-the-wall-semi-deserted pub on Fleet Street. The company was excellent but the place was miserable, looking like it had last been decorated (and cleaned) circa 1955. Back then, at the epicentre of world journalism,  it would have been permanently full of Trilby hatted  hacks lubricating their brains and fingers to facilitate their daily masterpiece which, following a short detour with the editorial staff, would be with the typesetters across the road and ready to roll quicker than most of them could say “Another pint please, love”.

By the time the first Royal Christmas Message to be broadcast in 3-D was shown at 3pm, most people could not tell the difference

By the time the first Royal Christmas Message to be broadcast in 3-D was shown at 3pm, most people could not tell the difference

Judging by what happens to newspapers in the season of goodwill, journalists must reach such a state of inebriation (now in purpose-built squeaky-clean concrete monstrosities in East London), that their brains and fingers part ways resulting in the regurgitated nonsense they spew out . In fairness, this is not entirely their fault. As world leaders are similarly sozzled, nothing much happens. I followed the BBC World Service News on Christmas Day. The headlines were the Pope’s speech in St Peters’ Square, the Queen’s speech to the Commonwealth (with a joint age of 190, I had difficulty containing my excitement) and a running commentary on the day in Bethlehem which, apart from being the birthplace of Jesus, is today a predominantly Muslim city in which nothing much happens.

With the notable exception of The Economist which sensibly skips Christmas week entirely, we – the public – are being subjected to re-heated, repackaged fare from the 2012 archives. It reminds me of school dinners where Friday’s meal was always meatloaf unquestionably produced from all the slops of  the rest of the week.

So, we are confronted with endless “Reviews of the Year” and “The Best of 2012”. We discover that a cocky bike rider is the greatest UK sports personality of the past 52 weeks  and that Lord Seb Coe has become a living legend performing the Churchillian task of leading his country to victory over the Chinese, Greeks, Australians and everybody else since 1896 in  Olympic pyrotechnics.

It really does no credit to the intelligence of any nation to ponder this kind of nonsense. Why not just hang up a sign saying “Normal service will be resumed as soon as possible” (which is precisely what ITV’s News at Ten did on one occasion several years ago when newscaster Reginald Bosanquet was too pissed to even read the teleprinter) and go into hibernation until January 2?

Do people really want to be reminded about all those hardly remembered Republican candidates for President of the US who picked proposed corporate tax rates out of a hat on the basis of such sound economic thinking as “17.5% is half the current rate” or “12.5% is what the Irish charge – and it works for them”? And what about the French who merrily ditched Mr Bling only to embrace a kamikaze socialist who has so incensed the wealthy classes with his 75% tax rate that they are willing to escape to Belgium (Belgium!!)? And talking of kamikazes, did you hear the one about the Japanese Prime Minister who committed political suicide by insisting on doubling the VAT rate for the good of the country!? Then there was the Indian Government which finally lost an outrageous withholding tax claim against Vodaphone in the Supreme Court and promptly announced it was introducing a law retroactive to 1961. And the bankrupt Greeks who, with a backlog of 170,000 tax fraud cases managed to bring a case within 4 days against a journalist who blew the whistle on 2000 potential tax dodgers. Meanwhile, the Italian tax authorities came up with a novel idea for getting people to pay tax – a government sponsored programme for calculating how much tax you need to pay to fall beneath their radar. The Channel Islands threatened independence from the UK sometime in the next 500 years for being caught encouraging VAT fraud and Starbucks was royally roasted for  paying tax in the UK at an even lower rate than Mitt Romney (who?) in the US. Meanwhile, the Prime Minister of the zero-tax Cayman Islands quickly backtracked on a proposal to impose taxes exclusively on foreigners  and, following his subsequent resignation, I understand he is helping the police with their enquiries.

A penny for his thoughts

A penny for his thoughts

And, while I receive quite a few offline comments (why not, online?) there is the question of whether anybody really cares about what I think about this Blog. The fact is that, of the 60 (sixty!) posts over the last year, the one I had the most fun writing, by a whisker, was the last one (I, incidentally, love Marmite) followed closely by the Dickens bicentennial (Hard Times, Great Expectations).

Nobody really wants to know all this so I shall be more responsible than the Fleet Street pros and shut up.  The other day,  my Welsh neighbour and I watched helplessly as  the cork of a newly opened  15-year-old Glenlivet tragically disintegrated into the bottle. After a difficult few moments, we determined that we had better finish it quickly. That is my current project and I am presently comfortably numb. Evelyn Waugh once defined Hogmanay as “getting sick on Glasgow pavements”. See you in the New Year, if I don’t stumble under a bus before then.

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