Tax Break

Who said tax is boring?

Archive for the tag “International Taxation”

Did you hear the one about..?

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French comedy at its (silent) best

This year’s Booker International prizewinner, ‘A horse walks into a bar’, follows the routine of an over-the-hill stand-up comic as he coaxes and manipulates his audience, painfully aware that one failed joke could send the entire act crashing through the stage floor.

I often wonder why modern politicians don’t take their cue from stand-up comedians. While much of what they say and do is laughable, they never seem to be afraid of wheeling out the old, failed one-liners. And, unbelievably, far from throwing rotten tomatoes, their constituents and the international community at large lap up their corny nonsense.

For example, did you hear the one about the French Finance Minister who walked into a press conference …?

Following five years of clownish misrule by socialist Francois Hollande, last month France’s independent auditor uncovered a budget shortfall of seven billion euros. Meanwhile, France has failed to meet the EU maximum deficit requirement of 3% of GDP every year for the last decade – a target that is particularly important for the stability of the single currency. And, then there is the protected labour market, with maximum working hours and early retirement, to name but two loony-left policies.

All that misery led the new Prime Minister to announce earlier this month that President Emmanuel Macron’s campaign-promised tax cuts would have to wait until 2019 while the government set about balancing the books. That invited an immediate reaction, not from the opposition, but from the government’s Finance Minister, evidently acting with the backing of his boss’s boss. According to the quickly revised script, the first stage of the planned reduction of corporate tax from 33% to 25% would go ahead next year – down to a cordon bleu, mouth-watering 28%. Meanwhile, housing taxes would be reduced, and there would be a reform of wealth tax (the latter would be delayed).

The amazing thing is that the Finance Minister declared that the required budget deficit target would still be achieved in 2018 – the gap evidently to be closed by the expected additional tax revenues from the economic growth arising from the change. You can fool some of the people all of the time. History is full of no-hope fiscal promises from governments. A larger than expected deficit, plus labour rigidity that will take years to unravel, would be a no-brainer to any tenth-grade pupil who could think past his infatuation with his teacher. Short of a miracle – like the bonanza of more than a billion euro back-taxes the French courts refused to sanction from Google last week, or the Finance Minister getting lucky with the country’s foreign currency reserves on the tables at Monte Carlo – the deficit target is going to be missed once more.

I realize that politicians, more than most, do not like to be bearers of bad tidings, but what about the French equivalent of the man on the Clapham omnibus? Do people really just hear what they want to hear?

While governments and their cohorts can, at a price, mess with the money supply and the amount of fiscal spending, as well – in fairness – as tax policy, they clearly cannot micromanage the annual tax-take.

Lousy one-liners aside – in politics, like in stand-up, it is all a matter of timing…..

 

The Unsatanic Taxes

funnyroadNobody who has read Salman Rushdie’s classic ‘Midnight’s Children’ can be indifferent to the juxtaposition of India and Midnight in a phrase or sentence. So, the recent announcement that India’s new GST law (VAT by any other name would smell as sweet) would come into effect, amidst much fanfare, at midnight on July 1 was enough to make my heart flutter like a punkahwallah’s punkah.

The world’s biggest democracy has finally joined the vast majority of the globe’s tax-setters in a cross-twenty-nine-state system that, when the technological problems are sorted out, should improve India’s tax-raising efficiency and, thus, help that great country in furthering its economic growth.

That is not to say that VAT is the Mother Teresa of all taxes. Its biggest problem is that it is regressive –  it taxes consumption at the level of the poor-man-in-the-street who, the poorer he is,  spends a higher proportion of his income on surviving. This is traditionally combatted by lower rates or exemptions on basic things like food. Indeed, India – in keeping with its tradition of making everything as complicated as possible – has introduced five rates of VAT  plus a stratospheric concoction for dealing with untouchables like luxury goods and tobacco.

Of course, there will still be those who manage to get round the tax, legally or otherwise. Time will tell whether devious residents latch onto the ubiquitous Carousel Fraud phenomenon (involving the import and export of the same goods multiple times – a bunch of Brits were caught a few years back when they got lazy and stopped changing the plugs on phone chargers between France and England). And then there was the hard-to-believe wheeze of the Spanish theatre that sold VAT-exempt carrots for admittance to its performances together with a worthless piece of paper called a ticket. The only problem (apart from the Spanish tax garrotters catching up with them) was that hungry patrons couldn’t prove their right to re-entry to the auditorium after a toilet break during the intermission.

At the end of the day, VAT works. One of the few countries that does not seem to agree is the ‘biggest’ democracy (as opposed to the ‘biggest democracy’). A few years ago, at lunch at a conference in Berlin, a group of American experts were discussing ways of plugging the impossible US deficit, coming up with all sorts of supply-side ideas. Thinking that V.A.T was the sort of acronym (actually sayable, like M.A.D – Mutual Assured Destruction) that Americans would die for (especially when said with an English accent), I suggested that imposition of such a tax would surely solve all their problems. I was completely frozen out. V.A.T is a dirty acronym in the eyes of Uncle Sam. My luncheon partners looked like they wanted to drag me in front of Senator Joseph McCarthy’s Un-American Activities Committee. The irony, of course, is that while V.A.T undermines the ‘redistribution of income’ philosophy of most of the ’red’ nations (such as Britain and Europe) imposing it, the American belief in ‘equality of opportunity’ is completely at peace with its workings.

The Indians still have a long way to go. Their direct tax system leaves much to be desired – the witch-hunt of Vodafone to cover the seller’s capital gains in an offshore purchase a while back, and its treaty-defying Dividend Distribution Tax being but two examples of the rot.

As Rushdie put it in Midnight’s Children, ‘I admit it: above all things I fear absurdity.’ Thankfully, his beloved India is finally taking steps in the right direction.

Taking axes to taxes

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How Hungary chose its tax rate

En route to a tax conference in Malta earlier this month, circumstances led me to muse about the renewed race to the bottom of international corporate tax rates. Donald Trump had not yet surprised the world with his election win, so his promises of madly reduced US corporate tax rates were the stuff of fantasy. But lowly Hungary had just come up with the first single digit rate in the EU, leapfrogging on its way down the traditional cut price nations of Ireland and Cyprus. And since Britain’s decision to ditch the EU, its surrogate Prime Minister Theresa May and her Cabinet have been titillating the markets with talk of even lower rates, though this week’s Autumn Statement reiterated the, once promiscuous but now modest, 17% target for 2020.

All sounds wonderful? Well, here was the first lesson in Tax Policy 101 at 35,000 feet. A certain Italian international airline, which shall remain nameless, was offering the cheapest Business Class travel to my destination. This was not the first time I had flown with them, but triumph-of-hope-over-experience is my middle name.

As Milton Friedman famously said: ‘There is no such thing as a free lunch’,

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It took their minds off crashing

but in the case of this airline, for the first hour and a half in the air, there was no such thing as a free glass of water. The single attendant assigned to Business Class clearly felt the need, inspired by his socialist Prime Minister Matteo Renzi, to redistribute his time to the proletariat at the back, and offer free access to the Business Class toilet because – as he pointed out – he had 150 people on the flight needing facilities; Airbus (and the Italian airline) obviously hadn’t taken that fact into account when configuring the seat lay-out. The meal would not have disappointed a five year old kid with a five dollar budget at McDonalds.

But it wasn’t all bad. The plane did manage to stay in the air for the entire three and a half hour flight – no small feat when considering Italian aviation history, especially in the early 1940s.

At the end of the day, it is simple economics that if you cut the budget something has to give. In the case of the Italian airline, it was service that flew out of the window. In the case of countries recklessly hacking corporate tax rates without stopping to think, they are condemning their populations to austerity today, or austerity tomorrow.

Of course, what each government is trying to do is bring in more foreign investment, expand employment and, thus, the tax base. However, while there is considerable evidence that free trade, by forcing nations to concentrate on their areas of comparative advantage, potentially leads to an increase in the size of the overall pie, tax competition is, if anything, distortive to international trade leading to suboptimal results, at the same time delivering reduced public investment that may have been needed to expand the economy.

johnf-kennedy

Where is he when we need him?

After years of careful planning following the 2008 financial crisis, we are now entering a period of knee-jerk decisions in international economics alongside knee-jerk decisions in international affairs.

At least it will not be boring.

 

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Going it alone?

It would appear Americans have long preferred blondes

It would appear Americans have long preferred blondes

Ever since Marilyn Monroe’s less famous namesake, James, came up with his Doctrine almost two centuries ago, America has toyed with isolationism. They tried it in the First World War, and it didn’t work. They tried it in the Second World War, and it didn’t work. And Barack Obama has spent his presidency unsuccessfully trying to raise the drawbridge to the Middle East.

But there is a bit of isolationism going on at the moment that is not catching everybody’s eye: Tax Isolationism.

As the nation fires its engines for the four-yearly circus that is the Presidential Election, candidates for the Republican nomination are outdoing each other in unpassable and unworkable tax reform proposals. Meanwhile, the nominee-presumptive for the Democratic ticket has made her own comments on the issue.

What is remarkable is that all the candidates have concentrated on lowering tax rates and closing loopholes, conjuring up numbers they each know they will not have to justify. After all, America is one of the few countries in the world where the Government’s Budget is a wish-list rather than a statement of intent (Congress never passes Budgets as proposed). They are looking at America as if it were a self-contained island. Their sole material tip of the hat to other countries is the universal objection to inversion transactions, which have been rife in recent years and serve to reduce the US tax base.

In the meantime, BEPS is fast taking shape, and the US Treasury is belatedly realizing that, as European nations apply the rules and import more profit to their shores, in a zero-sum game the big loser is the U.S. of A. which is by far the busiest player in the international economy.

The big question now is whether the US will try and torpedo part of the BEPS program. At this late stage that would not go down well internationally. As regards automatic exchange of information, America may end up trailing much of the world since the Federal authorities evidently have limited legal right to demand States’ statistics.

What did he see in her?

What did he see in her?

On the other hand,  America’s antithetical view to John Donne’s meditation, ‘No man is an island,’ may not be all bad. As Mrs Arthur Miller herself once observed, ‘If I’d obeyed all the rules, I’d never have got anywhere’.

The spotlight beside the golden door

When did she renounce her first religion?

When did she renounce her first religion?

Fifty years ago today, the New York Times announced that Elizabeth Taylor  had failed in her attempt to renounce US citizenship. Required to disavow ‘all allegiance and fidelity’ to the United States, she found herself  unable to do so. Now, allegiance and fidelity are terms Ms Taylor had a lot of experience disavowing – eight lots of experience, to be precise: Mr Hilton, Mr Wilding, Mr Todd, Mr Fisher, Mr Burton (Take one), Mr Burton (Take two), Mr Warner and Mr Fortensky.

Ms Taylor, somewhat disingenuously, declared her reason for renouncing her citizenship as wanting to have the same citizenship as her then husband-for-the-first-time , Richard Burton. Had Burton, by reason of his birth, been a Welsh Nationalist (which he was patently not), the argument may have had some traction. But Taylor did not need to seek the same British citizenship as her husband for the convenient reason that she was British, born and bred.

The only reason that the Cleopatra star wished to be rid of her American passport was that she was living and working in Europe at the time, and she did not want to have to pay tax in the US.

Nothing has changed in fifty years. People are renouncing their citizenship right, left and centre (although, on this occasion, I suppose that should be ‘center’). Whereas, in the conscience-ridden and patriotic ’60s ordinary people had understandable difficulty in renouncing allegiance and fidelity – nowadays, if it will save a buck or two, who the hell cares about such outdated emotional claptrap?

Thaddeus Stevens who roomed with Al Gore at Harvard

Thaddeus Stevens who roomed with Al Gore at Harvard

But, of course, as in so many other respects, this aspect of  US Tax Law is insane. Eritrea is the only other nation that taxes income on the basis of citizenship. I admit that I have never been to Eritrea (in fact, I would not know where to find it on a map, so it is just as well I have never tried to get there), but my assumption is that Fifth Avenue it is not. One can almost sympathize with successive Eritrean governments trying to plug their fiscal hole with takings from comparatively wealthy citizens abroad. One could also sympathize, if one were living a hundred and fifty years ago, with Thaddeus Stevens and his House Ways and Means Committee wanting to clobber Yankees escaping the Civil War. But things have moved on since then. The  dysfunctional American tax system allows multi-national corporations to shelter profits overseas, provides countless tax breaks to domestic taxpayers and has enough loopholes to fill whatever you can fill with loopholes. So, choosing to chase expatriates not currently benefiting from the public spending of tax revenues is barmy.

Beyond the idiocy of citizenship-based taxation, it is the offer of a ‘Get out of jail free’ card by relinquishing citizenship that I, a non-American with no aspirations to become one, find distasteful. I am very proud and happy that I became an Israeli citizen a quarter of a century ago. This is my home. This is the place where  I raised my children and the place where they are now raising theirs. But I am also proud of being British. It was Britain that offered my grandparents refuge when, over a century ago, they had to escape the stink-hole that was, and possibly still is, Ukraine. It was Britain that stood alone against the greatest evil yet known to man in 1940 and 1941. It was Britain that gave me the education that enabled me to get on in life. Britain does not present me with a dilemma. There is no reason for me to consider giving up my citizenship.

Expatriate Americans, on the other hand, faced with horrendous annual reporting requirements, as well as potentially horrible taxes, have to make a real decision. For those with a conscience, it is an almost impossible situation. How does a native-born American disavow ‘all allegiance and fidelity’? Even I, a non-American, would have difficulty making a  statement like that about the one nation on the planet that, when push came to shove,  has held it all together for the last hundred years.

Still liable to tax

Still liable to tax

Come on Uncle Sam. This year marks the 150th anniversary of the end of the  Civil War. If you can make peace  with Cuba, you can  make peace with your expatriates. They are the best ambassadors you’ve got (although I’m not sure about Liz Taylor – she was a bit of an embarrassment at times, even for an American).

 

Yes we can!

barak_l2014 was the year when ‘Yes, we can’ finally became ‘No, I couldn’t’. It is all over bar the shouting, and Mr Obama is reduced to bumping wedding couples off Hawaiian golf courses so that he can get on with one of the remaining functions of his office.

In fairness, it isn’t just the President who should be swallowing his words. Congress will discover in 2015 that in one area at least –  international taxation – it is being hoisted on its own petard.

The FATCA  ‘spill-the-beans-to-Uncle-Sam-or-he’ll-rip-out–your-windpipe-with-a-pair-of-pliars’ rules  that were conjured up in 2010 have spawned a revolution in international taxation. The big loser is going to be the US of A.

When the Foreign Account Tax Compliance Act was legislated, it was designed to ensure that  income rightly taxable in the US could not be sheltered overseas. Execution involved steamrollering the rest of the world into accepting horrific compliance costs, just so Uncle Sam could relax at the side of his Florida condo pool.

The world, sick of being cowed into submission by the western juggernaut, struck back. What was good for the goose was good for the gander. Countries demanded reciprocal arrangements – which the US agreed to, comfortable in the knowledge that Federal Law did not permit the gathering of such information. America was still riding high.

But if reciprocal arrangements were on the cards, why stop at bilateral arrangements with the US? There was a serious, and soon to be succesful,  move towards the Automatic Exchange of Information between just about everybody.

Golf - Putin style

Golf – Putin style

Aye, Mr United States Congress, there’s the rub. Because, once old orders disintegrate, there tends to be a domino effect. If the game was up for dirty money, why not deal with slightly-soiled money as well? National Parliaments started to make noises. Then came the Base Erosion and Profit Shifting initiative of the OECD, sold to the world by David ‘I play cricket’ Cameron and Vladimir ‘I play dirty’ Putin. All of a sudden, bringing together the international community to ensure that multi-national companies pay their fair share of tax in countries hosting their activities was not just a pipe dream. Meaningful transfer pricing based on real activity, country-by-country reporting, sharing the cake of the digital economy, updating archaic permanent establishment rules and unravelling hybrid transactions, were all within sight. What is more, it didn’t really matter if the BEPS action plan would be formally adopted or not – the international mood was to enact unilateral legislation and take it from there.

The bottom line is that, in 2015,  Uncle Sam’s FATCA is going to turn around and bite him on his bum. Why? Because the vast majority of reshifting of profits will be away from the US. It is true that much of the profits now being claimed from US multinationals by countries such as the UK and France are currently parked offshore – but, were the dysfunctional US Congress and President to stop squabbling like alley cats in a garbage can, they could pull in those earnings at the stroke of a pen. That will not be the case, however, once they disappear legitimately into the coffers of other sovereign states.

A typical 2015 day at the White House

A typical 2015 day at the White House

So, President Obama, Senator McConnell and Speaker Boehner, the message from the world beyond New York Harbor is: ‘Yes, we can’. And we are going to. Anyone for golf?

A Tale of Two Cities

I should have stayed in bed

I should have stayed in bed

Arriving at a hotel in the heart of Dickens country late last Monday night, I was asked by the receptionist if my day had been a pleasant one. I replied that, having woken in one country, worked a full day in another and being now about to go to sleep in yet another, I did not feel qualified to answer the question (or, for that matter, any question).

We live in a mad, frenetic world.

Not many hours later, beating the dawn to its daily task of rousing the city from its slumber, I decided to fulfill a life-long ambition (or more precisely an ambition since the first year of grammar school) to greet the sunrise from the centre of Westminster Bridge – mimicking  what William Wordsworth experienced when he stood in the same spot “Upon Westminster Bridge” on September 3, 1802. Well, all I can say is that either Mr Wordsworth was high on some interesting substance when he wrote “Dear God! the very houses seem asleep; And all that mighty heart is lying still!” or London has changed a bit in the last two hundred-odd years. At 6am The city was alive with motorists, cyclists, joggers, river boats and pedestrians. Even the Underground was working.

Later in the day, sitting  in the jump-seat of a Black Cab (which was not black), bombing up the Mall from Buckingham Palace to Admiralty Arch, I was alerted to the sight of a horse-drawn carriage crawling in the opposite direction and creating an almighty traffic jam in its wake. It was  being driven by two men in full 18th century livery carrying,  whom I assumed to be,  the rotund Ambassador of an African nation on his way to present his credentials (and from the way he was dressed – possibly  his bed sheets) to HMQ.

Hopefully the first and last Crimean War

Hopefully the first and last Crimean War

Later still, my colleagues and I pulled up in another Black Cab at the Cavalry and Guards Club in Piccadilly, where we were warmly welcomed by our host, a club member, who had kindly invited us to lunch. The whole marvellous experience was quintessentially British and utterly timeless. We had been advised in the invitation that “Gentlemen are required to wear a tailored jacket and tie” (my wife had queried whether, while my suit might be acceptable for an officiating undertaker it would not meet the enhanced standards of a gentlemen’s club). Taking my cue from the other diners in the room, the jacket did not come off throughout lunch despite the unseasonably hot weather and the elbows did not, even once, as much as graze the table.

My entire day was a tug-o-war between London Present and London Past. What kept coming to mind was something I had mentioned that morning in a short breakfast lecture – “Management and Control”. Over a century after the phrase was coined by a British Judge, while  it remains one of the mainstays of the international taxation system, it is also one of the most confusing.

Time for a bit of mischievous conjecture.

Tuesday July 31,  1906 – Lord Loreburn  is sitting in his usual armchair at the National Liberal Club  with a copy of the Times in his lap. He is approached by a young, balding MP, cigar in hand, who – after the usual niceties – he politely invites to take the seat  next to him.

MP: Lord Chancellor, congratulations on your judgement in the De Beers diamonds case yesterday. I understand it created quite a stir among the legal fraternity.

LL: Y’know, old boy, it was time the South Africans remembered who’s in charge. Those bounders were claiming that, just because the company was registered down in Boer Country – I know how much you love that part of the world – it was not British. Balderdash, I said in no uncertain terms. Told ’em that you had to try and imagine that a company was like an individual that cannot eat or sleep but can keep house. I thought that was quite clever. Anyway, I rounded it off with : ‘A company resides … where its real business is carried on … and the real business is carried on where the central management and control actually abides’. I  actually don’t have the faintest idea what I meant but, to cut to the chase, because all the chaps running the company are in London, it can jolly well pay its tax here as a British resident. Otherwise, the revenue will go to helping those damned Boers who don’t deserve a bean. And as for…

MP: If I could interrupt, Lord Chancellor. Don’t you think  this idea about tax residence being where the “Central Management and Control” resides could lead to all sorts of uncertainty in the future? Allow me to challenge you with something fanciful I saw in The Times the other day. You will have heard of those two American bicycle builders  – the Wrights,  I think they are called – and their early success. Well they  patented an improvement to Flying Machines a few weeks ago which they claim enables them to control flight so that they will be able to fly to specific destinations rather than their current circus act of reaching somewhere in the next field. What if one day, a company director were able to climb aboard one of those flimsy contraptions with his top hat tied firmly to his head and, holding tight to his seat, fly to another country in a day or two and make decisions there. Where would the Central Management and Control be then?

Safe travel

Safe travel

LL: Oh, you are a card! Could you really imagine a British gentleman submitting himself to one of those flying machines? Quite preposterous! Next you are going to tell me that he would be served fine whisky and a fresh copy of The Times! Ha Ha. Listen, old chap,  I was talking to Ismay of the White Star Line the other day. He is thinking of commissioning three (!) new ocean-going liners to compete with Cunard. By 1912 he expects to have the biggest passenger ship in the world sailing between Southampton and New York – with swimming pools and billiard tables – and totally unsinkable. That is the future for gentlemen. Safe, luxurious travel. Not some flimsy piece of wood with a bit of canvas stretched over it, all held together by string.

MP: You are probably right. They will be much more use for throwing bombs from when there is another war. Well, I must be on my way, Lord Chancellor. It has, as ever, been a pleasure talking to you.

MP walking across the room (to himself): Good Lord! That fellow is stuck in the 19th Century.

LL (to himself): Precocious young whippersnapper.  Lacks his father’s self-discipline. Must be the mother’s American influence. I don’t know what Campbell-Bannerman saw in him to make him Under-Secretary of State for the Colonies. Gentlemen in flying machines, indeed. And what was that idea of bowling bombs from them at the enemy?  Heaven help the country if he ever achieves a position of real power. Somehow, with ideas like that, I  don’t think we will be hearing too much more of  Mr Winston Churchill.

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?

Dallas, Taxus

"The Kennedys"

“The Kennedys”

According to a study in the influential “British Medical Journal”, if you are looking for a safe profession (leaving aside Accountant or Lawyer), you would be better advised to plump for Bomb Disposal Expert or Formula 1 Racing Driver than Soap Opera Star. The BMJ informs us that characters in these B-TV sagas have three times the normal mortality rate across age groups. Taken together with the other essential ingredients of a Soap – halting scripts, multiple rambling semi-plausible plots, and the occasional totally implausible shock occurrence (remember when the entire 9th series of Dallas turned out to be a dream?) – “The Kennedys” could have easily qualified for a grant from the Soap Opera Arts Council.

With newsprint and screens currently full of the  tragic moment in Dallas  exactly 50 years ago next Friday, my unhinged thoughts drifted unwittingly to other Reality Soaps and, particularly, those of the Taxploitation Genre.

The ink is not yet dry on the OECD Base Erosion and Profit Shifting Action Plan and hurriedly drafted scripts, including those of various tax authorities, are already prophesying the impossibility of reforming the taxation of the digital economy, which is so essential. Flashbacks remind us that the whole international tax mess started after the First World War, when  the Gentlemen’s Club of Europe and America decided that taxation should follow residence – so that profits did not remain in the hands of the off-screen Colonial extras who had their hands on  the raw materials , but flowed up to the stars at centre-stage.

The public and their governments now scream that , with the onset of internet maturity,  it is time to upset the digital world order – a rare Soap moment calling for  Tax Armageddon. Surely the time has come to look more closely at where transactions are being consummated –  recognizing that data-collection should be taxable where the data is collected?  But no, it is noted that there is absolute connectivity between the digital and old  economies – if we change digital, we have to change everything – and that exclusive Gentlemen’s Club seems to be saying: “That will not do. We cannot flash the bat outside the left stump”. They prefer to carry on with the same script tweaking it over the long-term trying to achieve governments’ stated goals.

Marilyn is far left, Carlos is far right (he was, after all, from Franco's Spain)

Marilyn is far left, Carlos is far right (he was, after all, from Franco’s Spain)

This brought back memories of my favourite soap during my formative years – the low-budget, cardboard-walled “Crossroads” about a Midlands Motel, which ran without interruption from 1964 to 1988. In its early years it followed all the normal rules until, in 1968, sometime around the assassination of RFK, the scriptwriter must have had enough of writing his daily drivel. In an act of devilish inspiration, and right under the noses of the sleeping producers, he decided to marry-off the extremely “working-class” Motel waitress, Marilyn Gates, to the local vicar, Peter Hope. I can picture the scriptwriter the night before the announcement  (episodes were filmed in a single take) on a bender in his cheap hotel (motel?) room, poring over the ubiquitous Gideons’ Bible hoping for an epiphany,  hitting on the enigmatic Mary Magdalene, and the deed was done.

When the producers woke up and realized that, while evolution is the thing with Soap Scripts, this one was going to end in tears, they probably did contemplate contributing to the statistics on which that BMJ article was based. However, they had a problem. Only a few weeks previously they had killed off Carlos, the beloved Spanish Chef who died saving children from a burning Orphanage. Another cardinal rule of Soaps is – you can’t kill people off too often; (they may have killed off the scriptwriter, but he would not have been missed unless he was planning the first Miss Crossroads competition for the Christmas special.) The solution was, literally, unbelievable. With the raising of a middle-digit to their intellectually superior viewers (including 10-year-old me),  one bright evening a few months after the wedding the episode opened with an announcement: “From today, there is a new Marilyn Hope” and, in keeping with the miracles promised by her Faith,  the said Marilyn Hope appeared as a prissy, blue-stockinged, Queen’s English-speaking, Vicar’s wife…….and they all lived happily ever after (or, at least, until they were buried by budgetary cuts in 1988).

And that is what the scriptwriters of the tax world might be trying to do to their governments and  us. Cornered in a dead-end without a feasible storyline, instead of bumping off the entire cast, they may just try and dress digital taxation up in a different pair of stockings (a bit of consumer jurisdiction VAT here, a service Permanent Establishment there).

john_f__kennedyOne cold Tuesday afternoon a few years back, I stood shivering on the Grassy Knoll. It was one of the most unremarkable places I have ever made a special point of visiting. Apart from the anonymously named “Sixth Floor Museum” behind me, the only indication of what happened that terrible Friday were two metal studs in the approach road marking where the bullets hit. Whatever Kennedy was, or wasn’t, he inspired new frontiers. The Tax World could do with another JFK right now. Obama’s policy wonks and speechwriters should get to work on their laptops.

In God (Alone) We Trust

Business Card

Business Card

When the news broke last Sunday that a Boeing 737 had inexplicably missed the runway at Bali airport and ended up in the sea without, miraculously, any loss of life, I couldn’t resist a sardonic smile. In the closing pages of Swedish author Jonas Jonasson’s improbably titled “The 100-year-old man who climbed out the window and disappeared”, an elephant laden, privately chartered Boeing 747 is trying to get permission from air traffic controllers to land at Bali airport. The gist of the conversation goes like this:

“My name is Dollars, One Hundred Thousand Dollars.”

“Excuse me, what is your first name, Mr Dollars?”

“One Hundred Thousand and I want permission to land at your airport”

“Excuse me Mr Dollars. The sound is very poor. Could you be so kind as to say your first name once more?”

“My first name is Two Hundred Thousand.”

“You are most welcome to Bali, Mr Dollars”.

It does make you wonder. In fact, my knowledge of Indonesia (of which Bali is a part) is founded entirely  on the above-mentioned novel and Barack Obama’s positively embarrassing “The Audacity of Hope” in which he frighteningly bases his concept of foreign policy on his childhood experiences with his mother and autocratic stepfather in that country. What is interesting is that both authors take the existence of corruption there for granted and, in the case of Jonasson, he is clearly aware of his readers’ subconscious expectation that, in that part of the world, bribery will always be involved.

But that begs a question about the West.

Why is it that every time somebody in authority puts his hands in the till (or elsewhere) we freeze in indignation and shock, adopting the facial pose of someone in desperate need of the bathroom, and fast? Indignation has some logic to it. But why shock? Shouldn’t we expect it? Just look at the shenanigans in high places of only the last few months:

Starting with monarchies. There is the King of Spain’s son-in-law facing fraud charges (with his wife Princess  Christina being required to appear in Court). Meanwhile, there are accusations of a political slush fund that may have benefited some of the King’s highest democratically elected political servants. And then there is the widow of King Baudouin of Belgium (who shared first place with General Franco in my childhood stamp collection) who has been siphoning off part of her considerable State pension to a foundation for the benefit of her Spanish nephews so as to avoid Estate Tax.

"Who loves ya, baby?"

“Who loves ya, baby?”

Republics have not been faring any better. Berlusconi’s antics in the boardroom and the bedroom do not  need repeating here but even he is being outshone by the political heirs of the Sun King. The French establishment seems to be guillotining itself with the disclosure that  the treasurer of President Zeropopularityrating’s party invested illegally in the Cayman Islands  followed by the resignation of his Budget Minister for a similar iniquity.

Furthermore – and not because I want to be fair to the French but because I want to make a point –  if we go back a few short years, a large number of MPs, constituting  the rump of the British Parliament, were caught inflating their expenses, claiming for such necessities as the cleaning of a moat.

For the life of me, I cannot understand why intelligent, educated people in their millions are still shocked by these antics. There are simply too many of these good people to assume that they are the same poor souls who still believe in Santa Claus and saunter down to the lily pond at the end of the garden on a summer’s evening to dance with the fairies.

All this is not a cue for the God Squad to jump up and start lecturing on the debilitating effect on morality of an increasingly secular society.  They might like to reflect on the state of organized religion which has, itself,  not been having a very good press  lately. Moreover, a recent book by primatologist Frans de Waal has shown that chimpanzees display considerable moral behaviour in terms of looking after the infirm, the old and the orphaned – which should wipe any remaining  smug smile off the face of the average, intellectually stunted Holy Joe.

Anyone who can see past the Evangelist standing on the doorstep trying to sell human salvation – in fact, anybody who gets around to reading the older part of the Bible he is trying to peddle – should realize that immorality is here to stay. Instead of being surprised by it – society should  legislate for, and strictly enforce, the bits that cause the most angst.

A few months ago I wrote about a British Parliamentary broadside against Amazon, Google and Starbucks who, it was contended by British lawmakers (in between consultations with the moat cleaner), were not paying enough tax. Committee Chairman Margaret Hodge accused them of being immoral rather than illegal. This was balderdash. Apart from the fact that a company cannot be moral, intelligent or humorous because it is just a number in a government registry – how are company managers to know who the god, or gods, it is that they are required to serve – shareholders, host country government , home country government or customers?

And, while we are at it, what defines Morality in the modern Global Village? Perhaps it was prescient that the only typo ever recorded in the official King James Bible was in the 1631 edition where the 7th Commandment was rendered as “Thou shalt commit adultery”. In those days, if you committed adultery it could cost you your life (and if you committed adultery with the wife of the heir to the throne, you watched yourself being chopped up first). Nowadays, it just costs you your house and car.

"Good mornin', Mista Fisher"

“Good mornin’, Mista Fisher”

As the sun began to set on the last century,  I spent a few months working in Manhattan. On my first day in the apartment on 34th and 2nd the concierge caught me on the way out. “Mista Fisher, you gotta separate yer garbage. It’s de law Mista Fisher, it’s de law”.  I, of course, proceeded to do exactly what he said for the entire two months. Why? Was it because, I had a Green epiphany and considered it morally reprehensible to put recyclable and non-recyclable rubbish in the same bin (sorry, “can”)? You kiddin’, or somethin’? There were two reasons: I thought that, if I got caught 3 times putting the washed out remains of the Drip Brew filter  with the empty Ding Dong packets I would get life without parole; and the concierge talked and looked like Jimmy Cagney so I wasn’t taking any chances so close to the East River.

FDR was wrong when he announced at his first inauguration that “all we have to fear is fear itself”. With all the progress in the world, when it comes to enforcing the law, there is no substitute for fear. Maybe they should bring back the Rack. It might not deter corrupt high-flyers much, but it would satisfy the moral majority’s primitive urge for revenge.

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