Tuesday, 26 May 2009
Thursday, 7 May 2009
Free the Hargreaves 500,000!
Peter Hargreaves, the multi-millionaire financial sevices "wizard" has recently been loudly complaining about tax increases for those on very high incomes. The core of Hargreaves complaint is the increase from 40% to 50% tax on earnings above £150,000 per year. To put it another way, the level of income where the higher rate kicks in works out at £12,500 per month compared to the national minimum wage of less than £12,000 PER YEAR. Mr Hargreaves estimates that with the extra tax hike, he will pay an extra £500,000 which presumably means that he expects to earn some £5 million ABOVE the £150,000 threshold each year.
It is worth remembering why this extra tax is being introduced. We are, in case you hadn't noticed, in a recession, a recession initiated by the excesses and failures of the financial industry (with the assistance of a compliant government). The effect? Well let's look at what one highly successful financial services executive has to say:
"A trillion pounds has been borrowed to prop up the financial system but revenue from taxes has already been decimated. Royal Bank of Scotland, which was the biggest payer of corporation tax in the UK, no longer makes a profit. The government used to enjoy £8 billion in stamp duty from property deals, but the number of transactions has halved over the last year. The lower value of houses has also reduced the inheritance tax take.At the same time increased unemployment is giving rise to greater welfare payments and the loss of taxes from those who have lost their jobs."
And this same financial expert goes on:
"All main political parties are advocating tax rises for those on higher incomes. The very wealthy already pay the most taxes so as they rise further there is more incentive to employ schemes of avoidance and circumvent the system. Raising top rates of tax therefore usually results in the government's total tax take going down. The only other option is to raise taxes across the board.This means that your taxes are eventually scheduled to rise."
So, in short, the financial services industry (of which Peter Hargreaves is a major player) got us into the mess, the UK tax-payer has been used to prop up this industry, and any effort to increase taxes to repair the damage will be undermined by the very rich (like Peter Hargreaves) who will "circumvent the system" to avoid paying their taxes and thus forcing the burden even more onto those who can't afford expensive lawyers to guide them through the many loopholes available for tax avoidance (it has been estimated that tax avoidance by the super-rich and large corporates cost the country between £25 and £85 BILLION every year!).
And the financial expert from whom the quotes above were taken - why, that would be Peter Hargreaves.
This is not just about paying taxes - the burden left to us by the financial services industry (recently estimated by the Institute for Financial Studies at £2,840 per family) cannot be met by higher taxes alone (especially if some avoid paying), so it will be met by a reduction in spending on public services - that impacts services like state education and healthcare provision - not so much the buildings already used for these essential services (because many of them are subject to long-term PFI schemes that will make profits for the private sector, and the payments on which are subject to 20-30 year contracts) but the quality of the service delivered within those institutions – and the less tax recovered from the very wealthy the greater the negative impact on those services. Our children, our elderly, and our sick will be the innocent victims of the unabated greed and selfishness of those who cannot see beyond their own fat wallets.
In the end we still, just about, live in a free country and if Mr Hargreaves wants to “circumvent the system” to avoid paying his taxes by making use of the legal loopholes available to those rich enough to take advantage of them then that is his decision. Likewise if he chooses to leave the country because of the raising of tax levels – that is his decision. In the Politics Show he admitted that he was unlikely to leave the country because “I’m very patriotic”. Well Mr Hargreaves, here is a suggestion – as a demonstration of your patriotism why not do the patriotic thing and pay your taxes like the majority of the population of this country?
It is worth remembering why this extra tax is being introduced. We are, in case you hadn't noticed, in a recession, a recession initiated by the excesses and failures of the financial industry (with the assistance of a compliant government). The effect? Well let's look at what one highly successful financial services executive has to say:
"A trillion pounds has been borrowed to prop up the financial system but revenue from taxes has already been decimated. Royal Bank of Scotland, which was the biggest payer of corporation tax in the UK, no longer makes a profit. The government used to enjoy £8 billion in stamp duty from property deals, but the number of transactions has halved over the last year. The lower value of houses has also reduced the inheritance tax take.At the same time increased unemployment is giving rise to greater welfare payments and the loss of taxes from those who have lost their jobs."
And this same financial expert goes on:
"All main political parties are advocating tax rises for those on higher incomes. The very wealthy already pay the most taxes so as they rise further there is more incentive to employ schemes of avoidance and circumvent the system. Raising top rates of tax therefore usually results in the government's total tax take going down. The only other option is to raise taxes across the board.This means that your taxes are eventually scheduled to rise."
So, in short, the financial services industry (of which Peter Hargreaves is a major player) got us into the mess, the UK tax-payer has been used to prop up this industry, and any effort to increase taxes to repair the damage will be undermined by the very rich (like Peter Hargreaves) who will "circumvent the system" to avoid paying their taxes and thus forcing the burden even more onto those who can't afford expensive lawyers to guide them through the many loopholes available for tax avoidance (it has been estimated that tax avoidance by the super-rich and large corporates cost the country between £25 and £85 BILLION every year!).
And the financial expert from whom the quotes above were taken - why, that would be Peter Hargreaves.
This is not just about paying taxes - the burden left to us by the financial services industry (recently estimated by the Institute for Financial Studies at £2,840 per family) cannot be met by higher taxes alone (especially if some avoid paying), so it will be met by a reduction in spending on public services - that impacts services like state education and healthcare provision - not so much the buildings already used for these essential services (because many of them are subject to long-term PFI schemes that will make profits for the private sector, and the payments on which are subject to 20-30 year contracts) but the quality of the service delivered within those institutions – and the less tax recovered from the very wealthy the greater the negative impact on those services. Our children, our elderly, and our sick will be the innocent victims of the unabated greed and selfishness of those who cannot see beyond their own fat wallets.
In the end we still, just about, live in a free country and if Mr Hargreaves wants to “circumvent the system” to avoid paying his taxes by making use of the legal loopholes available to those rich enough to take advantage of them then that is his decision. Likewise if he chooses to leave the country because of the raising of tax levels – that is his decision. In the Politics Show he admitted that he was unlikely to leave the country because “I’m very patriotic”. Well Mr Hargreaves, here is a suggestion – as a demonstration of your patriotism why not do the patriotic thing and pay your taxes like the majority of the population of this country?
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