Tax

What exactly is wrong with this?

In case you haven heard, last year Star Wars was released. The owners of the brand, Disney, are reported to have “got” £31 million from the UK Government last year. Of course they didn’t, they just got tax relief, so the correct way of putting it across would be that the Government didn’t take millions of pounds from a company that made a very successful and enjoyable film.

POLITICO strangely gets this all wrong, with “the government’s contribution to The Force Awakens” particularly standing out; no they haven’t contributed, they just haven’t taken tax from the first 25% of £20 million, and 20% afterwards of production costs. It really isn’t like the British government is paying for lightsabers, it it?

One of the reasons that Disney decided to make the latest Star Wars in the UK was of course that they weren’t going to be taxed the full amount on the production. But I can’t see anything really wrong with the UK government offering tax incentives for films to be filmed. Obviously it would be better for lower taxes all around, but this is demonstrating again that incentives in the right conditions work.

I am pretty skeptical of multiplayer effects, but the claim is that it generates £12 per pound offered in a tax incentive. And, like with google, just because the production company is paying less tax than the high minded but typically ambiguous “fair sharers” would like does not mean that tax isn’t being paid overall. There are plenty of very well paid people who pay income tax here, and without such a vibrant film industry they more than likely would not be employed here, and therefore not pay tax. Nicht gut.

The trend towards conflating Government support with lack of Government intervention makes me very uneasy. Those who tend to point it out (not having a go at POLITICO here because they aren’t in this instance) also seem to like arguing for more Government intervention in the economy with the cry of ‘aha! But it was that clever State led industrial policy what did it.’ No, it seems that a lack of intervention and regulation can be a recipe for success. Who would have thought it…

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Oh but evil tastes so good.

I don’t really have a sweet tooth, I turn my nose up at puddings, don’t like chocolate, don’t tend to drink fizzy drinks. Still, despite this lack of poison, I don’t feel the need to write hysterical articles in the Guardian (I guess it could be some fun) about TWENTY FIVE TEASPOONS OF SUGAR IN A HOT DRINK.

The lovely people from Action on Sugar have a nice new report about HOW WE ARE ALL GOING TO DIE. Principally, from sugar consumption, and the way Big Sugar are going to do it is by putting  it in a hot chocolate. The horror!

Costa’s largest chai latte was found to contain 20 teaspoons of sugar, while an extra large Signature hot chocolate from Starbucks contained 15 teaspoons, double the daily adult maximum.” This is of course less sugar than in some of sugar tax campaigner Jamie Oliver’s recipes, some of which contained 28 teaspoons per serving, but “The campaign group named Starbucks’s Hot Mulled Fruit (grape with chai, orange and cinnamon venti) as the worst offender.” I think it sounds quite nice.

Action on Sugar want to scare the public into supporting a sugar tax, which will have the excellent policy results of;

1/Not working in reducing consumption (how do I have to go from this?) because people will get consume sugar elsewhere, because you know, it tastes nice.

2/Hitting the poor hardest. I don’t think not taxing the poor to pay for middle class hysterics is too outrageous

Ok wait, with an obesity crisis on the way, I will stop the shouting and agree that we need to consume less sugar. Like, less than we did in 1900 when we were all much poor, hungrier and  many of us starving right? By the way, like with all doom mongers, the predictive accuracy (I can actually leave it at accuracy)  of these campaigners hasn’t been very good.

I have to stop being nonsensical. But Kawther doesn’t! “Kawther Hashem, registered nutritionist and researcher for Action on Sugar, said these hot flavoured drinks have to become an occasional treat, rather than an everyday purchase.” So yes, don’t enjoy yourself, at all, never ever you adult child.

And of course, at the end of the article we have this “In November, a hard-hitting report from MPs said a 20% sugar levy was an essential part of any national strategy to tackle child obesity.

When was the last time you saw a child drinking a chai latte?

A hypothecated tax is not the way to save the NHS

This morning the Guardian has a piece with the headline “Income tax must rise 3p to stop NHS ‘staggering from year to year’. I would say it probably does stagger from year to year, because every damned year we only have 24 hours to save the thing.

Lord Kerslake says that big questions will have to be asked about whether or not the public is prepared to actually pay for a service equivalent to our European neighbours, who spend much more. This is true, we get what we pay for when it comes to the NHS and the outcomes aren’t actually very good.

But what Kerslake proposes is not a very good thing at all. A hypothecated tax is a tax where the funds raised are only spent on the nominated service, much like the belief that National Insurance is going on paying into a future pension pot. This isn’t true, it goes into the general pot and is spent with no real link to what the money was raised for.

This doesn’t sound very good, which is why so many US states raise revenues by targeting specific behaviours, goods and services (Alabama raises 84% of it’s revenue this way). Say I am a politician, and I want to desperately save just one child’s life. I don’t want to propose raising general taxes, because this is very unpopular. Instead I say “look at that miscreant over there smoking. I will set a special tax on smoking, and the revenue will only go to roads so that ambulances can get little Jimmy to hospital quicker”. This sounds very good politically, but when we raise taxes in one area we tend to find revenue is reduced elsewhere.

Outside of a hypothecated tax of a moment, but still looking at the top rate of income tax, when it was raised in 2010 rather cynically by the outgoing Labour government, tax revenues fell. When the rate was lowered to 45p from 50p, there was much howling and knitting of teeth, but the bankersthebonuses ended up paying much more.

If we have a hypothecated tax, and raise income taxes (across the board mind, not just on the higher rate) we may well end up with a lovely large figure. But tax revenues elsewhere may well have fallen, and because this is a hypothecated tax we cannot spend the new revenues on the shortfalls in government spending. We may well want to look at how the national religion NHS is funded, but it certainly shouldn’t be through a hypothecated tax.