Janice Atkinson for The Daily Mail
25th July 2012
This week is seeing the fight-back by those of us who believe in lower taxes, a small state, capitalism but not corporatism, the consumer and the entrepreneur.
The Institute of Economic Ideas, the Taxpayers’ Alliance, most of us on this site, Charles Moore in the Daily Telegraph, Tim Montgomerie, and others, are re-calibrating the narrative on banker bashing, out of control corporatism, urging less, not more state control.
Yesterday’s Daily Mail covered the report from the economist John Kay, who has written a government backed review recommending that no employee or company director should get a bonus at all and any shares are only cashable upon retirement.
Vince Cable seems to back the proposals because he is intrinsically left of centre in his politics, is out of his depth with his political brief, has leadership delusions and is playing to the ramped-up public anger.
At least the bankers and company directors pay tax on their bonuses and share issues if they are in the PAYE system – as most are. Messrs Cable and Kay should also be reminded that these are private companies, with boards and shareholders, though some are publicly listed, so this is no business of government. And this is what the politicians are losing sight of. If they are concerned about bonus culture, short-termism and non-delivery then they should be seeking to recoup the taxpayer-funded bonuses to the UK Border Agency staff.
This is dangerous thinking, appeasing those who want public hangings, this is anti-capitalism. It flies in the face of entrepreneurship, free trade, incentives to do well, to grow a business and to take risk. Why shouldn’t an employee receive shares, whether you are an employee of John Lewis or a lowly bank clerk? When employees have a stake in a company they feel more ownership, are prepared to work harder because they reap the benefits of their hard work. Therefore you cannot differentiate between the boardroom and the shop floor.
What happens to the sales incentives packages for double-glazing or cars, and is it wrong to take a commission if you are a mortgage broker? These are all bonuses in their own way and provide a competitive trading environment. Sales people are driven by a commission. Would they work so hard if they clock-watched and had a set salary?
Then there is the constant attack on business. It doesn’t help that the ridiculous foot-in-mouth MP David Gauke, the Tory man from the Treasury, tries to explain that there is a difference between tax avoidance and tax evasion – and cites the little traders, the entrepreneurs, the backbone of Britain, the small business people – to provide examples of tax avoidance/evasion. He has just alienated the natural Tory-voting aspiring small business community. Instead, he should turn his guns on big business, like the Googles of this world.
How many of the 342 BBC stars earning over £50,000 a year, avoiding tax, have righteously damned capitalism and the bankers whilst taking the taxpayers’ pound? How many sneer at Osborne for the reduction in the 50p top rate of tax but avoid it themselves?
The taxman should be sent into the BBC to go through their books. It is very simple to ascertain if someone is entitled to self-employed status.
The Inland Revenue has a 10-point check list, including two very important indicators: Are you paid from one source and do they provide you with the tools to do your job? For most of the BBC’s 342, I would say that the Inland Revenue should be able to re-classify the employment status of a good number, re-claim the employers’ NI contributions and claw back the uncollected tax.
Yet, Gauke rails against plumbers, roofers, hairdressers and the rest of the self-employed for taking cash in hand. As the Institute for Economic Affairs pointed out on Monday, tax avoidance occurs for two reasons: the system is too complex and tax rates are too high. It added: “If the Government wants to reduce tax avoidance it should reduce and simplify taxes.” Indeed.
It’s time for the fight-back. Corporatism is a bigger threat than the little guy giving a 20 per cent discount to avoid excessive VAT charges. Stop blaming failed capitalism. It is not capitalism that has failed, it is corporatism. Capitalism employs people and makes them richer, corporatism destroys competition and drives up prices – milk wholesalers, utility companies, supermarkets.
Corporatism keeps poorer nations in their place. Branding the world creates less commercial diversity – witness the strong-arm influence of the Olympic corporate sponsors.
Then there’s the EU, the biggest and most dangerous example of corporatism. Professor Tim Congdon, one of Thatcher’s ‘Wise Men’, estimates that over-regulation by the EU costs us around 4 per cent of GDP. Cameron has got no chance of repatriating our employment and health and safety law, two areas key to freeing up businesses to grow.
Without enterprise there is stagnation. This country was built on free enterprise. Mr Gauke, stop knocking free market capitalism and educate the public about its positive side – not by encouraging the hanging and public torture of people who pay large amounts of tax.