Tuesday, 11 December 2012

Corporate Tax Avoidance

It's a burden on us all.
There's been a lot of fuss about corporate tax avoidance recently. I will, as ever, try to apply a bit of logic.

It's disgraceful that these companies aren't paying enough tax!
How do you define enough? Google, Starbucks and Amazon have all paid the amount of tax required by law. They have not done anything illegal.

Tax avoidance is a grey area where the law is concerned.
Completely and utterly wrong. In the UK, our judicial system is based on the Common Law - the law applies equally to everyone, but it also assumes that everything is legal unless specifically prohibited by law. Therefore, as there is no law against minimising your tax liability before you incur it, it is legal. There is no grey area - something is either legal or it isn't. Tax avoidance isn't.

It's morally wrong to engage in tax avoidance!
Really? That would be true, if you proceeded on the assumption that paying taxes is a moral thing to do. Why is it? Why is handing over your money under threat of force a good thing? It is morally neutral - giving money voluntarily instils a sense of morality. Taxes are not voluntary; they are coercive. Nobody has yet presented a cogent argument as to why tax is moral - they just base all their logic on that assertion. I challenge it.

Companies should pay their fair share.
'Fair' is a subjective term. What one person defines as fair may be completely different to what another person considers so. Who should decide what is a fair share of tax? The answer, in a democratic society, is, of course, Parliament. And Parliament does, indeed, decide - it lays down the law. And, as discussed, Google, Starbucks and Amazon have not broken it.

The other consideration is that companies do not actually pay tax. The Government levies taxes against company accounts, but the companies do not actually pay the tax. The effect of the tax is passed on - either in the form of higher prices for their customers, or reduced wages for their employees. The incidence of the tax is on the people who can least afford to pay it.

Mine. Nobody else's.
Avoiding tax deprives the State of funds!
That it does, and rightly so, given that it funds itself entirely by stealing off other people. Money does not belong to the State, it belongs to the people, who have obtained it in exchange for their labour. If the State owns our money, then it owns our labour. And that makes us slaves.

I am not a slave. I am a free man. My labour, and my money, are my own. Any attempt by any organisation to expropriate it is a breach of my individual liberty. I am prepared to tolerate minor breaches of this liberty if it serves the greater aim of guaranteeing the larger part of my liberty. Hence why the nation-state is a necessary evil, for funding things like defence, security, preserving the rule of law, allowing free movement along Queen's highway etc. The State taking money off me to give it to charities that I do not value, to pay for opera tickets I do not buy, to subsidise railways I do not use, and to fund services I do not benefit from, is utterly wrong.

The State is an unfortunate necessity, that has a horrible propensity to waste money that does not belong to it. As such, it should be kept as small as possible, to prevent it from doing too much damage.

Companies should have principles too!
Companies are not real. Companies are legal fictions which exist only on paper. They are an imaginary concept which have been invented to allow people to speculate with their money (obtained in exchange for their labour) in an attempt to make more money. They do not have brains, souls, morals or principles. They are vacuous non-entities which only exist in our minds. How on earth can something which does not really exist have principles?

What they do have is a fiduciary duty to their shareholders. That means they are obliged to maximise the amount of money their shareholders get. Given that the money that shareholders get is profit, and Corporation Tax reduces the amount of profit, it is hardly surprising that companies go out of their way to reduce their tax liabilities. Indeed, the company management could be sued by their shareholders if they did not.

But some of these companies should have paid more tax - they've done enough business in the UK!
Corporation Tax in the UK is levied on profits, not turnover. It doesn't matter how much money has crossed through a company's bank account - if it has ridiculously high operating costs, then these are offset against tax. Starbucks has made substantial sales in the UK, but has high operating costs, and therefore a narrow profit margin. As a result, it hasn't paid much in Corporation Tax.

Next, whether profits are assessable in a particular jurisdiction or not is entirely dependent on where a company is domiciled. Amazon have been routing a lot of their sales through their Luxembourg subsidiary. They are based in Luxembourg, but by virtue of our membership of the European Economic Community (the common market), they are permitted to transact business in the UK. However, any profits arising from that are taxed as if the business took place in Luxembourg, because that's where they are based. This is a standard feature of virtually every double-taxation treaty on the planet.

Well, that's wrong - the business they do in the UK should be taxed in the UK.
Fine - I take it that you will support our immediate withdrawal from the EU, EEC, the imposition of capital controls and the restriction of overseas entities from trading? No? Thought not.

Well, how can we get them to pay more tax in the UK, then?
Very simply. The reason that many companies have Luxembourg subsidiaries is because Luxembourg's Corporation Tax rate is 5%. Ours is 21%. Our rate of Corporation Tax, even taking into account our other competitiveness factors, is too high, and it is driving companies away. The answer is to cut Corporation Tax.

This will send a sign that Britain is open for business, and will attract new investment in the country. More companies will want to be domiciled here, especially as it gives them access to a very wide and lucrative market. As a result of more companies being domiciled here, the revenue raised by Corporation Tax will likely rise. It's that old Laffer Curve again, and currently, we're on the wrong side of it.

People should boycott these companies for their tax avoidance!
It's a free society - people can boycott them if they want. If you want to foster a culture of complete and utter subservience to the State, focusing more and more power into the hands of politicians, then that's your bag - but just remember, societies get the governments they deserve. Which, over the last 20 years or so, is a rather damning indictment of our society, don't you think?

Personally, I have done all my Christmas shopping with Amazon and eBay, quite happy in the knowledge that they are both based in Luxembourg. I will continue to use Google to provide the majority of my internet services, because I am pleased that they are standing up to a bunch of socialist bullies with nothing better to do with their time than to harp on jealously about the amount of money that other people earn, rather than getting off their arses and doing it themselves.

Even the Church is rallying against these companies!
Mistakenly, I would argue. Whilst I do not doubt the motives of the clergymen criticising the actions of these companies, they, like others, cannot present a cogent argument as to why paying tax is moral. Jesus taught us to love and care for one another, not to abrogate that responsibility to Caesar. On the subject of money, Jesus said an awful lot. On the subject of taxes, he said very little, which leads me to the conclusion that he, too, saw the State as a necessary evil, but Society as a greater function of human good. The two are often conflated, but they are not the same.

Tuesday, 13 November 2012

The Curious Case of Abu Qatada

Abu Qatada
So, it appears that Abu Qatada, a noted Islamist cleric with some rather unsavoury views on what should happen to non-Muslims, has been released again.

Cue the vicious outcry from all and sundry on how it is ridiculous that this man has not been deported. He's a baddie, they say. He should have gone ages ago.

It would appear that a little refreshment of his case would be in order. The Telegraph have produced an excellent timeline and summary of the situation - I won't repeat it in full, but I will highlight a few pieces which seem, to me, to be particularly important, and use it to answer a few myths about him.

1. He's an illegal immigrant and shouldn't be here anyway.
True - he entered Britain on a forged passport in September 1993. He immediately applied for asylum. Technically, those seeking asylum from persecution should claim it in the first friendly state they arrive in. It is perfectly possible that Qatada arrived by plane - to be honest, I can't find any reference that says how he arrived in this country. If it was any way other than by plane, then he was most likely at least in France first, in which case, why didn't he claim asylum there? However, the fact is that he was, rightly or wrongly, granted asylum in June 1994. He is therefore not an illegal immigrant, and the 'shouldn't be here anyway' argument is purely academic.

2. We're only trying to send him back where he belongs.
We are trying to deport him to Jordan, as he holds Jordanian citizenship. I doubt he would identify himself as Jordanian. He was born in Bethlehem in the West Bank in either 1959 or 1960, in what is now classed as the Palestinian Territories. At the time, it was occupied by Jordan. He is a Palestinian Muslim with Jordanian citizenship.

3. He's wanted in Jordan for crimes anyway - we should just send him there.
He isn't just wanted for crimes in Jordan - he has been tried and convicted in absentia. Yes, they held a trial for him without him actually being present to defend himself. In English Law, we refer to this concept - actually being there in person to contend your accusers - as habeas corpus. It is one of the oldest and most valued legal rights we have. The Jordanians didn't bother with it.

What concern of that is ours, I hear you say? Well, we granted him asylum, and therefore accepted some level of responsibility for him. We can't just turn him over to a foreign power without assurances that he's going to receive a fair trial.

4. They've said they're going to give him a fair trial.
They've said that, but that hasn't convinced the courts. Especially since the Jordanians have used evidence obtained by torture in trials before. This would be illegal under UK law, and given that we have assumed some responsibility for him, we can't just wash our hands of him. The condition of the Jordanian justice system is precisely the reason his deportation is being blocked.

5. But he's guilty of crimes in this country, isn't he?
He may well be, but given that he's never been charged, prosecuted, tried or convicted, we can't say for certain. He was arrested in February 2001 in connection with a plot to bomb Strasbourg Christmas Market, and was suspected of fomenting Islamist terrorism in Chechnya. However, he was not charged. He was bailed, and broke his bail conditions in December 2001. He was found and re-arrested in October 2002, and detained in Belmarsh High Security Prison. He was still not charged.

He was held in Belmarsh without charge or trial for 3 years, before finally being released on conditional bail  and subjected to a control order. He was shortly re-arrested under immigration rules, as part of the Government's attempt to deport him to Jordan. He was re-imprisoned without trial for a further 3 years. The Court of Appeal ruled that he could not be deported, as the Jordanian Government could not assure him a fair trial. He was again bailed, and then re-arrested after the Home Office told the Special Immigration Appeals Commission, a UK court which is held in secret, that he was at high risk of absconding.

He has been in and out of prison in the UK for over 10 years, but he has never been charged or tried in a court of law.

The European Court of Human Rights in Strasbourg
6. This is just the EU telling us to keep him, isn't it?
No. In 2009, the Law Lords (then the highest legal authority in the UK) ruled that he could be deported to Jordan on the basis of the diplomatic assurances given. He appealed to the European Court of Human Rights (ECHR), an international court established just after World War Two, which has a far wider jurisdiction than the EU. They awarded him compensation on the basis of his detention without charge or trial in 2009, but in 2012, the ECHR agreed with the Law Lords that he could be deported, provided that there was no risk of evidence obtained via torture being used against him.

Qatada's legal team again appealed to the ECHR (within the deadline, despite the Home Secretary Teresa May's objections to the contrary), but their appeal was rejected.

By and large, the ECHR, not the EU, agree with the decisions of the UK courts.

7. So why has he been released again?
Qatada was granted another hearing at the secret UK court of SIAC (Special Immigrations Appeal Commission) to test the diplomatic assurances provided by the Jordanian Government. He won that appeal, and has been released on bail again. Again, the UK courts (even the secret ones) remain unconvinced that he will receive a fair trial if he is deported to Jordan.

8. So why don't we just try him here? He'll receive a fair trial in the UK, surely?
That is a very fucking good question. Not only, 'why do we not try him here?', but also, 'why has he not already been tried?'

Both the previous and current UK Governments have detained Qatada without bothering to attempt to try him, and have actively tried to deport him to a foreign state in the full knowledge that he may be tortured if he goes, or that he may not receive a fair trial. And then we have protests from different people calling for changes to human rights legislation, and even for Ministers to be allowed to decide who stays in the country!

Qatada keeps being successful in his appeals because, put quite simply, what the Government is trying to do is wrong. They are trying to render a man to a foreign power which may torture him or subject him to a show trial, simply because they think he is a danger to national security, but refuse to submit those allegations to legal scrutiny. And because this man has some reprehensible views and has said some horrible things, people agree with them. And they are so desperate to be rid of him that they are considering changing the law, and thus trampling over the legal rights of everyone in the country in order to do it.

The reason all these checks and balances and hearings and appeals are taking place, the reason that human rights legislation exists, the reason for habeas corpus and the right to a fair trial, the reason for all of this is not to stop the Government from dealing with horrible people. It is to protect the rest of us from horrible Governments.

Personally, I could not give a twopenny fuck what happens to Qatada. I care greatly about a Government that operates under the auspices of the law, and doesn't just decide to stamp all over individual rights when it suits their objectives. If they say he's a bad 'un, I'm inclined to agree. But my gut feeling, and the say-so of some politicians, is not a sufficient basis to condemn someone.

Try him. List your charges and give your evidence in open court. What, HM Government, are you afraid of? What are you hiding?

Monday, 12 November 2012

Rejecting Remembrance Day

Cranmer got there first, but I thought that I had to pass comment on this.

The Acting President of the University of London Union, a chap called Daniel Cooper, was invited to lay a wreath at the University's Remembrance Service, in his capacity as Union President.

He refused, and published an open letter listing his reasons why. The full text can be found on Cranmer's blog.

Time to put on the fisking gloves...

Ordinary people in the UK formed many of the first war veterans’ organisations. For example, the Labour-aligned “National Association of Discharged Sailors and Soldiers” was set up in 1917, campaigning for better war pensions and jobs – excluding officers from membership. The left-Liberal organized “National Federation of Discharged and Demobilized Sailors and Soldiers” campaigned under the slogan “justice not charity”. In response, a charity for ex-servicemen was launched in 1921, in opposition to these organisations, and the sale of poppies marked the build-up to Remembrance Day.

So? The political Left don't have a monopoly on compassion, you know?

It is named after Sir Douglas Haig, the British senior officer responsible for the massacre at the battles of the Somme and the Passchendaele.

Again, so what? Field Marshal Haig was indeed in command during the Battle of the Somme and Passchendaele, and it is fair to say he shares a proportion of the blame. However, there are a couple of points to make:
  1. He wasn't solely responsible. I'd hazard a guess that at least part of the responsibility falls on the German commander as well, not to mention the geopolitical motivations of political leaders of both the Triple Entente and the Central Powers. Just a thought, of course.
  2. It's all very well criticising Haig in hindsight, nearly 100 years after the event. In fact, when the British Legion was established, Haig was regarded as a bit of a hero. The painting of him as a heartless incompetent has been a fairly recent development.
The British Legion continued to veer further to the political right, with figures like Lord Derby taking a lead on its work.

Again, so what? Being on the political Right doesn't make you evil. The Legion's primary motivation has been, and continues to be, the care of former servicemen.

Today the colossal loss of life, misery and suffering is commemorated in a way that doesn’t fit with the reality of what took place in WW1.

You are completely misunderstanding the point. The reason we have 2 minutes' silence on the 11th of November is because that's when the war ended. We don't commemorate the war - we commemorate it's ending. There's a big difference.

Before 1914 there had been no major war for a century.

The defence presents Exhibit A: the Crimean War. Less than a century before. This is historically regarded as the first major conflict between industrialised powers; however, the Russians were still less advanced, which is why they lost. However, the suffering of the soldiers in the Crimea was very much in the public's mind - hence the institution of the Victoria Cross, and the efforts of people such as Mary Secole and Florence Nightingale.

This was the first example in history of “total war”, a break from the hitherto dominant model of state craft and diplomacy.

This was not the first example of 'total war'. Previous conflicts had been fought along similar lines, including the War of Independence, the Crusades, the 100 Years War, the Napoleonic Wars and others. Are you somehow implying that these conflicts were somehow more civilised? Complete rubbish. The only difference is one of scale - the Great War was bigger, and between industrialised powers of approximately equal technological status.

It plunged the world into a chasm of barbarism, industrialised killing and ruin beyond imagination.

Again, you are implying that the world was actually a nice place to live before all these nasty empires with their evil technology came along. I suppose it was, as long as you ignore the crushing poverty and dynastic oppression of medieval monarchies. Oh, wait...

The imperial age was not a pleasant one, to be sure, but it can't really be argued that it was significantly worse than what had gone before. Humans have made a hobby of murdering each other since the dawn of time. As I've said, the only difference is one of scale. And, in the case of the Allies, their reasons for opposing the Central Powers was they did not want to see a single police state i.e. a potential unification between the German and Austro-Hungarian Empires, dominate Europe.

The poet Siegred Sasson...

That would be Siegfried Sassoon. I studied him in GCSE English Literature as well, but I can remember how to spell his name.

The war wasn’t an act of liberation, or self defence from despotism, as our leaders today preach. The British Empire feared the growing industrial and military power of imperial Germany. The war that exploded in 1914 was a war to re-divide the world. It was a scramble for colonial possessions, markets and resources amongst the major nations.

You are either accidentally or wilfully ignorant of the causes of the Great War, and are falling into the trap of the modern narrative of the war, which is a far cry from what actually happened. For a start, as I have already mentioned, it was not so much the German Empire which the British had a problem with, but the fact that they had formed a key strategic alliance with the other major power in Central Europe, the Austro-Hungarian Empire. And it wasn't just us that was concerned - we were in a Triple Entente with France and Russia, in an attempt to contain an absolute monarchy and police state which looked set to dominate Europe. Admittedly, the Russian Empire operated on a similar basis, but both Britain and France were democracies. Even taking into account our imperial dominions, our system of government was still much fairer than either the Germans' or the Austro-Hungarians.

The primary claim by governments at the time, and today, is that the war would be laying claim to our freedoms, and preserving our democratic traditions. But at the same time as the war, most in the UK were not politically enfranchised or even held basic democratic rights, particularly women and working class people.

Actually, there had been significant steps forward in terms of suffrage during the 19th Century. Approximately 60% of men had the vote just before World War One. And again, although this was far from perfect, it was far better than the autocratic, absolutist model favoured by the Central Powers. Indeed, the Suffragettes movement was well underway at this point - the only reason they didn't get the vote earlier was because of the war.

As for the working classes, all male heads of household had the vote, regardless of their income, assets or social standing. Of course, there were more people per household in the working classes, so they were less franchised, but they at least had something. In Gemany, Austria or Hungary, they would have had nothing.

A wave of revolutions followed across Europe, some were limited, and others developed into full blown changes in the status quo, for example in Russia the working class took power.

The Russian Revolution happened in 1917, during the war, not after it. And it wasn't the 'working class' that took power - it was a small group of educated hardline revolutionaries, which had Tsar Nicholas and the rest of the royal family murdered, and then set about establishing one of the most brutal and oppressive regimes in human history. The Soviet Union killed more people than Nazi Germany. It's not what I'd call improvement to the governmental system of the Russian Empire.

This legacy is not documented.

Yes, it is. It's just that the facts don't fit with your ideology.

The Prime Minister David Cameron wants the lessons of the war to remain with us but the dominant narrative on show is one-sided and distorted. It mourns the dead and regrets their loss. But at the same time it exalts their “necessary sacrifice”. The war was terrible, the argument goes, but the price was worth paying.

You seem to be implying that Remembrance Day is solely to commemorate the First World War. As I have stated before, this is not true. Remembrance Day was instituted to commemorate the end of the First World War, but in its modern context, we use it to honour the deaths of everyone who has given their lives in defence of what freedom we have, whenever that sacrifice was made. Certainly, in the context of World War Two, when we were facing a scale of State-sponsored murder the likes of which mankind had never seen before, it was worth paying.

Cameron deems Friday’s remembrance should be a “to capture our national spirit” and display “national pride”, this is the same sentiment as the purported challenge to accepted national values trumpeted by war politicians in the lead up to 1914 . Today the military and monarchy stand tall at the front of the day of remembrance.

Personally, I am proud of the role that Britain has played throughout the ages in the cause of freedom. This is the nation that brought common law, democracy, industrialisation (which has caused a massive increase in life expectancy and quality of life) and good governance to billions of people across the globe. This is the nation that abolished slavery, that confronted political hegemony, that defied fascism. Our military and monarchy are symbols of our nation and everything we represent. Truly, ours is the greatest nation upon the face of the earth.

Mourning the butchery of thousands of ordinary people through an act of remembrance side by side with the inheritors of an economic system which created the war is not something I wish to take part in. It is an insult to those sent to die, victims of the self interested advancement of the British Empire.

Ah, now we come to it. It is not the act of remembrance you oppose, it is the participation of people with different political principles to you. Well, then, I suggest you grow the fuck up, you child. And as for the 'economic system which created the war', economic systems don't create wars. I don't see anything in capitalism about advocating the murder of other people, only free trade with them. People create wars. And in terms of your implied alternative economic model, that's totally perfect, isn't it? Soviet Russia, Vietnam, China, Cambodia, Uganda, North Korea, Nazi Germany (yes, the Nazis were National Socialists)... your implied alternative has killed more people than capitalism and laissez-faire imperialism put together.

We should instead remember the internationalists and socialists. We should remember the figures like Karl Kraus, one of many poets and satirists, who denounced the war. We should remember the soldiers that downed tools to build relationships with each other.

Of course we should remember those who opposed the war - they did so rightly, and if only the cause of democracy had been further advanced in both the Central and Entente Powers, the war would probably not have happened. However, it took the war to further that cause. It is the sacrifice of the hundreds of thousands of soldiers that allow us to have a tolerant, liberal society today. It is their deaths that, indeed, allow you to form and express such ridiculous opinions. And yet, despite this sacrifice being the primary reason for your freedom, you choose to reject an act of remembrance of that, simply because you disagree with the political motivations of their leaders at the time, and the people who also participate in this act.

You are a petty, obnoxious, ignorant, prejudiced imbecile, to put such petty divisions before an act of such solemn meaning. Grow up.

Tuesday, 6 November 2012

The US Election

President Barack Obama
So, the most important election in the world is currently underway. Citizens of the United States of America are choosing who will occupy the most influential and powerful office in the world for the next 4 years.

Someone recently asked me, 'why do we pay so much attention to the American elections, and they practically ignore ours?' Because, quite simply, theirs is much more important. POTUS is far more influential and powerful than PMOTUK. We might not have a say in who he (or she) is, but we are certainly influenced by them.

It's been a tight race. Some have called it for Romney. I'd say that's a bit optimistic - whilst, on the balance of policies, I agree with Romney more than I agree with Obama, as this goes to pixel, the latter holds a narrow lead in the key swing states. It's likely to go to Obama.

However, I find some of the coverage of the election a bit nauseating. Especially one such article in the Guardian, which states:

'Racial prejudice, covert or otherwise, also partly explains why a majority of white males will vote against Obama.'

Really? A majority of white males will vote against Obama just because he's black? Now, I have been a critic of how Obama has been treated because of his skin colour. No other President in US history has ever been required to publish their birth certificate to prove that they are 'naturally-born'. However, the astonishing assertion that 'a majority of white males' will vote against Obama simply because he's black is ludicrous. That is implying that the majority of white males cannot make a rational decision based on the fact that, say:
  • Obama's a spendthrift who can't keep Government debt under control, and has had a tendency to play 'financial chicken' with the Republicans and the markets;
  • His priority during a time of profound economic crisis has been forcing through a divisive and expensive healthcare scheme;
  • He has presided over a period of political gridlock, and has comprehensively failed to deliver the 'change' to the Washington establishment that he promised;
  • Many Americans fundamentally disagree with Obama's big-state corporatist model of government, having the limitation of government constitutionally programmed into them.
I, personally, as a white male, don't give a flying fuck what colour someone's skin is. It has about as much relevance as their eye colour, hair colour or whether they wear glasses or not. If I could have voted for Obama in 2008, I would have done, not because of his skin colour, but because of his policies. And now, if I could vote for him, I wouldn't, not because of his skin colour, but because of his record in office. And I suspect that the 'majority of white males' in America may well come to a similar conclusion.

Only the Guardian could imply that entire demographic is being racist. Of course, implying that an entire demographic is guilty of one particular characteristic is stereotyping, and therefore, you know... racist. And of course, black people voting for Obama simply because he's black isn't racist at all, is it?

He's got black skin. I suggest we all get the fuck over it, accept that it does not matter, and concentrate on his policies and record in office.

Monday, 5 November 2012

The Living Wage

A £7.20 per hour minimum wage?
So, I see that, at last, Labour's 'blank sheet' finally has something written on it. They finally have a policy. This policy is the 'Living Wage' - a proposal to increase the minimum wage to a whopping £7.20 an hour.

Fantastic, I hear people say. Brilliant. What better way to support the lowest paid than to give them more money? No one should be working on less than that, anyway!

There are two reasons why this policy is crap. The first one is that it will force employers to pay everyone working for them £7.20 an hour. If they consider that someone working for them is not worth £7.20 an hour, they will sack them. Good one, Labour. You will successfully put lots of poor people out of work, thereby making them even poorer.

It also means that people cannot sell their own labour at a rate the market will pay. If people out of work have skills which the labour market deems are worth less than £7.20 an hour, they won't be able to get a job. They will be imprisoned in poverty, dependent on State handouts, because the Government has price-fixed their only asset, i.e. their ability to work. It sucks.

Next reason that it sucks is the tax system. Currently, the Income Tax personal allowance is £8,105. Which means that, if you are earning £7.20 an hour, working 40 hours a week, 52 weeks a year, you will get paid the grand sum of £14,976. The first £8,105 of this is tax-free - the rest will be taxed at 20%. So you will owe the Government £1,374.20.

Still, that's not so bad, I hear you say. True - it wouldn't be, but it's not the end of the story. Enter the second Income Tax - National Insurance.

The personal allowance for National Insurance is £107 per week, or £5,564 per year. A lot lower than the threshold for Income Tax. So your excess over that will also be subject to National Insurance at 12%. You will therefore owe the Government a further £1,129.44. This gives Labour's total proposed tax bill to someone on minimum wage at £2,503.64.

So the net wage that such a person would receive, after the thieving Government have taken their slice, is £12,472.36. Which equates to £6.00 an hour. The current minimum wage is £6.19 for people aged 21 and over.

Dicks.
So, therefore, the difference between Labour's 'Living Wage' and the current minimum wage is the tax paid. Labour's position is therefore: 'we are too fucking stingy to cut tax on the poorest people in society, we'd much rather spend that money on our self-aggrandisement projects. Therefore, as a sop, we'll make their employers fork out for it instead, which will act as an extra cost to businesses during a time when many of them are already struggling. Not to mention that, by virtue of this plan targeting the lower-paid, it will also affect smaller companies much more.'

How about just exercising some fucking restraint in public spending so that you don't have to rob poor people? Fuck's sake.

Wednesday, 31 October 2012

Why Tax Avoidance Isn't Causing the Deficit

Not the solution to your problems.
There's been a bit of rumbling recently about tax avoidance, most notably Starbucks, eBay and Amazon, which don't seem to pay a huge amount of tax in the UK. Some bright sparks on Twitter have come up with the notion that this tax avoidance is basically responsible for the deficit, and that all that we have to do is to get our hands on this money.

I have a few points to make.

Firstly, the old difference between tax evasion and tax avoidance. Tax evasion is deliberately not paying tax which is already due. Tax avoidance is simply arranging your financial affairs, or the affairs of your company, to minimise a tax liability. Tax evasion is illegal, tax avoidance is not. I would encourage everyone to engage in tax avoidance.

If it's true, and the fact that these horrible companies are simply not paying tax which they should be paying (even though they're not because tax avoidance is perfectly legal), then this would be reflected in historical revenue figures, would it not? I mean, the deficit didn't exist at one point, so there must have been a point where tax avoidance was lower in order for us to have been running a surplus in the past?

Enter this article, from the Guardian, no less, which gives us the historical UK tax revenues as a percentage of GDP going back to 1964-65. It quite clearly shows that total tax revenue, as a percentage of GDP, fluctuates between about 31% and 39%.

That's it, folks. In black and white. In official figures printed by a left-wing newspaper. Doesn't matter who's in power, doesn't matter how much they fiddle with the tax system, the most you're going to get in good years and bad, is between 31% and 39% of GDP. That takes into account years when we've been running deficits and surpluses.

Government spending as a proportion of GDP is around about the 47% mark at the moment, yet our average tax take is about 36%. Oh, that would be an 11% structural deficit, then. Not caused by not raising enough money. Caused by spending too much.

Cut, cut, cut, cut, cut.

Wednesday, 10 October 2012

Muse - The 2nd Law Review

For a change, I'm writing about something other than politics. It has been known to happen.

I am writing about Muse - the rock band - for a change.

I like Muse. I think they're pretty much the best 'new' act going these days. And by 'new', I mean not an old school band like Queen, Led Zeppelin, Journey et al. Compared to them, Muse are new. I do not class what generally passes as music these days as proper music. Thudding, droning, repetitive nonsense churned out by transient boy bands in tight shirts or 21-year-old Ibiza girls wearing only their underwear does not qualify as music.

So, Muse are a good band. They have talent. Teh winz.

As such, I was very much looking forward to the release of their new album, 'The 2nd Law'. I like albums, and Muse are definitely an album band. Especially in light of some of their previous work, such as 'Black Holes and Revelations', and 'Origin of Symmetry', the later being, in my humble opinion, one of the greatest rock albums of all time.

So, what can I say about 'The 2nd Law'? Only this:


MEH.


'Twas decidedly average. The songs were very forgettable - there was nothing anthemic that really stuck in your head. No 'New Born' or 'Plug In Baby' moments on this album. Nothing like 'Starlight' or 'United States of Eurasia'. Hell, I've have even taken a painfully poignant 'Unintended' as a consolation, but nothing.

Probably their worst album to date. Not that it's particularly bad - it's all right, but it pales in comparison to their earlier work. Their albums (excluding live albums), in order of greatness, are:
  1. 'Origin of Symmetry' - Their best album. There's simply not a bad track on it, and it should probably be a crime to skip any of them. 'New Born' is probably the best rock track ever written, 'Plug In Baby' a close second, and their cover of 'Feeling Good' is just immense.
  2. 'Black Holes and Revelations' - a close second to 'Origin', the highlights of the album are the energetic 'Starlight' and the gloriously silly 'Knights of Cydonia'. Epic stuff, with echoes of Queen and Led Zeppelin.
  3. 'The Resistance' - A pretty good all-rounder, the best track is the painfully naive and optimistic 'United States of Eurasia'. If only life were that simple, you can't help but wonder. Although the Doctor-Who-esque opening track 'Uprising' is pretty funky!
  4. 'Showbiz' - Muse's first album was a pretty solid outing in many respects, showing that they were capable of something much more. The highlight is definitely the poignant and beautiful 'Unintended', although the opening track 'Sunburn' features an addictive piano solo.
  5. 'Absolution' - heavy and orchestral, Muse's third album does have a certain appeal, but it seems to me to fall short of the mark it aimed at. By far and away the best track is 'Butterflies and Hurricanes', but unfortunately, none of the others seemed to come close to that grandeur.
  6. 'The 2nd Law' - see above. Meh. Decidedly average and forgettable.

Wednesday, 3 October 2012

Miliband is Lying Again

'What do they choose as their priority? A tax cut for millionaires. A tax cut for millionaires. Next April, David Cameron will be writing a cheque for £40,000 to each and every millionaire in Britain. Not just for one year. But each and every year. That is more than the average person earns in a whole year.'
Ed Miliband, Labour Party Conference 2012

You see, pal, this is where you are completely and utterly wrong.

First off, jackass, there is a difference between someone who earns enough to pay the so-called Additional Tax Rate and a millionaire. A millionaire is someone who has £1,000,000 in the bank. Someone who pays the Additional Tax Rate has to be earning £150,000 a year. That doesn't necessarily make them a millionaire.

Next, you ignoramus, Cameron isn't going to be writing a cheque to everyone who benefits from the tax cut. He's simply going to stop taking it off them in the first place. You know, because it's their money, and they've earned it. Cameron is merely reducing the rate at which the State robs those people.

Which, again, says something about your attitude towards money, doesn't it? You're implying that the money doesn't, in fact, belong to those people, but it belongs to the State. Really. Well, given that the money was paid to them in exchange for their labour, does that mean that their labour belongs to the State?

Let me establish something quite clear. My money is mine. I exchanged it for my labour, which is also mine. The Government, through the threat of violence, takes some of this money off me. If it were anyone else doing it, it would be classed as extortion with menaces. The Government calls it tax. But that doesn't change the fact that it's my money, not yours.

And socialists wonder why people like me get so upset over State spending? Because it's my money! You put your fucking hands in my pocket and take my money, and then you spend it on shit you think I need. FUCK YOU.

Finally, you insufferable cretin, where'd you get that £40,000 figure from? Oh - here. You see? Even the fucking Guardian thinks your claim is made of something brown and sticky. It applies only to people who are earning £1,000,000 or more. How many fucking people earn £1,000,000 in a year?! A damn sight less than however many have £1,000,000 in the bank. You fucking arse.

And, FYI, just what do you think those few people are going to do with the extra money? Hmmm? Hoard it in the bank? Unlikely - they've most likely got enough in savings. No, jackass - they're probably going to spend it. How evil of them. Fancy rich people increasing the demand for goods and services, creating job opportunities, contributing to increased money velocity and paying VAT... oh, wait.

It's the bloody Laffer Curve in action. Again. Sure, the revenue from Income Tax might drop a bit - although I suspect it will actually rise as people don't go out of their way to avoid such a punitive rate. But it's highly likely that revenue from other taxes, particularly consumption taxes, will go up, and probably by more than the amount the Exchequer has given in the tax cut.

Cut the rate = revenues rise. It's pretty simple economics, really.

You lying smeggy felch-bucket.

Monday, 24 September 2012

Nick Clegg is an Utter Arse, pt 2

Nick Clegg is demonstrating his cretinous stupidity once more. Apparently, people earning more money should pay more tax, and he's intimated that taxes on the richest 10% in society should be raised.

Sounds fair enough, except when you consider that the top 10% basically consists of anyone earning about £50,000 or more. Given that the current threshold for Higher Rate Income Tax is £42,475, this means that the 10% that Nick is talking about is already paying a top rate of 42%. That's 40% Income Tax and 2% Employee National Insurance.

I say this as someone who earns around £18,000 a year, so I'm well aware that someone on £50,000 is considerably better off than me. But I'm also aware that, as we have a progressive tax system, where the rate increases in bands as you move up the income scale, most tax in this country is already paid by people who are better off.

So, first off, we already have a tax system that is pretty fair. The lowest-paid in society pay a substantially lower share of tax than the richest. So what's the problem?

Well, of course, the problem is that we're running a deficit. So Nick proposes to close that deficit with extra taxes. Ah, but before we prescribe the medicine, hadn't we better check the symptoms?

The ONS and HMRC have confirmed that receipts from Income Tax have risen pretty steadily over the last 14 years. Graph detailed below, lifted from their figures. Receipts were £86.5billion in 1998-99, rising pretty steadily until 2007-08, where they levelled out at around the £147billion mark. Since then, they've been pretty steady.

 

This is no massive surprise, given that Labour successively rose Income Tax during this period. You'd expect the receipts to increase, especially when combined with a growing economy. However, the rate of increase slowed from 2006-07 to 2007-08, before the recession really took hold. On top of that, receipts actually held up in 2008-09, when the country was really in the throes of recession. There was a slight dip in 2009-10, but they bounced back the following year.

So, what this graph shows is that, although allowing fiscal drag to effectively increase taxes over the last 15 years has produced a rise in revenue, we're now basically maxed out. We're at the peak of the Laffer Curve - we're squeezing as much money out of Income Tax as possible.

So the problem is not that we are not taking enough in tax.

Yet we are still running a deficit.

Therefore, the only possible explanation for this state of affairs is...

(drum roll)

The Government is spending too much.

The answer, therefore, is not to tax people more, but to start spending less.

Of course, dear old Cleggie, what with being the Deputy Prime Minister and all, is in a far better position to know this than little old me. Yet I managed to figure it out all by myself, on account of it being fucking obvious. So that means that either Little Nicky is really, really stupid, or...

He's fucking lying to us.

Yes, you are.

Friday, 14 September 2012

Free Speech and Kate Middleton's Baps

The Duchess of Cambridge
The news that some French paparazzi has taken some photos of Kate Middleton in the buff has raised the thorny issue of free speech once again. The magazine in question is testing the boundaries of the free press. Should a free press be held accountable for invading someone's privacy? Where do you draw the line? Taking pictures of someone in the nude? Or hacking into a dead girl's phone?

My position on this is a very difficult one to explain, so I'll do my best. First off, a few fundamental declarations:
  • I think free speech and press freedom are central tenets of a healthy democracy;
  • They are principles which should be upheld without condition;
  • I am fundamentally opposed to any form of State censorship.
So my position on the pictures of Kate Middleton's baps is clear in that regard: their publication should definitely be legal. There's an argument that as she didn't give her active consent in the making of the pictures, then she's potentially the copyright holder, and therefore any royalties from their publication are due to her, not the magazine or the photographer, but that's a separate issue.

And here comes the big qualifying but...

Is the publication moral? In other words, is any great public good served by this disclosure?

There are a few instances when a publication of such material could be deemed in the public interest. If - totally hypothetically - an heir to the Crown was caught knobbing someone other than his wife, for example, such a disclosure would be in the public interest. This would be on account of it reflecting on the behaviour and character of a future Head of State.

But as far as I can see, pictures of the knockers of a British Princess who isn't of Royal Blood whilst she is on holiday with her husband have absolutely no bearing on anyone's behaviour, and therefore their disclosure has no public interest whatsoever. The only purpose they serve is to titillate the masses, and allow the editor and the photographer to make a bit of money off the back of exploiting her.

So, no, the publication is not moral. Legal, yes, and it certainly should remain that way. Notwithstanding any debate about the ownership of the photos. Moral? Unquestionably not.

Is this grounds to censor the photos? Definitely not. Last time I checked, we live in a society based on the Rule of Law, not the Rule of Morals.

Censorship is always shit.
So how do we respond to this? Banning their publication would be wrong, yet their publication in itself is also wrong. The answer is pretty simple: we make our own individual choice. We can do that, as we're all moral agents in our own right. Therefore, I choose not to buy these pictures or seek them out. I refuse to condone the behaviour of the photographer and the editor. In fact, I condemn their willing exploitation of a young woman simply to make a fast buck. I will not call for them to lose their jobs, but I will make my own conscious choice not to support their actions.

It makes me wonder how many other people will make the same choice. It bothers me that searches for the pictures on the Internet have already risen considerably. But it also makes me realise that, in a democracy, we get the press we deserve. We get the politicians we deserve as well. I look at the grasping, amoral scum that run our newspapers. I look at the mindless filth they churn out on a daily basis. I look at the sycophantic lickspittles that walk the corridors of power in Westminster.

There is something very wrong with this country. And you know what? We have only ourselves to blame.

Monday, 10 September 2012

Manage the Economy Like the Olympics?

'Those union barons are so fucking dumb...
Dealing with Klingons is easier!'

So, I see the economically illiterate dinosaurs in the TUC still seem to think that we're living in the 1940s, demanding that we 'manage the economy like the Olympics'. Their contention is that the (largely publicly-funded and centrally-planned) Team GB effort shows that the private sector isn't the answer to everything, and that State planning and control can play its part.

Cue the obligatory Captain Picard facepalm.

Well of course it bloody well can. But just because you can do a thing, does not necessarily entail that you should do a thing. We could solve starvation in Africa by murdering everyone who lives there, but it's not really classed as a viable solution to anyone other than the die-hard maniacs like Idi Amin that pop up every now and again. He was a socialist, by the way. But I digress...

The reason that a centrally planned Statist approach to the Olympics worked so well is because it has fixed, measurable targets, and an established method of hitting those targets. The target was to come 4th in the medals table, ergo winning as many gold medals as possible. Very nice and clear cut. The next stage was identifying the sports that we were likely to do well in, and targeting funding at those areas to maximise our chances. The funding paid for personal trainers, medical staff, dieticians, training equipment and facilities, living expenses for the athletes and so on. Lo and behold, it worked. So why can't we do that with the economy?

Because there is no clear-cut goal for the economy, and no established method of reaching such a goal even if we had one. Which we don't.

You might argue, 'we need economic growth!' Really? From what sector of the economy? Construction? Agriculture? Retail? Dare I say it... banking? All of the above? You might find that the focused activity needed to create economic growth in one area may be the diametric opposite of the requirements for creating growth in another. In short, we have a strong element of uncertainty, which makes it very difficult for any single organisation - even one as complex and well-resourced as the State - to formulate any serious centrally planned economic management. For further details, see the Soviet Union, 1970s onwards.

So, if a centrally planned system can't assign funding and resources properly, on account of the variables simply being too complex to work out, what's the alternative? Well, the alternative is to let the people in the relevant industries exchange goods and services at their own rates. That way, resources and labour will focus into the hands of the people who are best-placed to produce the most efficient outcomes.

In the real world, we call this a market.

Here endeth the economics lesson.

Monday, 13 August 2012

Socialism: A Thought Experiment

Three blokes get together to go to the pub on a Friday night. One of them earns £100,000, one £50,000 and the other one is unemployed.

Obviously, the bloke who is unemployed can't afford to get his rounds in. So the other two decide to split the cost of the beer between them. The bloke with £100,000 pays two thirds, and the bloke with £50,000 pays one third. The other guy doesn't have to pay anything, but all the blokes have the same amount of beer.

After three months, the guy on £100,000 realises that he's paying not only for his beer, but for the unemployed guy's beer as well. He thinks to himself, 'I don't mind paying for a little while, but three months are starting to take the piss a bit!' So he decides that, actually, he can manage without beer for a while. He stops coming on the nights out.

All of a sudden, the guy on £50,000 is now being expected to pay twice as much, because he's now the sole earner. He can't afford it, and so decides to pack up as well. The only one left on the night out is the unemployed guy, and he can't afford to buy any beer. Indeed, he's never been able to - he only managed to get beer because of the good graces of the other two. Now that they're gone, he can't get any beer either.

So because ONE guy took the kindness of his fellows too far, no one has any beer. Because when we're all poor, then nobody's rich, and that's fair.

This is the inherent failing of socialism.

Friday, 20 July 2012

Christianity

Not entirely to be taken literally.
OK, this is a just a quick one, I promise - but the same argument keeps on popping up time and time again, and I want to get it written down so I can just link people to my debunking of it.

A common criticism I hear about Christianity is that it claims to be a peaceful religion, but yet seems to sanction sexism, homophobia, executions, rape and genocide.

Examples are the Bible prohibiting homosexuality, the destruction of Sodom and Gomorrah, women not being allowed out when they are menstruating, stoning people to death for breach of certain laws and forcing women to marry their rapists.

Overwhelmingly, such examples are confined to the Old Testament.

So, a little Sunday School education for you.

The Old Testament forms the Old Covenant with God. When Jesus was crucified, he formed the New Covenant. Many of the terms of the Old Covenant no longer apply. Christians are no longer required to sacrifice goats, for example. Eating pork is no longer prohibited. Keeping your beard is the correct fashion is no longer a social requirement. Tattoos aren't going to get you executed.

If people want to understand what applies to Christians, then I suggest they focus more attention on the teachings of Christ. The clue is in the name.

He was the guy who went around explaining how much nicer the world would be if we weren't such utter cunts to each other. And that scared the Romans so much they murdered him for it. But he had such a profound effect on the people he knew that 2,000 years later, millions of people around the world still honour what he had to say, and try not to be utter cunts.

Wednesday, 18 July 2012

Pensions

How much of your money is taken up charges?
Considerably less than what you get in return.

The old chestnut of pensions has hit the headlines again, with Labour calling for greater transparency and a reduction in charges in the pensions industry. This follows on from a report by the RSA, which states that a large number of pension providers are failing to disclose their charges properly.

They might have wanted to look a little bit more closely at the financial services industry generally. I have, because I work in it. And it is astonishing how disingenuous some of the press coverage has been on this issue.

First things first. CHARGES ARE NOT EVERYTHING. Having a lower-charging pension contract does not automatically mean that you'll have a better pension in retirement. In most pension contracts, your payments are invested into a fund, which accumulates until you retire. That fund is then converted into a guaranteed income for life, which in the technical jargon is called 'purchasing an annuity'.

Therefore, the income that you get in retirement depends on three things:
  1. The charges on the plan;
  2. The investment performance of the fund;
  3. Economic conditions when you retire.
By far and away, Number Three is the most important issue. When you purchase an annuity, you give your pension fund to an insurance company. They use it to buy gilts (Government IOUs which pay interest at a fixed rate) and other income-generating assets, which will provide your income. They use prevailing gilt yields to set their annuity rates. If gilt yields are ridiculously low, then the annuity rates will be lower as well.

So, if you have a fund of £100,000, and you buy a 5% annuity, you'll get £5,000 a year for the rest of your life. Annuity rates can fluctuate significantly. A change of 1 percentage can result in a 20% drop in the income a pensioner can expect.

What affects gilt yields? Well, what drives them down is when gilts are in high demand. Like when the Bank of England is printing money and using it to buy gilts, pushing the capital value of gilts up and the yields down, for example. Cough, cough, Quantitative Easing, cough, cough.

Right, onto investment performance.

This is the second-most important issue. Even if the charges on your pension plan are zero, if the investment return is also zero, then anything you pay into your pension fund is not going to increase in value. Indeed, with the effects of inflation, it will actually lose its value. Long term inflation rates are estimated to be 2.5% - that means anything you pay into a pension has to grow at 2.5% after charges just to retain its value. People being invested in shit funds that offer pitifully low returns, especially old-style With Profits funds which often have 0% growth rates and transfer penalties, are a much greater issue than charges.

Finally, we get onto charges.

The issue is one of transparency, according to the RSA. They've done a study on the pensions industry over the last three years, and concluded that not all of the charges are declared.

In that, they're right.

But they have made two major omissions from their work:
  1. They contacted pension providers directly to obtain information. This is a bit daft, as 50% of all retail financial services in the UK is transacted by Independent Financial Advisers. The IFA would be in the consumer-facing role - why didn't they talk to IFAs? They would have been in a far better position to disclose details of any pension contracts, whereas the numpties in the insurance company's call centre don't give a flying fuck;
  2. They failed to take account of the massive regulatory change afoot in financial services in the form of the FSA's Retail Distribution Review (RDR). This mandates the clear separation of pension charges from advice, and improves disclosure and transparency. It's going to do a lot of other things that are unspeakably shit as well, such as allowing product providers to simply keep their own charges the same, even though those same charges previously included the cost of advice, paid in commission.
Specifically, the RSA said that pension providers only disclosed the Annual Management Charge (AMC) of pension funds, rather than the Total Expense Ratio (TER), which is the total headline annual charge applied to pension funds.

This is a common tactic used by pension providers. They should have spoken to an IFA - an IFA, when transacting a pension transfer, is required to use the TER figures. The providers' help-desk numpties won't know them, but an IFA will, because he has to.

They next said that the TER still isn't sufficient, because it doesn't include the cost of switches and advice. Well, no, it doesn't - because it doesn't pay for switches and advice. The TER pays for the management and the administration of the investments, which needs to be done on an ongoing basis. As such, the TER is expressed as an annual percentage.

Advice and switches are often ad-hoc. They don't need doing all the time, just once in a while. Typically, an IFA will charge between 3-4% for arranging a pension transfer. That covers the cost of gathering the data, conducting research and analyses, writing an extensive and comprehensive Suitability Report, producing quotations, submitting the application, liaising with the ceding provider to get the money across and finally completing the plan. It's a lot of work, most of which is mandated by regulations from the FSA. That 3-4% pays for that regulation.

But that's a one-off cost, not an ongoing charge. So the providers don't factor it into their TER, because every adviser charges a different amount. What an adviser would do is factor it into the TER over the term of the plan. That's called a critical yield. If a proposed contract is unlikely to outperform the critical yield of the old one, the IFA won't do the transfer.

Switches, again, are ad-hoc. In many pension contracts, switching funds internally is free. In which case, they have no bearing on the overall cost of the plan. In some cases, they're subject to a 0.25% charge to cover the provider's administrative costs in switching funds. Some advisers will also charge extra for switching. Most don't.

But how often will a client switch funds during the lifetime of a pension contract? Who knows? How long is a piece of string? It's a completely unknown quantity, and therefore cannot be factored into the TER.

Many advisers now also charge an additional 0.5% per year for the provision of ongoing advice. The ongoing advice will typically include periodic valuations of the pension fund, in addition to those provided by the pension company, and a review of the quality of the funds and portfolio, together with any associated work.

I am involved with such reviews as part of my job. It does cost the client a bit extra in the form of charges. But when a client actually deigns to respond to a review, and switches out of a poor fund into a good one, the difference it can make to their portfolio in terms of performance is significantly in excess of the 0.5% they are being charged for the service. I recently calculated it at approximately 2% extra performance per year on average.

Another criticism levied is that some funds have a 'bid-offer spread' - a form of initial charge, which is not fully disclosed. What they did not say is that bid-offer spreads only apply to Unit Trust funds, a specific type of investment fund. Unit Trusts are not often linked to by pension providers - instead, they are invested in mutual funds, which have a completely different charging structure. In many cases, bid-offer spreads will not apply to pension funds at all.

Furthermore, there has been an increasing trend over the last 20 years of Unit Trusts converting into Open Ended Investment Companies (OEICs), which have far simpler charging structures with no bid-offer spread.

Pension charges - a drag on growth?
Maybe - but without them, you wouldn't HAVE growth.
And lastly, it has been alleged that the cumulative effect of these fees can halve the value of your pension fund. Mathematically, that is possible. If the cumulative effect of all the charges is a 1.5% TER, plus a 0.5% annual adviser charge, plus a 3% initial charge and maybe a dozen or so 0.25% switching charges on a plan with a 25-year term, you're probably looking at a critical yield of around 2.5%. The longer the plan, the more that figure will tend towards the headline annual figure of 2%.

If you assume that your investment return is 5%, then that yield will be reduced to 2.5% after the cumulative charges have been deducted. Low and behold, half the value. But what it fails to take into account is what those charges are paying for.

On the adviser charge of 0.5%, I've already said that you can conservatively expect it to add 2% per year to investment performance, simply by picking the best funds. So you're already up by 1.5% a year. Next, the TER. About 1% of that goes in administrative and transactional fees - that's the cost of actually running the fund. You don't like it, talk to the regulator - most of the costs are Compliance-based. The other 0.5% goes to the fund manager.

And he deserves every fucking penny.

He's the one that identifies which companies to invest in, and what proportions to hold in each. He's the one who has to dip in and out of the markets as timing demands. He's the one who could ultimately go to prison if he screws up. The value a good manager can add to a portfolio - the Alpha, the difference between what he does and the market does - is about 2% on average.

So those extra charges you pay account for almost all the growth on your pension fund. If you weren't paying those charges, you would not get the performance. If you don't believe me, stick your money in a tracker fund and see how well it does. I can tell you right from the off. It'll do FUCK ALL.

If you consider the FTSE All Share index, which is often used for tracker funds, it has produced returns of -6.63% per year, on average, over the last 20 years. Your average tracker fund will cost you 0.3% in charges, so if you invested in a FTSE All Share tracker 20 years ago, you'd have lost 6.93% on average every year.

The UK All Companies sector average - an average of all funds in the IMA UK All Companies sector, which all invest in the same stocks as the FTSE All Share index - which includes all the crap managers as well as the good ones, produced returns of -4.64% on average per year over the same term. When you take off an average TER of say 2%, you'd still be better off investing in an average, run-of-the-mill managed fund instead of a tracker.

If you invested in the best fund in that sector - and by best, I mean the one with the highest average quartile position, lowest volatility and highest financial strength, measured by independent credit ratings agencies - the average annual performance would have been +9.26%. Take your 2% TER off that, and you're still at +7.26%, 14.19% PER YEAR HIGHER than the tracker.

If you pay peanuts, you get monkeys. Pay low fund charges, you'll get shit performance, and performance is MORE IMPORTANT than charges. What matters is WHAT YOU'RE LEFT WITH at retirement, not HOW MUCH IT COST to get there.

The last time there was a major drive to reduce pension charges to try to get people saving was in 2001, when the last Labour Government introduced Stakeholder contracts. These are effectively cut-price Personal Pensions, with a 1% AMC limit. Did they work? No. We still have a savings gap. Why did Stakeholder not work? Because charges aren't the problem.

People not saving enough are the problem. And the reason they don't save is because pensions are insufferably shite. You pay into it throughout your life, and when you retire you can get at a QUARTER of the fund, with the rest being dribbled out to you as an income with a pitiful conversion rate. Oh, and that income's taxed. If anyone wants to do anything about pensions, bloody well LOOK at the problem, don't just jump on the nearest passing band-wagon.

And if people still want to bang on about charges, even though they're not actually the problem, it is worth bearing in mind that about half of the total cost of pension charges are there to meet the cost of the regulatory burden that is placed on the financial services industry by the Dear Regulator, the FSA.

You know, the one set up to protect consumers.

And regulate the banks.

By Gordon Brown.

Tuesday, 10 July 2012

Freedom of Speech

This John Terry versus Anton Ferdinand thing is one of those classic cases which puts freedom of speech firmly under the spotlight. To those of you who can't be arsed to Google it, John Terry allegedly made a racist remark to Anton Ferdinand after a football match. In light of this allegation, he has been arrested and charged under Section 5 of the Public Order Act 1986.

Some of the specifics are coming to the fore. It appears that Ferdinand was winding Terry up about his alleged shenanigans with a team-mate's wife. Terry responded by swearing at him. In other words, they were mouthing off at each other. Technically, therefore, both of them were in breach of the Public Order Act.

Have you read the Act? Fucking stupidest law I've ever read. Get this:

'A person is guilty of an offence if he:

  1. uses threatening, abusive or insulting words or behaviour, or disorderly behaviour, or
  2.  displays any writing, sign or other visible representation which is threatening, abusive or insulting,
within the hearing or sight of a person likely to be caused harassment, alarm or distress thereby.'

Yep, that's right. It's illegal to insult someone. So, if I call someone a fucking cunt, I've broken the law. It's even worse if I refer to their skin colour.

So, let me address a few points here.

Firstly, both Ferdinand and Terry were mouthing off at each other. Technically, Terry could press charges against Ferdinand as well. It strikes me that they should act like men, and drop the whole fucking thing, on account of it being rather reminiscent of running to teacher 'because the nasty boy is calling me names.' Are we actually supposed to be fucking ADULTS, or what?

Secondly, I understand that Ferdinand is a bit upset because Terry brought his skin colour into it. However, I can't help but feel that the racism card is played WAY too much these days. If a black guy calls a white guy a honky, nobody seems to care. If someone was referred to as a 'blue-eyed bastard', would it evoke the same level of emotional response? No - they'd probably look at you with a sense of bemusement. As if having blue eyes had anything to do with it. What about having brown hair? 'Mudheaded twat.' Would that be racial aggravation? I'm guessing not. But you put the word 'black' into a sentence containing 'cunt' and all of a sudden, everyone loses their minds. Given that skin colour is just another physical characteristic, I don't quite understand why the hell we get so hung up on it.

Lastly, IT IS THE DUMBEST FUCKING LAW I HAVE EVER READ. What the actual fuck? I mean, illegal to insult someone? Assault, I can agree with. But an insult? The way the law is worded, you can actually be breaking the law if someone happens to be offended by something you've said, even if you didn't really mean it that way.



That's fucking horseshit. It's a bad law. To be honest, if I was the judge, I'd throw the case out, and tell both Ferdinand and Terry to grow the fuck up and act like men. And then I'd give the Police and CPS both fucking barrels for wasting the Court's cunting time.

It should not be illegal to insult people, regardless of how much it offends you, them or any other fucker. Unfortunately, the price of such freedom means having to put up with insults when they throw them at you. I can cope with that, if it means that I don't have to look over my shoulder every time I call someone a twat. Because if I call someone a twat, it's pretty much guaranteed that they fucking well deserve it.

So, to whichever dopey little shit managed to get this onto the statute books:

YOU'RE A TWAT.

Friday, 22 June 2012

Poverty

The Guardian have put up a nice little tool on their website to calculate how far you are from the poverty line.

Apparently, I'm pretty much on it.

What. The. Actual. Fuck?

I earn the equivalent of around £18,000 a year. I'm not fantastically well-off. But I wouldn't describe my living conditions anywhere close to poverty. I have heat, shelter, clothing, food, water, security and access to medical treatment. Hell, I even have Sky TV. I cannot, in any serious use of the term, be described as being 'in poverty'.

Now, I don't doubt that there are a small minority of people in the UK that still do live in poverty. If your quality of life is so poor that you are effectively denied access to one or more of the above criteria, you are in poverty. Given that we are fortunate enough to live in a society where security and access to medical treatment are provided by the State (although not particularly efficiently, but that's a different argument), that leaves us only 5 considerations for ourselves.

So, a minimal energy bill would cost around £60 a month, say? That's based on my bill of £90 a month which allows me to live in relative comfort. The rent on a small bedsit - £150 a month. Sustainable food for one person - about £80 a month. Average water bill - around £30 a month. That's a total survival bill of £350 a month, or £4,200 a year.

Being unable to afford Sky TV is not poverty. This is poverty.
 So that's the real poverty line in this country. Not around £9,000, which the Guardian calculates it is for a single person.

The fact that real poverty still exists in the UK shows that:
  • The current benefits system isn't fit for purpose, because it gives money to people who aren't actually poor;
  • Poverty cannot be eliminated simply by throwing money at the problem, as that's what we currently do, and poverty still exists.
Of course, that throws into confusion the entire ethos of the current welfare state set-up, doesn't it? So maybe it's actually time to start addressing the causes of poverty, rather than just its symptoms.

Wednesday, 20 June 2012

Tax Avoidance

I am getting bloody sick and tired of the constant Leftist rhetoric on tax avoidance. I am also sickened that some of this pathetic nonsense is emanating from Government Ministers.

'Oh, it's an outrage!'

'How DARE those people avoid paying taxes?'

'The rich should pay their fair share.'

Which leads me onto a little question: why is tax avoidance classed as immoral?

Because it shouldn't be, and here's why.

Tax avoidance is often conflated with tax evasion. It is important to make the difference. Tax evasion is deliberately not paying tax that is due. Tax avoidance is arranging your affairs in order to make sure that you aren't paying any more tax than you need to.

There can be no doubt about tax evasion being immoral, and illegal. The State, although it does have an unpleasant tendency to waste a lot of our money, does need to be funded, in order to guarantee individual freedoms, property rights, the rule of law and mutual defence and security.

However... why should anyone pay more tax than they need? The State is not a charitable cause. The State is not a voluntary organisation. The State is not virtuous. The State funds itself by robbing others. The State is a necessary evil, nothing more.

If some people want to give more money to the State, of their own free will, they will receive no criticism from me. They're entitled to do whatever they like with their money, even if I personally disagree with it. However, what I do with my money is nobody else's business. And after I have paid my taxes, what is left is my money, which I have received in exchange for my labour. And I will do what I like with it.

I, personally, choose not to give more money to the State than I need to, because the State has a high propensity to waste money, and spend it on things I don't want. Much as though I am sure that many of the charities the Government funds do sterling work, I do not value that work. I do not identify with the causes of Stonewall. I do not visit the opera, and therefore find it ridiculous that my taxes should subsidise tickets that I don't buy. I don't go to art galleries. I do not use leisure centres. Yet I am forced to pay for them all, through the taxes I have to pay. I resent that enough, so I'm certainly not going to voluntarily give more money to those causes.

I will spend my money on the things I want it spent on. I will give money to my brass band, and my local working men's club. I will give money to my local church. I will give money to the charities that I like, such as the National Trust. Then I spend half of what's left on wine, women and song. I'll probably waste the rest.

So, if a millionaire comedian decides that, actually, he really doesn't want to give an extra £1million A YEAR to the Government for them to spend on shit it thinks we need, I'm not going to criticise him. I'm going to fucking applaud him.

'Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's.'
- Matthew 22:21

In other words, pay what is due.

Tuesday, 19 June 2012

The Civil Service

I found this little gem on the Telegraph website today.

The Government are apparently announcing a plan to reform the Civil Service. Not surprising - just about every Government tries to reform the Civil Service. Which, in itself, speaks volumes about the effectiveness of reforming it.

But what caught my eye was a few little entries.

The article clearly states:

'We are very aware that the public’s and the media’s perception of the Civil Service is too often that of the clich├ęd "Sir Humphrey". So let’s dispel some of these myths now...'

And then goes on to say...

'The Civil Service has to have a culture which is pacier, more innovative, less hierarchical and focused on outcomes not process. We also need sharper accountability, in particular from permanent secretaries and those leading major projects...' (Bold highlights are mine).

Hmm... sound familiar?

So, basically, what you're saying is, the Civil Service is absolutely nothing like Sir Humphrey Appleby, that famously obtrusive Permanent Secretary in 'Yes, Minister'. And then go on to describe exactly how the Civil Service suffers from Sir Humphrey's most notable characteristics.

Perversely, with such an act of misdirection, obfuscation and verbal meandering, Sir Humphrey would be delighted to express his warm satisfaction with the expression of ideals that fundamentally underpin the necessity of a Civil Service which promulgates and perpetuates the continued government of Britain, whilst maintaining its consistent integrity and impartiality.

In other words, he'd be proud of the way you tried to lead us up the garden path. Isn't that right, Humphrey?

"Yes, Minister."

Friday, 25 May 2012

Banks

So, I have just concluded a little escapade with my bank.

A few days ago, I went overdrawn due to a Direct Debit coming through that I wasn't expecting. It happens. It's happened before. On day 2, I became aware of it, and immediately transferred £350 from my instant access savings account into my current account, thus clearing the balance and leaving more than enough in for the remaining bills I was expecting.

Didn't think anything more of it.

Until...

The next day, I got a letter from my bank informing me that I had used an unauthorised overdraft, and that for the privilege of that, they were going to charge me about £25.

Now, bear in mind that in the aforementioned instant access savings account, I had about £1,600, compared with the tiny temporary overdraft in the current account of about £30. My bank has a policy where, if an unauthorised overdraft is repaid within 1 day, they make no charge. If they had phoned me, e-mailed, texted, sent a FUCKING CARRIER PIGEON, that money would have been in the account immediately. Notwithstanding the fact that they weren't actually loaning me anything - my net assets with this organisation, even just on deposit, were £1,600.

BUT NO. Rather than do the decent thing and let me know, they kept schtum, and then used it as an excuse to sting me for charges.

OH, NO, YOU FUCKING WELL DON'T.

*dials phone*

Bank: Hello, how can I help?

TR: Good afternoon. I have an issue with my current account. I have been charged for an overdraft, despite going only £30 overdrawn when I have net assets with you (net instant access assets, I might add) of £1,600. This overdraft was the result of me incurring an unexpected bill. What you could have done was notified me about this, which would have resulted in the immediate transfer of monies into my current account to clear the balance. Instead, your organisation has deliberate kept silent and used it as an excuse to charge me. I am not happy about this. This is not treating customers fairly, and, given that I work in financial services, I am well aware of your regulatory obligations to do so. I want a refund, immediately.

Bank: Well, sir, we can't simply take money from one account to top up another...

TR: (interrupts) Nor would I expect you to. I do expect you to contact me and help me to avoid charges wherever possible, rather than simply remain silent and then bill me.

Bank: Well, sir, we do offer that service, however you have to register for it...

TR: (interrupts) Is it free?

Bank: Yes, sir...

TR: That means, no, it isn't, but the cost of it is factored into your profit margins on your current accounts. Correct?

Bank: Well...

TR: Therefore, every current account holder is implicitly paying for that service anyway, therefore you should be doing it automatically. I shouldn't have to register for it.

Bank: Ah. Well. I can get you registered onto it now...

TR: That would be a start. But we still have the issue of these ridiculous charges. I want a refund.

Bank: Well, sir, I can refund £15 immediately, but I don't have the authority the standard overdraft charge of £10...

TR: I bet your manager does, though, doesn't he?

Bank: Uh, yes...

TR: Better go talk to him, then, hadn't you? Refund. Now. I am a long-standing customer of yours - my accounts have been with you for over 20 years. I expect better, and if I don't get it, I will move my business elsewhere. And given that I work for a financial adviser, I would be duty-bound to inform him of this, as well. And he may well just feel moved to advise his clients to move their business elsewhere, as well. Off you go.

Bank: Ah... erm... can you hold for a moment?

TR: Of course.

*irritating hold music - TR waits with nice, big, shit-eating grin on face*

Bank: Sir?

TR: Yes.

Bank: We'll be happy to refund all of those charges for you, and apologise for the inconvenience.

TR: I should think so.

Bank: In the meantime, we've noticed that your savings account isn't earning as much interest as some of our newer ones...

TR: That's because you only offer a decent rate of interest for the first 12 months, and then it drops to something pitiful while you profit out of people's inertia.

Bank: Erm... yes... well, would you like us to move it into an account with higher interest?

TR: As long as it's still instant access, so that if you try to play this little overdraft game with me again, you don't have an excuse.

Bank: Yes, it will still be instant access.

TR: Yes, go ahead. And make sure I'm on the list of people that you tell before you start ripping them off, as well.

Bank: (sounding relieved) We'll sort that out straight away for you, sir. Sorry for the inconvenience again.

TR: Good. Thank you! (hangs up)

BOOSH! Take that, you motherfuckers! Picked a fight with the wrong stubborn son-of-a-bitch, today, didn't you? Fucking trying it on, weren't you? Knew that you didn't have a leg to stand on, but thought you'd just give it a go, and try to bully me into paying charges that I didn't have to.

Makes you wonder how many other poor bastards get fucking mugged by the banks in such a manner every day. Unfortunately for them, today they picked on TR - a rather bad-tempered fellow at the best of times, who knows exactly where their testicles are, and most importantly, how hard to squeeze.

Always remember: mine, not yours. MINE.