Friday, October 29, 2010
Johann Hari's unconventional attitude to facts
And he’s at it again today. Now, when he first mentioned the Vodafone tax dispute a few days ago, I commented that things often look straightforward to the ill-informed, and assumed that Hari’s confusion on the subject was just a symptom of that ignorance. But since he’s so much more specific here, I’m not sure that holds.
In my column last week, I mentioned in passing something remarkable and almost unnoticed. For years now, Vodafone has been refusing to pay billions of pounds of taxes to the British people that are outstanding. The company – which has doubled its profits during this recession – engaged in all kinds of accounting twists and turns, but it was eventually ruled this refusal breached anti-tax avoidance rules. They looked set to pay a sum Private Eye calculates to be more than £6bn.
Then, suddenly, the exchequer – run by George Osborne – cancelled almost all of the outstanding tax bill, in a move a senior figure in Revenues and Customs says is “an unbelievable cave-in.”
Starting at the beginning, the tax dispute relates to an overseas subsidiary of Vodafone based in Luxemburg. Under the Controlled Foreign Companies tax provisions, HMRC (although since this was in 2000, it would have been the Revenue that would have started all this) claimed tax on this transaction in full – that’s where the £6bn figure comes from. Vodafone argued that the CFC tax regime was incompatible with EU law on freedom of establishment – and there was an ECJ case (Cadbury-Schweppes if you’re interested) that ruled that CFC rules are in principle a restriction on the freedom of establishment and that they should apply only to wholly artificial arrangements where the CFC in question was not carrying on genuine economic activities in the non-UK EU member state.
Far from it having been "ruled that this refusal breached anti-tax avoidance rules" Vodafone won their case with HMRC’s Special Commissioners, and won again at first instance when HMRC appealed – the court ruling that the CFC code was in basic conflict with EU law, and should be disapplied. HMRC won the right to appeal this decision further, but elected to settle it out of court instead. The tax bill wasn’t outstanding, it had been ruled invalid both by HMRC’s own internal commission and subsequently by the High Court. Now, it’s possible (hell, it’s more or less certain) that Johann is as ignorant of the law as he is of history and economics. But that’s why newspaper columnists are supposed to have editors.
Tuesday, October 26, 2010
The dangers of Labour's approach
No Polly, seriously
UPDATE: This article currently appears directly below a piece by Tim Montgomerie politely asking Labour supporters not to accuse Tories of being a cross between Fagin and Goebbels. Nice touch.
Monday, October 25, 2010
Peej on the midterms
That's the spirit.
Sodding bloody hell
At least this gives me no choice but to update my links...
Thursday, October 21, 2010
It's the end of the world (as we know it)
When was the last time Britain's public spending was slashed by more than 20 per cent? Not in my mother's lifetime. Not even in my grandmother's lifetime.
Anyone spot the blinder in this line? Yes – it’s that public spending, far from being slashed by 20%, is actually being cut by the rather more modest 4% over 4 years.
No, it was in 1918, when a Conservative-Liberal coalition said the best response to a global economic crisis was to rapidly pay off this country's debts. The result? Unemployment soared from 6 per cent to 19 per cent…
Who thinks that the demobilisation of 3 million men might have had an impact on unemployment? In fact, Hari has all this arse about tit. Public spending diminished dramatically after the end of the First World War because, um, the First World War had ended. When by far the largest single component of public spending ceases to be, the effect is likely to be a diminution of that spending. If Hari wasn’t such an arsehead about numbers, he’d know that public spending fell even more sharply after the Second World War – by 35% from 1945 to 1949. In the style of Johnny Cochrane, if 35% is bigger than 4%, then Johann Hari is an idiot.
That's why virtually every country in the world reacted to the Great Crash of 2008 – caused entirely by deregulated bankers –
I would love to know what regulation, specifically, Hari believes was removed from the financial sector, that caused the Credit Crunch. Because my guess, based on reading Hari for a while, is that his knowledge of the financial sector is rather less profound than his knowledge of history.
To pluck a random example, one of the richest corporations in Britain, Vodafone, had an outstanding tax bill of £6bn – but Osborne simply cancelled it this year. If he had made them pay, he could have prevented nearly all the cuts to all the welfare recipients in Britain.
And this is what I meant earlier about the best and most powerful arguments being based on ignorance. The Vodafone case has been rumbling on in the courts for over a decade now and relates to a technical dispute over a Luxembourgeois subsidiary and the Controlled Foreign Companies tax system that the late and unlamented Labour Government made such a monumental horlicks of during their time in office. Rather than continue to pursue a legal case with no guarantee of any recovery at all in the long term, and no possibility of any recovery in the short term, HMRC has decided to settle this and similar long-standing disputes now (Vodafone settled for £1.25bn), and clarify the law so that there are fewer such disputes in the future.
Which all means that in that first sentence, both major elements are incorrect. It wasn’t an outstanding tax bill, and Osborne didn’t cancel it. If he (or any previous Chancellor) could have made them pay, then he undoubtedly would have done so – unfortunately there’s this pesky thing called the rule of law.
You can’t fault Hari’s emotional engagement, but I do wish he’d read a little more.
Friday, October 15, 2010
Tom Harris and Lady Thatcher
It’s something of a dilemma for partisan spectators like me: should we be pleased that Labour is so ostentatiously handicapping itself in opposition, or disappointed that the best Labour MPs are on the backbenches?
Anyway, this wasn’t supposed to be a paean of praise to some unwashed Glaswegian socialist. It was supposed to be a reflection on Tom’s latest post: Considering the Iron Lady.
Last night I ReTweeted a message from Peter Watt, wishing Margaret Thatcher a heavily caveated happy 85th birthday. The response from some party members, particularly on my Facebook site, has been pretty extreme: “evil” and “hate” were used in abundance by my detractors.
Thatcher is a totemic hate-figure for the left. The mere mention of her name is enough to drive many of them into a frothing lunatic rage. Which made me think: who is the equivalent hate figure for the right? You’d think it would be Blair, after all he trounced the right for a decade, and had the same sort of contempt for his opponents as Lady Thatcher. But the real source of Blair Derangement Syndrome is on the left – often among the same people who suffer from Thatcher Derangement Syndrome. Gordon Brown? Well, that’s probably closer, but I really don’t see the name of Gordon Brown raising anything more than a shudder in 20 years time.
Are the right just worse at resentment than the left? To me, as to Tony Greig, a grudge is nothing more than a place to park your car – is this representative?