Hay told me of a disturbing case yesterday. She sets up drug trials for patients with dementia disgnoses (she thinks I have symptoms, but if I do, then I've had them as long as I can't remember). One of her patients who has early signs of dementia, yet is only in her early 50s, has had to give up full-time work due to the symptoms. That entitles her to free medication, along with any number of other disability benefits. However, as any form of mental stimulation is good for dementia, she has resumed working for a couple of days a week, but not in any mentally taxing job and certainly not one that pays well. The fact she works at all means her right to the free trial medication has been withdrawn.
So, the options are; give up work completely (as she is entitled to do), and claim all manner of disability benefits at great expense to the tax payer, but hopefully delay the progress of the dementia, or do a few hours' work in an attempt to negate the dementia in some small way, yet be penalised by having to pay for the trial medication. As far as government legislation goes, it's a black or white scenario as this eventuality was not foreseen.
The same can be said for many of the allowances on inheritance tax - they were designed by parliament for one specific purpose, but naturally, and because all eventualities can't be foreseen, there are loopholes which allow them to be used for purposes other than those for which they were intended. That raises the morality issue. Faced with the opportunity to save some tax or get the state to pay for something you'd morally pay for yourself, the temptation is huge. As someone once said; ethics are what you have when you're under surveillance; morals are what you have when you aren't.
Many are calling for tax havens to be closed, but what defines a tax haven? Any country that charges a lower rate of corporation tax than the UK is, in effect, a tax haven as far as UK investors are concerned and they leave more money available for dividends and can be nominated in currencies more stable than sterling. All earnings on those investments are liable for UK income tax anyway, so it's not as if they are used for tax evasion or avoidance - for the investor, that is (for the corporation it's very definitely a tax issue). As far as the investor is concerned, they produce greater profit, which is still taxed (invariably at the top tax rate). Unless I'm mistaken, it seems to me that a tax haven converts what would have been corporation tax into income tax for the individual investor, but at a higher rate than the lost corporation tax, which perversely nets the UK government more in receipts. I'm not sure about the situation for institutional investors like pension funds.
The vast majority of the 82 recognised tax havens that charge no (or nominal) corporation tax have nothing at all to do with the UK or indeed the EU. Not only that, but some of them have no other form of income, not being endowed with natural resources or manufacturing industry. From what I can see they will always exist so long as there's a differential in the corporation tax between countries and a call for their abolition is somewhat naive. Where tax havens are used purely for financial secrecy and to hide true ownersihp of money is morally questionable, but again, how does one legislate against them when they're outside your jurisdiction and the chances of being caught are very small and entirely dependent on hackers.
Archdruid Eileen over at Cyber Cenobites had an amusing take on it a few days ago.
Perversely, the Daily Mail is using Guernsey as an example of a place that survives outside of the EU as an argument for Brexit. Someone obviously doesn't realise it survives as a tax haven, the very thing they're clamouring to have put down.
Many are calling for tax havens to be closed, but what defines a tax haven? Any country that charges a lower rate of corporation tax than the UK is, in effect, a tax haven as far as UK investors are concerned and they leave more money available for dividends and can be nominated in currencies more stable than sterling. All earnings on those investments are liable for UK income tax anyway, so it's not as if they are used for tax evasion or avoidance - for the investor, that is (for the corporation it's very definitely a tax issue). As far as the investor is concerned, they produce greater profit, which is still taxed (invariably at the top tax rate). Unless I'm mistaken, it seems to me that a tax haven converts what would have been corporation tax into income tax for the individual investor, but at a higher rate than the lost corporation tax, which perversely nets the UK government more in receipts. I'm not sure about the situation for institutional investors like pension funds.
The vast majority of the 82 recognised tax havens that charge no (or nominal) corporation tax have nothing at all to do with the UK or indeed the EU. Not only that, but some of them have no other form of income, not being endowed with natural resources or manufacturing industry. From what I can see they will always exist so long as there's a differential in the corporation tax between countries and a call for their abolition is somewhat naive. Where tax havens are used purely for financial secrecy and to hide true ownersihp of money is morally questionable, but again, how does one legislate against them when they're outside your jurisdiction and the chances of being caught are very small and entirely dependent on hackers.
Archdruid Eileen over at Cyber Cenobites had an amusing take on it a few days ago.
Perversely, the Daily Mail is using Guernsey as an example of a place that survives outside of the EU as an argument for Brexit. Someone obviously doesn't realise it survives as a tax haven, the very thing they're clamouring to have put down.
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