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Money Don’t Buy You Love… Just Friendly Legislation: UK Edition

February 9, 2011

The Big Society

The BBC reports on new research that shows that over half of donations to the UK Conservative Party, the present party of government, came from the firms or individuals from the City of London, the financial heart of the country.

The Bureau of Investigative Journalism, which is a not-for-profit organisation, examined records of donations held by the Electoral Commission and Companies House.

It concluded that last year, City donations totalled 50.8% of all money given – up from just under 25% in 2005, the year in which Mr Cameron became Tory leader.

Fortunately a Conservative Party spokesman quickly stepped in to remove any misconceptions that this suggests that the Party is somehow representative of the interests of the rich and richer.

On the very day that the chancellor raised another £800m in tax from bankers – having already introduced the toughest rules on bankers’ pay anywhere in the developed world – it beggars belief that anyone could claim that donors to the Conservative Party are influencing policy.

Beggars belief, dammit!! Oh but, wait they’re not actually bankers?

The research indicated that the majority of big City donors were hedge fund managers and brokers rather than bankers.

Dr Stuart Wilks-Heeg, a lecturer on social policy at Liverpool University, said the findings “raise issues about how influenced and impartial the Conservatives are”.

We're all in this together!

Hmm… Doctor Wilks-Heeg, I wonder. I mean the Conservatives are the party of One Nation, the Big Society now right?David Cameron is nice guy… his forehead is slightly too big, but then Labour Party leader David Milliband’s head is so disproportionately large it looks like at any moment it might bring him toppling to the ground… and compared to the average UK politician he appears relatively, well, nice and normal. Perhaps these people are simply donating because they approve of the Conservative parties foreign policy, or plans for the future of the NHS, or schools? After all, people that work in hedge funds are humancitizens too!

Oh, wait what now? The Conservatives are planning an obscure change to UK tax law? Tell me more George Monbiot of the Guardian…

If you’ve heard nothing of it, you’re in good company. The obscure adjustments the government is planning to the tax acts of 1988 and 2009 have been missed by almost everyone – and are, anyway, almost impossible to understand without expert help.

At the moment tax law ensures that companies based here, with branches in other countries, don’t get taxed twice on the same money. They have to pay only the difference between our rate and that of the other country. If, for example, Dirty Oil plc pays 10% corporation tax on its profits in Oblivia, then shifts the money over here, it should pay a further 18% in the UK, to match our rate of 28%. But under the new proposals, companies will pay nothing at all in this country on money made by their foreign branches.

Foreign means anywhere. If these proposals go ahead, the UK will be only the second country in the world to allow money that has passed through tax havens to remain untaxed when it gets here. The other is Switzerland. The exemption applies solely to “large and medium companies”: it is not available for smaller firms. The government says it expects “large financial services companies to make the greatest use of the exemption regime”.

But that’s not the end of it. While big business will be exempt from tax on its foreign branch earnings, it will, amazingly, still be able to claim the expense of funding its foreign branches against tax it pays in the UK. No other country does this. The new measures will, as we already know, accompany a rapid reduction in the official rate of corporation tax: from 28% to 24% by 2014. This, a Treasury minister has boasted, will be the lowest rate “of any major western economy”.


One Comment leave one →
  1. February 9, 2011 10:53 pm

    Thanks for this, now I am so angry I could shit bullets.

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