A Taxing Problem 01/19/2011
 

Our American “special friends” are stalking us like prey again – the US medical giant Johnson & Johnson are apparently trying to buy Hull-based Smith & Nephew for an estimated £7+ Billion, but the S & N board have been trying to keep this news quiet for some reason, despite Takeover Panel rules that require companies to keep investors informed of possible offers. Strange, that…..

If recent acquisitions by American companies are anything to go by, it will pan out something like this: a British bank bailed out by English taxpayers in 2008 will play the role of Judas and lend the Johnson gang the money – the Smith big-wigs will receive huge “golden goodbyes” - all production in England will be phased out and moved abroad - and finally the company will be re-registered in Switzerland where corporation tax is considerably lower than the 28% that the short-sighted British government insists on charging every company that wants to do business here. Everyone in England will suffer as another FTSE 100 company is swallowed up by global capitalists and moved abroad, along with all the revenue and employment it provided. Indeed, a steadily increasing number of British companies have already re-registered in Switzerland, and are saving millions in tax already.

Firstly, we see no sense in foreign companies being allowed to buy out profitable English companies, and English Radical policy would be to limit by law, any and all foreign holdings in English companies to 33%, to prevent these precious assets being stripped away from us. The only possible exception to that rule would be to rescue an English company in severe difficulties - and then only after the workforce had been given the opportunity to buy the company and run it themselves and the Government has considered purchasing a 'Golden Share' to keep the company in business and majority ownership in English hands.

Secondly, the 28% Corporation Tax – a tax on net profits – ensures that British and English companies will always struggle to compete against companies that use cheap labour. So, if you can't  match the labour costs, then you must reduce the tax overhead to attract investment. The English Radicals believe that all taxes on home grown income and profits should be lowered to encourage initiative and productivity (as long as that income and profit stays in England) - whether they be company profits, share dividend payments or worker’s pay -while taxes on consumption should be increased, especially on foreign made goods and services – these twin measures would encourage English production and jobs on the one hand, and encourage people to consume fewer imported products. We've said it before and we'll say it again: England is a massive market of fifty million people – if you want to sell here, make here. You bring the jobs, and we'll buy your products.

Thirdly. why do governments feel the need to charge such high rates of corporation tax in the first place? Because they need revenue like a junkie needs a fix, due to their inefficient, bloated, centralised nature. The “bigger” the government (as in dictatorial and controlling), the bigger the fix has to be. China's corporation tax is 30% - their government controls every aspect of Chinese life, and even in China that level of “big brother” control doesn't come cheap. So, if the British government could get used to the idea of taking a smaller role, and allow local government at county/regional level to take on more responsibilities, they could get by with much less money.

It is also interesting to note that EU aid to Ireland has been conditional on them raising their Corporation Tax rate from 12.5%, one of the lowest in the EU – whilst French, and German (if you add the national and local taxes together) corporation taxes are currently over 30%. Ironic and sad that Ireland fought so hard to gain independence from the chinless British aristocracy, only to have their sovereignty stolen by faceless European bankers a few decades later.

We are no lovers of global capitalism, but we are pro-business – and if we want to attract manufacturing (and therefore wealth creation) back to England, there has to be something in it for the manufacturer. These are our proposals:

Imported products into Britain/England from nations with whom we have large trade deficits to be taxed more heavily than at present. This would limit the present advantage of global capitalists producing in low paid sweatshop economies, and exporting to higher wage economies like our own. We are happy to trade with other nations, but there must be more balance.

Central government to keep 33% of this taxation revenue, the other 67% to be shared out fairly amongst the devolved local county/regional authorities of England.

Foreign owned companies producing in England (eg, Nissan) to pay only 20% CT. (split 50/50 between that local area and national government).

English owned companies producing in England to pay only 10% CT. (split 50/50 between that local area and national government).

English co-operatives producing in England to be exempt from CT altogether.

A tax regime such as the one we propose would once again make it viable for both home grown and foreign companies to set up shop here. Critics may argue that these proposals would result in less corporation tax revenue - but the British government is driving away tax paying businesses altogether, by charging more than it should! Imagine the British government as a landlord whose tenants have discovered cheaper rooms across the road – the Tory's beloved “free market” dictates that in such an event you should drop your rents to compete, or face having no rental income at all.  Which is better - some corporation tax and more employment, or no corporation tax and mass unemployment?
 


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