Taxing Treatment

Scratching my head at this one……quite a contradiction.

An investigation into Starbucks in the UK has shown that despite £3 billion in UK sales since 1998, only £8.6 million has been paid in tax. That’s a tax rate of less than 1%.

So that suggests……

(1)   They are hugely unprofitable and have had many years of losses.

Or

(2)   They are hugely profitable but have found a loop hole (or two) in the UK tax system.

Or

(3)   HMRC are useless at upholding tax rules.

I’ll let you make your own mind up on this one. But does a company that plans to create 5,000 new jobs over the next 5 years and shareholders were recently told by company executives that the UK business was "successful", "profitable" and they were "very pleased with their performance" sound like a company making losses?

Regrettably, my money is on a mixture of (2) and (3).

One day we will have a fair and just tax system that is policed efficiently.

One day.  

The US Elephant

White Elephant: A Possession Unwanted By The Owner But Difficult To Dispose

With less than a month to go to the US Presidential Election, you can expect our media to really ramp up the coverage of all things Obama and Romney over the next few weeks.

The big issue though is the US Government debt that is the elephant in the room of the US economy and will form the backdrop to the election campaigns. Both parties need a strategy to tackle this……according to the Congressional Budget Office, $655 billion of spending cuts are required. That’s 4.7% of US national income. Or to put that another way……the largest economy in the world will be spending less on our goods and services. The US sneezes……the rest of the world catches a cold.

Tightening of that magnitude could cause the US to fall into recession and this will have a ripple effect.  

So forget the Eurozone problems, Greek demonstrations, 1 in 10 Spanish loans being in arrears, a clueless Government in the UK and X Factor……the real stories to shape the next few weeks are in the US.

Hold tight……it’s a huge few weeks for us.

Good luck everybody.

There’s Gonna Be A Revolution……Apparently!

Revolution: A Radical and Pervasive Change In Society

I started last week to believe every newspaper, radio station, TV programme and politician telling me that it was a momentous day for the UK and pensions. Probably best summarised by the merchants of doom’s (AKA Daily Mail) headline:

The Pension Revolution: Shake-up For 11m Workers As Every Employer Is Forced To Provide Staff Retirement Schemes

But here is the thing……when you ask people from non-profit making organisations (AKA The Government) to make decisions for profit making organisations where 3 out of 4 people work (AKA The Private Sector), mistakes will be made.

Look back at the headline……Every employer is forced to provide a retirement scheme for employees. The key mistake……employees are not forced to join. And therein lies the issue.

With incomes already stretched due to spiralling costs of food, petrol, electric, gas, etc……does a deluded Government expect 11 million workers to pile into something they don’t understand, trust and can’t afford?

Let me be the first to tell you that this is nothing more than a paper chasing exercise for employers. And in 15 years time when the Government realises it has failed due to a low take up rate, they might actually insert the line ‘and employees forced to join’.  

This is scarily and head shakingly obvious for anyone outside of Westminster.

Come on……a little bit of joined up thinking please Downing Street.

West Coast Woe

Everything you need to know about the people at the very top who run this country on our behalf is summed up in the bidding competition to run the West Coast main line train route.

Put simply, the process to bid for the 13 year franchise (worth around £5 billion) was fatally flawed and the winner (First Group) bid on different terms to its competitors.

The Outcome......

Firstly, the decision to award First Group the franchise has been overturned whilst the process is reviewed and likely to be repeated on a level playing field. 21% of the company value has been wiped off via the stock market share price and thousands of jobs are now at risk.

Secondly, £40 million of taxpayer money must be paid out to the 4 companies to reimburse the costs of their bids. That's £40 million......of our money.

If Westminster cannot get the process right to award a £5 billion contract, is it any wonder I have constant concerns at their ability to manage a far bigger economy.

We are one of the most significant players in world economics but this is amateurish.

The most shocking thing is that this isn't shocking.