John Street’s January 27

Written By: John Street
Published: January 27, 2012 Last modified: January 26, 2012

Tony Blair’s fondness for US presidential style politics is well-documented. But it seems, on face value at least, that there is one area where he can teach one White House hopeful a thing or two – tax efficiency. Mitt Romney, up until now at least, a front runner for the Republican nomination, famously allowed people just a peek at his considerable personal wealth when he published his two most recent tax returns, almost 550 pages in all. The independently wealthy former governor of Massachusetts earned $21.7 million in 2010 and $20.9 million last year, all from profits and dividends on canny investments – none from wages or salary – although he continues to make capital gains profit from the private equity company, Bain, that he set up in 1984 and left in 1999. In 2010 he paid $3 million in income tax – effectively 13.9 per cent – and his tax bill for last year will be about $3.2 million, effectively 15.4 per cent. All legal and legitimate, he pays tax on income from his Swiss bank account and other tax havens including Ireland. But far less than any of his opponents or the average US taxpayer. Mr Blair succeeded in paying just £315,000 tax on earnings by Blair, Inc (more formally known as Windrush Ventures) of more than £12 million – a 42 per cent increase on the previous year. Almost £11 million of this income was written off as “administrative expenses” and, therefore, tax allowable, and bringing total profits for the company down to just over £1 million on which corporation tax was levied at 28 per cent. The result was a bill of just £315,000. Mr Blair paid £2.3 million in wages to 26 staff, some of whom accompanied him on 61 overseas trips totalling 224,000 miles of travel. He spent a further £300,000 on office equipment, and £550,000 on rent for his Mayfair offices. Details of almost £8 million of deductible expenses for “administration” have not been publicly disclosed. There is absolutely no suggestion in either Mr Romney’s or

Mr Blair’s cases that their low tax bills are anything other than utterly, legally bona fide – if a bit hard for some to stomach. Mr Blair’s tax-allowable expenses include premises costs, stock costs, travel expenses, repairs, staffing costs and his  salary. Business profits are subject to corporation tax, charged at 20 per cent for profits under £300,000 with a rising marginal rate imposed on profits between £300,000 and £1.5 million. It is 26 per cent (25 per cent from this year) on profits over £1.5 million – after all deductions for ­expenses.

 

Of course, it could be argued that Mr Blair represents precisely that same, wider can-do entrepreneurial spirit exemplified by the surge in the numbers of self-employed and hailed by Prime Minister David Cameron in mitigation of this month’s seriously disheartening jobless figures of 2.69 million (expected to hit 2.8 million). Self-employment rose by 101,000 to 4.12 million accounting for 14.1 per cent of total employment, according to the Office of National Statistics. It has jumped 8 per cent since the recession started in 2008, even though the number of employees has fallen 3 per cent, or 109,000. But, says the Chartered Institute of Personnel and Development, this jump has less to do with an enterprise culture and more to do with “desperation”. In other words, the vast majority of these new businesses will be ordinary people working part-time and freelance rather than higher income earners like Mr Blair – and his protégée David Miliband – who can make the most of ­corporation tax. According to the CIPD, women account for more than half the increase (see hair dressers for a daily example) and nearly 90 per cent work fewer than 30 hours a week. The CIPD’s John Philpott said the figures suggest an army of sole ­trading odd jobbers desperate to avoid ­unemployment.

 

The Government has run out of things to do in the House of Commons. Understandable, given the coalition’s engagement outside Westminster in the biggest social engineering project this side of the Second World War. The long and short of it is that there is not enough Government business to occupy MPs. Official Opposition “supply day” debates, when Labour and the other minor opposition parties have a chance to choose the topic for debate, have already been used up as the Government seeks to pad out empty time in the Chamber. Now even more days are being thrown at Labour, “unlisted” supply days, as Speaker John Bercow announces in lip-curled emphasis at the coalition’s blank agenda. Instead of leaving the Government embarrassed by having nothing for the Commons chamber to debate, Labour business managers feel obliged to fill in the gaps in case people feel they have nothing to say about Government policy. So that’s working well, then.

 

Former sports minister Gerry Sutcliffe was quizzing his coalition successors during hearings of the DCMS select committee on the Olympics. He wanted to know why more ministerial ­applications had been made for the beach ­volleyball than all the other events put together – around 4,000, give or take a roll in the sand. Red faces on the ministerial table were followed by a civil service explanation that, of course, the volleyball competition is taking place on Horse Guards Parade in the middle of Whitehall. So, the explanation went, ministers would be able to participate while taking the minimal time off duty. Yes, minister.

About John Street

John Street is Tribune's diary columnist.


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