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Tim Worstall exposes the flawed and contradictory claims of UK Uncut for the Institute of Economic Affairs

Picture 3 Tim Worstall is a Fellow at the Adam Smith Institute and an occasional comment piece writer for the UK newspapers. He is author of UK Uncut Unravelled, which is published today by the Institute of Economic Affairs.

There's no problem with the youth of today having a few demos: not only is there no problem, it's rather cheering, realising that we've not quite, despite the education system, managed to raise a generation of entire dullards. However, there is a problem with what UK Uncut is actually demonstrating about, which seems to be their ignorance of how the tax system works and how even the Platonic ideal of one would or could work.

Take, for example, their whining about Vodafone. Their argument is that a company which makes money in Germany, selling phones to Germans from German shops, should pay tax in the UK. That in itself is fine, we can tax companies where their domicile is, no problem. But then they whine about Boots, arguing that a Swiss company which makes money selling things to Britons, from shops in Britain, should pay British taxes. This is making the opposite argument to the Vodafone case: that tax should be levied where the economic activity takes place. We can indeed tax on the economic activity basis: but we cannot tax on both, domicile and activity. Not, at least, if we're to avoid simply taxing any and everyone just because we can which isn't quite the logical base for a socio-economic system that we might want.

Our education system might not have left the young without ambition but it does seem to have left them uninformed. It is thus the duty of us crumblies, tottering towards our graves, to do what the state has not managed to do, inform them. And thus the report released today by the Institute of Economic Affairs, UK Uncut Unravelled.

The other two major complaints that UK Uncut seems to have are similarly less than up with the details. Philip Green pays UK tax on his income, Arcadia pays all the corporation tax that is asked of it. Tina Green does not pay UK income tax on the dividends she receives though, something which has the cool kids doing what nothing else would: getting them to enter Top Shop. The reason that Tina Green doesn't pay UK income tax on her dividends is because she's not either domiciled or resident in the UK. We just don't tax such dividends, just as we don't if someone in France owns BP shares or someone in the US Rolls Royce shares. Income tax is levied where you reside and as it ain't here the UK just doesn't get a cut.

The complaint seems to go further, in that Philip gave Tina the company in some manner: actually looking at the paperwork it's the other way around. Tina owned Taveta, the holding company, before it bought Arcadia and then sent in her husband to run it. Finally, there's the complaint that well, you know, they're married, so it's really Philip's money all along and so we should have the tax. Which is rather depressing really as the major movement of the past century has been the economic emancipation of women. No longer are they just an appendage of their husband, father or guardian, they are individuals in their own right and will be treated by the law and the taxman as such. I'd pay good money to see the young shavers of UK Uncut explaining to the distaff side of the group that getting money off Tina would mean that they will all have to give up what the Sisters have been fighting for the past 100 years. You know, this equality lark?

The final target, Barclay's, offers more amusement. Once you correct for Chuka Umunna's ignorance of tax (a company in many places will pay corporation tax in many places, not just the UK), and of what Gordon Brown and Ed Balls put into law (no tax is paid on selling a subsidiary; as was the case with The Guardian and Autotrader), you find that Barclay's paid corporation tax at about 27%: spitting distance from the 28% statutory rate.

But as I say, there's no problem with young peeps berating us for the state of the world we've left them: every generation should indeed find something to demonstrate about. I seem to remember marching on quite a few occasions during my youth, although I cannot always recall for what cause. Much fun was had by all at such events for you know, demos are fun, there're chicks and you go to the pub afterwards.

But the knowledge that our young newly hatched from their educational pods are actually capable of action, while cheering, doesn't mean that we have to take much note of what they say. Not, that is, until they've realised the foolishness of what they are saying.


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