Once trust has been lost it is difficult to regain it as MPs are discovering following the scandal over their expenses. Thus, the article by Ian Cowie writing in the Daily Telegraph of Friday 8th July questions why MPs should be exempt from a new law to block tax avoidance. He writes that after Budget promises to tackle tax avoidance, Parliament is passing legislation to block several loopholes ? but an obscure clause specifically exempts MPs from these new restrictions. According to HMRC this legislation is only there to prevent tax avoidance but Section 554E(8) of the Finance Bill (No 3) in question specifically exempts members of the House of Commons and the Independent Parliamentary Standards Authority (IPSA) from the new legislation in situations where they fall within its scope.
In response to an MP who asked for clarification on behalf of a concerned constituent, the Treasury has responded that there is no question of this legislation providing MPs with a special dispensation from the new anti-avoidance rules. The issue it seems is that the scope of this new legislation is so broad that in addressing the use of third parties to disguise rewards to employees, the legislation has had to include a number of exemptions for arrangements which are considered as not concerned with attempts to avoid tax. One of these exemptions as it happens is a specific exclusion for anything done by the IPSA in relation to a member of the House of Commons. This is necessary because there is a legal requirement for the IPSA to administer payments to MPs to cover the necessary expenses they incur in their work, while also providing the necessary oversight to ensure the expenses of MPs are properly paid and that the public can be reassured that this is so.
The problem with this response by the Treasury is that it still does not seem to address the question raised by Mr Cowie and indeed distrustful members of the public, as to why MPs cannot rely on the same arrangements that every other employer and employee in the country will have to rely on to comply with the requirements of this Finance Bill. Is it just to avoid a further bureaucratic load on the IPSA for new rules on disguised remuneration which are really only intended to catch complex arrangements designed to avoid income tax through loans made to executives, typically via offshore structures?
Archive for juillet, 2011
Trust in MPs?
mercredi, juillet 27th, 2011Dilemma of Power
jeudi, juillet 21st, 2011David Cameron is faced with the dilemma of power of all Prime Ministers that he needs to court the media but not too closely, the latter the criticism levelled at the Labour government under Tony Blair. He made a mistake it now seems in hiring Andy Coulson, the former editor of the now defunct News of the World newspaper as his head of communications, and in only now going on the offensive before parliament to demonstrate his anger should the on-going police investigation reveal that Mr Coulson was more involved in the on-going phone-hacking scandal than previously believed.
However, this has allowed the Labour leader Ed. Miliband to score another tactical victory in the Commons, exploiting what the opposition believes is the weakness of a lack of attention to detail of the Prime Minister, as demonstrated not only in the current media scandal but also over the health service reforms. Previous incumbents such as Margaret Thatcher and Tony Blair both showed the benefits of better preparation and attention to detail, the latter for example with his training as a lawyer very involved in the Northern Ireland peace process and the intricacies of NHS budgeting.
Labour could undermine the government again with calls of economic incompetence if the current Euro-zone crisis further threatens the recovery of the UK economy, since British banks are still at major financial risk through the loans they have made to French and German banks more directly exposed to the terms of the second Greek bail-out being debated in Brussels today. The Euro-zone also represents around 40% and, together with the other European Union member states, some 60% of total British exports, making it critical to the success of the export-driven recovery plan of the government. As it is, total government borrowing for the financial year as a whole (following the unexpected rise in June) is now expected to be larger than the Office for Budget Responsibility predicted, its target based on an assumption that the economy would grow by 1.7 % instead of what is believed by economists as likely to be 1.4 % or even lower.
Luckily voters have longer memories of the role and responsibility of the previous Labour government in the current troubled state of the British economy, although they will progressively lose patience with those now in power if their everyday financial concerns about e.g. jobs, taxes, budget cuts, pensions, mortgages, inflation and declining real incomes, are not being competently addressed within a growing economy before the next general election. The Prime Minister also needs now to start raising his game as they say and start paying more attention to the briefing evidence presented to him by his advisors.