The IMF position at the negotiating table in the current round of discussions with Greece highlights an institutional flaw in the international financial system (report, 25 June). The IMF was set up to address short-term payments difficulties, but it is increasingly being called upon to dictate long-term growth strategy. This has opened up a further fissure, divergence between policies that are publicly advocated by IMF economists as being conducive to economic growth and the policies that are advanced by negotiators representing the views of the shareholders at that institution.
Greece has offered a proposal for improving her fiscal position to be able to service the international debt. The IMF negotiators are reported to be suggesting that a greater emphasis on cutting benefits to the poor and lesser reliance on tax collection would be conducive to economic growth. They have no evidence for that. The economies of countries under long-term IMF tutelage generally decline.
European governments as shareholders wield considerable influence at the IMF board, and the shareholder interest is communicated through finance ministries which are oblivious to the dangers of an externally imposed regime change in Greece.
If the fragile roots of European democracy are not to be undermined by the IMF, Angela Merkel has to rein in the IMF and her own finance minister.
Emeritus Professor of Economics
In every analysis I hear of the Greek crisis (both in British and in German media) there is a mention that taxation needs to be collected more efficiently with this statement often followed by a comment that many of the biggest sources of revenue (both individuals and companies) are able to hide their wealth abroad.
What I find bizarre here is that the use of tax-havens, letter-box subsidiaries and dubious cross-border accounting were recognised as a major problems during in crisis of 2007-08 but not too much seems to have been done to tackle this. Indeed, the opposite is the case with countries competing to offer tax dodges to foreigners thereby poaching tax-revenue from their neighbours. So, of course, rich Greeks have been taking advantage of these “opportunities” too.
The Greek crisis is a great shock but what I find even more shocking is the fact that our governments, especially the EU in Brussels, had clearly identified taxation (and regulation) “cherry-picking” as a major factor in 2007 but almost eight years later is bemoaning the consequences of its own inactivity ... and proposing “austerity” as the solution!
Close this egregious non-Dom loophole
With less than two weeks until the Budget on 8 July, I wonder if George Osborne is aware that some British-born taxpayers living in the UK are successfully claiming that they have a foreign domicile of choice, in order to enjoy tax breaks intended to attract wealthy foreigners to the UK.
Currently, UK taxpayers can change their domicile by deciding to make another country their permanent home and then moving there. But after a time taxpayers can become UK tax resident again yet claim a foreign domicile of choice indefinitely providing they can persuade HMRC that they intend to return to the place of their domicile of choice in the future.
The Chancellor should close this loophole by changing the law so that if a taxpayer claiming foreign domicile of choice subsequently lives in the UK for more than five tax years, then their domicile of origin will be deemed to have revived at the time they moved back to the UK.
This would prevent long-term abuse of the system and enable HMRC to claw back the tax saved by the taxpayer during the period they were UK tax resident claiming foreign domicile.
Boomerang non-doms should not be allowed to return again and again without tax consequences.
Why should the taxpayer continue subsidising inefficient companies that pay such low wages that families have to receive tax credits? (Letters, 24 June.)
Raise the minimum wage to a living wage and at a stroke public expenditure reduces as the need for tax credits disappears (surely an aim of this government) and inefficient companies will have to become more productive to survive, and thus the country’s abysmal record on productivity is raised.
Through this means the burden of reducing public expenditure is shared between employers and individuals.
Iain Duncan Smith says the onus is on employers to pay staff better to compensate for tax credit cuts’. (Report, 23 June.) If Labour suggested this they would be accused of being anti-business by forcing costs up and therefore profits down.
Bank stress tests are inadequate
James Moore’s article (18 June) on “No Stress”, my Adam Smith Institute Report on the Bank of England’s stress tests, dismisses its conclusions without any attempt to grasp its analysis.
Moore claims that the stress tests weren’t perfect, but the best the Bank of England could do; however, the analysis of the report shows that the BoE can, and should, be running safer tests. No one scenario can provide comfort that the system is sound.
Furthermore, the tests are based on an absurdly low safety standard, and if one stress-tests the tests against respectable standards all the banks would fail. They also lack credibility because the Bank can only allow the banking system to “pass”: anything else would imply that its own past policies have failed.
Moore might be satisfied with the results of the tests, but the rest of us should remain sceptical. Stress tests operate like a radar that is worse than useless because it cannot see the main hazards. We wouldn’t dream of sending out a ship or plane reliant on an unreliable radar. We shouldn’t do that with our banking system either.
Professor Kevin Dowd
Fracking will worsen climate change
“Two cheers for fracking” (Editorial, 25 June) misses the point. It’s not about weighing up the ground level environmental dangers or the effect on employment or the reliance on imports that is the problem. It is that the gas produced will be burnt in order to release its energy. Burning anything produces carbon dioxide, the enemy of a stable climate. This is now rapidly becoming by far the greatest energy problem facing the country – and the world.
The problem with fracking is not that there are insufficient environmental regulatory safeguards in place under current UK and EC legislation. It is that, in light of ongoing budget cuts to the inadequate Environment Agency and the laissez faire attitude of the Government to this activity, no one can have any confidence whatsoever that those regulations will be properly applied or, in the unlikely event that remedial legal action is ever successfully pursued, that appropriate penalties will be levied.
It’s different for royals
According to campaign group Republic, the monarchy costs British taxpayers £334m every year. It has been reported by the Political Scrapbook blog that the Queen’s income is 29 per cent higher than it was three years ago – and many newspapers reported that the taxpayer will pick up a £150m tab for repairs to Buckingham Palace, which is open for two months every year. How exactly is it fair that ordinary people are told they must accept austerity measures while this unelected clique enjoys a taxpayer-subsidised luxury lifestyle?
Rhondda Cynon Taf
The Royal train should not be seen as a cost in the Royal family accounts published this week. This train, with its berth accommodation onboard, saves the taxpayer having to pay for a secure hotel and security associated with a Royal visit. Instead the train can be parked in a remote siding guarded by the British transport police.
Why no sympathy for Ukraine?
Please could Mary Dejevsky (23 June) and Bernie Evans (Letters, 25 June) explain why Russian national security and interest is more important than Ukrainian national security and interest?
Tories' anti-BBC bias
Simon Kelner’s defence of the BBC (25 June) is apt and timely. The right-wing press are all out destroy the corporation, both out of commercial self-interest, and for more sinister reasons, such as shutting down debate on issues such as our future within the EU.