The attacks on David Cameron over his family’s tax planning seem wildly excessive. His father set up an offshore investment fund to invest in dollar based shares without incurring the risk of double taxation. David did hold some of the units but subsequently sold them. His mother gave him £200,000 after his father died, with the probability (not certain) of that being outside inheritance tax if she lived for another 7 years. That is not exceptional tax planning, it’s just common sense using the rules that apply.
Indeed the Daily Mail spelled out the issues in this headline which I just happened to read in a coffee shop this morning: “Enough of this madness. Instead of grovelling before the politics of mob envy, the Prime Minister should be arguing that, for most people, Inheritance Tax (IHT) — by re-taxing income that has already been taxed — is unfair. He should also be shouting from the rooftops the moral case for low taxation.”
Those who have reached a certain age (and this writer recently passed his 70th birthday) and have assets (in share portfolios or otherwise) should pay close attention to the inheritance tax rules and take some professional advice on the matter. But to do so is certainly not unethical.
But when the heads of FTSE 100 companies are being paid many millions of pounds per year, and David Cameon has to get by on a measly £143,262 per annum as Prime Minister, you realise there is a lot of hypocrisy being spouted on this subject. We have just issued a press release on the disgraceful amount paid to the CEO of BP (about $20 million) which is here: https://www.sharesoc.org/pr73bpremuneration.html
Indeed one of the key things to learn from the disclosures of the tax returns of David Cameron, George Osborne and Jeremy Corbyn is that one way to ensure you have a high tax bill is to make your living by earning a salary. The sooner you invest in a business (listed or unlisted, your own or other people’s) and get some income via dividends and capital gains the better.
Tata and the UK Steel Mills
The other hot political topic of the day is what to do about Tata and their wish to exit from UK steel making at Port Talbot. The latest news is that Industry Secretary Sajid Javid told the Commons that the government was working very hard to find a buyer for the South Wales plant, which is being sold by Tata Steel. Among options being considered was “the possibility of co-investing with a buyer on commercial terms”, he said.
Tata seem to be looking for a way to duck out of their potential liabilities to support the pension fund of steel workers and to avoid site reclamation costs if the site closes.
Now I am reluctant to put forward the following remedy because I have campaigned against pre-pack administrations in the past, which are frequently used by small companies to evade their debts and other liabilities. But clearly there is a financial construct already available to Tata and the Government to duck all the historic liabilities (a.k.a. the “bad stuff), and start with a clean slate. It just requires a good PR man to spin this story the right way.
Me, I might prefer it to go bust because one thing is now clear. Port Talbot is not competitive, is probably overmanned, and is in essence worth nothing at this point in time. Any suggestion that the Government should put public money into it, as an “investment” or otherwise is extremely dubious.