Gordon Brown: Squeezing The Poor Until The Pips Squeak

Taken from Gordon Is A Moron by Vernon Coleman

Vernon Coleman




`There is no art which one government sooner learns from another than that of draining money from the pockets of the people.'
Adam Smith


Brown's policies have created a world of four quarters:

1. The people who work for the Government in some form of administrative role (these are the only ones with security of tenure and guaranteed pensions).

2. The people who rely on `benefits' of one kind or another.

3. The people who are working in the city and, by taking advantage of Gordon's astonishingly generous tax regime for hedge fund managers and private equity profiteers, are making an absolute fortune without ever doing anything truly useful. Brown has created a society in which it is possible for a relatively small number of people (mainly either foreigners or people working in the hedge fund and private equity industry) to become enormously rich. The year 2006, the last of Brown's tenure as Chancellor, was a record breaking year for the super rich. By January 2007 there were 68 billionaires based in the UK, and the 1,000 richest people in the country had increased their collective wealth by 20% in just a single year. Inequality has widened dramatically under Brown. The 2007 bonus season saw 3,000 City of London bankers receive bonuses of £1 million or more. (That is, a bonus on top of their already massive salaries.) Gordon Brown doesn't seem as disturbed by this as are many taxpayers. Indeed, after ten years of Brown's tinkering and complicating the system it seems that he prefers to squeeze the middle classes rather than inconvenience the mega-rich, and Labour has surprised many by being (in the words of Peter Mandelson) `intensely relaxed about people getting filthy rich'. And the Labour Party has surprised people even more by showing itself uninterested in getting the filthy rich to pay their taxes.

4. The hard working, highly taxed, insecure remainder who are the ones whose work and taxes pay for everything else.

Brown, of course, has claimed to be committed to reducing poverty. His actions have proved that to be a terminological inexactitude for the gap between the poor and the rich is now at its widest for 40 years, according to a report by the Joseph Rowntree Foundation.

Despite his promises, and his alleged affection for the principles of socialism, Brown has created an absurd world in which the rich have got richer and the poor have got poorer. The people getting rich are no longer hard working entrepreneurs or efficient company managers but financial engineers, private equity experts and hedge fund managers. A lucky minority has been getting exceedingly, absurdly rich, thanks to Brown. They have been getting rich by charging huge, unprecedented fees for managing other people's money, by using tax laws to their advantage and by encouraging the middle classes to take on increasing amounts of debt.

Thanks to Gordon Brown's years of wasteful spending and egregious incompetence, real incomes among British people who work for a living (as opposed to sitting in Parliament or receiving benefits) are stagnant, while household debt has reached 164% of annual disposable income - the highest figure in the developed world. Brown has introduced steep tax increases for the poor and the middle classes. Brown's 2007 budget meant that people earning over £40,000 a year benefited most while those earning less than £18,000 were worse off.

Brown has claimed to be committed to eradicating poverty but only the rich have benefited under Brown's Chancellorship. It has been reported that there are super rich people in Britain who pay less tax than their cleaners. (Private equity millionaires negotiated a special exemption from the Labour Government - effectively allowing them to pay tax at 10%.) On the other hand there are now 175,000 children in Britain looking after their parents or another relative. The billions pumped into the NHS have done nothing for them (though they have enriched thousands of new Stalinist bureaucrats.) Perhaps Brown is only committed to eradicating poverty in the Brown household.

***

Politicians constantly tell that we are all getting richer. Ever since Harold Macmillan, politicians have been assuring us that `we've never had it so good'.

But the evidence suggests that, as usual, the politicians are lying. Productivity is rising constantly and some people are getting much, much richer than they were, but most of us are not better off than we were five, ten, fifteen or even thirty years ago. In fact, however you measure things, most of us are worse off. If you adjust incomes for real levels of inflation, the average wage is less now than it was decades ago. A few people are getting very, very rich. But most of us are getting poorer. According to the International Monetary Fund, the percentage of Gross Domestic Product (GDP) going to workers in the G7 countries has fallen over the last 20 years. Instead of being shared out among the workers, the profits have been distributed among a very small number of super-rich people.

It is perhaps not surprising that the Financial Times now produces a supplement called How To Spend It. Nor is it much a surprise that an index of `bling' and luxury companies has shown a massive rise in the last few years.

We may seem to have more money but the cost of houses, fuel and heating has rocketed, and the fact that our currency is constantly being devalued means that most of us are working harder (and having to put up with an unfriendlier, unhealthier lifestyle) but are taking home less money than our parents did. Savings have collapsed because, after taxes, people don't have enough money left over to put anything aside for a `rainy day' - and can't see the point in saving anyway. Most people now live right on the edge and are in no position to deal with any sort of crisis.

The people getting rich are the ones working in the financial services industry - private equity and hedge funds. Ten years ago graduates all wanted to be dot com millionaires. A survey of American college graduates in 1999 showed that 60% had decided that they would retire within five years as multi-millionaires. Becoming obscenely rich had become a career plan.

Now, thanks to Gordon Brown, young British graduates are all keen to work for hedge funds or private equity houses. That's where the billions are waiting to be collected these days.

Young graduates don't want to create wealth - they just want to redistribute it, taking it from widows and orphans and stuffing it into their own pockets.

The modern, successful man (or woman) in Brown's Britain doesn't produce anything you can see. He doesn't make anything you can eat, or read or sit on. He doesn't sell tea or make toothpaste. He doesn't edit a newspaper or make films. All these activities involve red tape, endless legislation and high taxes.

Thanks to Gordon Brown, today's successful citizens are money magicians. They move money from A to B and take a huge cut for their labours. They borrow money from C and lend it to D. They borrow from E to buy F which they then sell to G for a huge profit. This isn't just usury. It's gone far past moneylending. It's a huge game of pass the parcel. Along the way everyone who plays is a winner and everyone takes a cut. And, thanks to the special deal they've cut with Gordon, all the winners pay tax at just 10%.

In the current financial year there are expected to be 30,000 individuals in Britain earning more than £500,000. Nearly all of them work in London. Most of them work in the `financial services' industry. A good chunk are lawyers. Naturally, a few are retired politicians. The salaries of business bosses have been dragged up by these absurd salaries. The average Chief Executive Officer in the UK now earns 100 times as much as the average worker.

Brown's policies have made London the most expensive city on the planet. It's officially the most expensive city in which to buy property, the most expensive city in which to live and the most expensive city to visit.

Brown's Britain is a curious mixture of fascism and conspicuous spending by the elite. Greed and waste among the rich are now commonplace. In 2007, Prince William, heir to the English throne and an example to the young, was reported to have spent £5,000 on booze in a single night in a nightclub.

The three most popular countries for rich sportsmen to choose as home are Monaco, Switzerland and Britain. Of the three the most tax advantageous (for non-British sportsmen) is Britain. Thanks to a bizarre tax system which punishes those Britons who work for their money and encourages non-domiciled foreign residents to regard the UK as a tax haven, Britain has become two nations.

The unfairness and stupidity of the rules which enable foreigners to avoid UK taxes is easy to illustrate.

If a Briton left the UK and went to live in, say, France for five years he could acquire citizenship of that country, giving up his British citizenship in the process. He could, then move back to the UK for the rest of his life without having to pay tax. I wonder how many Britons would regard five years pleasant exile as a sensible price to pay for a lifetime without paying taxes? Would this work? I can't see why not, though I dare say the authorities might think of a way to stop it.

Despite combined sales of more than £12 billion and operating profits of more than £400 million, five of the ten largest private equity owned companies in the UK paid not one penny in UK corporation tax in 2005/6. Indeed, on the contrary, the companies received £11 million corporation tax credit from the Government.

Seven out of the ten richest people in Britain are foreigners who either pay no tax at all or else pay very little tax (in many cases paying tax, with Gordon's approval and connivance, at a 10% rate).

Britain is (with the USA) one of the world's most popular tax havens for non-domiciled residents and one of the two most popular places for money laundering.

There are nearly two million foreigners living in the UK who pay no UK taxes at all unless they want to. Non-domiciled residents pay no tax on their income from abroad unless they bring that income into the UK. This isn't something new; it's been this way in the UK since income tax was introduced in 1799. Originally, the rule applied to all taxpayers. But since 1914 the rule has only applied to foreigners living in the UK. Now the 1.7 million foreigners living tax free in the UK don't even have to file tax returns.

At the Labour Party conference in 1994, three years before he became Chancellor of the Exchequer, Gordon Brown announced that a Labour Government would tighten up residency rules for the rich. His words were that Labour would `rewrite the tax rules for the undeserving rich'. I have no doubt he got big cheers from Labour party stalwarts.

But Brown has done nothing to change the rules.

Coincidentally, Labour receives huge financial support from wealthy foreigners who live in the UK but pay no tax.

For many wealthy foreigners, Britain is now a tax haven - they don't pay tax on any income which is not earned in, or brought into, the UK. In practice this means that they live in Britain but don't pay tax.

Moreover, they can use offshore trusts to cut the stamp duty they pay when they buy a house. If a British taxpayer buys a £5 million house in London he will pay stamp duty of £200,000. If a non-domiciled foreigner buys the same house via an offshore trust he will pay just £25,000 in tax. So British taxpayers pay more for British houses than foreigners do. This system is unique to Britain. It's hardly surprising that more than half of London's multi-million pound houses are now bought by wealthy foreigners who don't pay British tax, and it's hardly surprising that London house prices keep soaring. (The cost of all housing is then dragged upwards - with the result that young couples can't afford to buy a house at all.)

While encouraging free-loading foreigners to regard Britain as a tax haven, Brown has stamped down hard on any British taxpayers who might put a foot on foreign territory.

Under Gordon's patronage the Inland Revenue decided to have a crackdown on Britons holding offshore accounts. They forced banks to give them the names and addresses of customers holding accounts in other countries (concepts such as privacy and confidentiality are alien to New Labour), and then threatened to hound the customers they identified in order to raise some extra cash. The theory was, presumably, that thousands of Britons were stashing money in offshore accounts and not declaring it. The reality was that most of the accounts were probably held by Britons needing a way to pay the gas and electricity bills for their French or Spanish bolt holes.

Inevitably, the scheme seems to have backfired.

In 2004/5, just 112,000 people living in Britain declared themselves to be living in Britain but non-domiciled for tax purposes.

According to Moneyweek magazine more than 200,000 people are expected to claim non-domicile tax status for 2006/7.

So, thanks to Brown's over-belligerent attitude, the Treasury now has to face the fact that the number of people living in Britain who are able to avoid income and capital gains tax has probably doubled.

Another magnificent blunder by Gordon the Moron.

Curiously, Gordon the Moron is so proud of Britain's status as a tax haven that the Government actually boasts about it. Britain is being promoted as a taxhaven on the Government's `UK Trade and Investment' website, highlighting the unusually generous tax benefits for foreign residents. `It (Britain) is also perhaps the only tax haven which has the high degree of respectability sought by the international business community' says the British Government reassuringly.

And it was, remember, Gordon Brown who promised that the Labour Party would tighten up on residency rules for rich foreigners.

Copyright Vernon Coleman 2008

The book Gordon Is A Moron by Vernon Coleman (from which the above extract is taken) is available from the shop on this website and from all good bookshops and libraries everywhere.


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