Tax and the rich 2

More than a third of Scottish farms sold this year have been snapped up by cash-rich businesspeople anxious to avoid paying inheritance tax .

According to the annual Scottish Estates Review by property agency Strutt & Parker, the number of farm buyers who cite IHT as a reason for their purchase reached 36% this year.

Prime Scottish arable land has now more than doubled in value since 2004, selling for at least £3,500 an acre, compared with £1,600 three years ago. Farmers have traditionally been allowed to pass on their land to their children without the value being calculated for inheritance tax purposes. Any assets above a threshold of £283,000 are normally taxed at a rate of 40%, but farms are excluded so that they do not have to be split up to pay death duties.

But the tax break is now being exploited by wealthy investors.

"These are people with maybe £20m, £30m or £40m and they are looking for ways to shield that money from IHT in the future. They are buying farms and sheltering some of their money that way." Strutt & Parker's farm sales specialist said "You can't let the land go unmanaged but you can employ a manager, so investors don't even need to get their hands dirty."

Tax and the rich

The Treasury has admitted its plans to clamp down on super-rich non-UK domiciled taxpayers are being hampered by a lack of reliable data

A little more than 15,000 people are thought to have a combined wealth of £140 billion, and that includes £65 billion attributed to a small number of super-rich.

The combined taxable annual income of this latter group is estimated at about £1.9billion and "non-dom" rules allow these people to avoid a £600m tax bill. The Treasury has estimated that it is losing £1billion a year to the "non doms".

Jobs for the Boys

Jonathan Powell, former chief of staff to Tony Blair, is to become a senior executive at a leading bank. He will take up a full-time position as a senior managing director of Morgan Stanley's investment banking division. The son of an air vice-marshal, Mr Powell comes from a powerful family that includes his brother Charles, who was Margaret Thatcher’s foreign policy adviser. His other brother, Chris, is influential in advertising and has done some work for the Labour party.

A former journalist and diplomat, Mr Powell is expected to play a role in transactions involving some of the bank's largest clients in UK and Europe. As a managing director in Morgan Stanley's investment banking division, Mr Powell will be responsible for introducing the bank to important governmental and corporate clients he met during his time as aide to Mr Blair.

It has become increasingly commonplace for investment banks to hire former government ministers and politicians to introduce them to clients and brief them on government policy. Former Conservative prime minister John Major is a senior adviser to Credit Suisse while ex-German chancellor Gerhard Schröder works part-time for Rothschild. Italian Prime Minister Romano Prodi spent time with Goldman Sachs before and after his first spell as Italian leader in the 1990s. Lord Waldegrave, a former Conservative minister, is vice-chairman of investment banking at UBS, Switzerland's biggest bank. Jeremy Heywood, Mr Blair's former principal private secretary, left his job as Morgan Stanley's co-head of UK investment banking to become Gordon Brown's head of domestic policy in June.

Brown-nosed snouts in the trough

SUB-PRIME, WHAT'S THAT?

"It's been that kind of year for the luxury sector in New York. While home prices slid around the country, Manhattan set a new apartment sales record with developer Harry Macklowe's $60 million purchase of an entire Plaza Hotel floor (minus one rogue apartment), and a new price-per-square-foot benchmark ($6,287 per interior square foot) with former Citigroup chairman Sanford Weill's $42.4 million splash into 15 Central Park West."
(Yahoo News, 29 November) RD

SUB-PRIME, AND HOW

"More than two years after Hurricane Katrina, New Orleans is suffering from an acute shortage of housing that has nearly doubled the cost of rental units in the city ... Before the storm, more than half of the city’s population rented housing. Yet official attention to help revive the shattered rental home and apartment market has been scant. ...One of the more striking changes to appear lately in New Orleans is the highly visible number of homeless men and women living under bridges and in parks. Social service groups say about 12,000 homeless people are living in the city, about double the number before the storm. ...In the past several months, a homeless encampment has sprung up on the steps of City Hall — partly because it is a safe open space and partly because it is a political statement. Tents and sleeping bags are aligned in rows. The crowd of hundreds is a mix of young and old, white and black." (New York Times, 3 December) RD

SUB-PRIME EXISTENCE

Capitalism likes hiding its brutality behind euphemisms. Thus we have no Ministry of Offence, but one of Defence. So when mortgage companies lend money to people that are skint they describe them as "sub-prime" loans. The recent rash of foreclosures in the USA affected not only home buyers but tenants of landlords that were in debt. Alice Mills, a 67 year old returning from hospital was shocked to learn that she was to be evicted the next day - she was not alone. "Mills is one of a growing number of renters who are being caught up in the nation's foreclosure crisis. According to RealtyTrac, a company that tracks foreclosures across the country, 1,785,596 foreclosures have been filed nationwide so far this year, a dramatic increase over a year ago. RealtyTrac say October foreclosures this year were up 94 percent over last October." (USA Today, 30 November) RD

WORKED TO DEATH

There is an old saw that claims "hard work never killed anybody", like most old saws it is absolute nonsense, as the following illustrates.
"A Toyota Motor Corp employee died of overwork after logging more than 106 hours of overtime in a month, a judge ruled Friday, reversing a ministry's earlier decision not to pay compensation to his widow. ...The employee, who was working at a Toyota factory in central Japan, died of irregular heartbeat in February 2002 after passing out in the factory around 4 a.m. "(The employee) worked for extremely long hours and the relationship between his work and death is strong," Yomiuri Online quoted Judge Toshiro Tamiya as saying. Overworking is a serious issue in Japan, where an average worker uses less than 50 percent of paid holidays, according to government data. In fiscal year 2005-2006, the labour ministry received 315 requests for compensation from the bereaved families of workers who died of strokes and other illnesses seen as work-related." (Yahoo News, 30 November)
This brings to mind another old saying - "Socialism won't work because the workers are too lazy"! RD

CHINESE COLONALISATION

Here is another example of the Chinese government that used to castigate European capitalism for exploiting less-developed parts of the world, engaging in the same adventurism that it once branded as "capitalist colonisation". "Overall, China's push into Africa has been remarkably successful. Chinese companies are sucking up oil from Sudan, cutting down timber in Guinea and mining copper and zinc from the Congo. Beijing recently bought a major stake in South Africa's Standard Bank to fund infrastructure projects throughout the continent. And the Chinese are far outpacing their Western rivals. China has opened more embassies in Africa than the United States has, and is even investing heavily in countries, like Rwanda, where the immediate returns are murky at best. Last year trade between Africa and China topped $50 billion. By 2010 it's projected to reach $100 billion." (Newsweek, 3 December) RD

Price fixing at your local supermarket

Always first with the news , Socialist Courier reported here the Capitalist Scam of supposed rivals and competitors co-operating to fix prices of goods to extract extra profits .

And lo and behold , what should appear on the BBC , but the revelation that Sainsbury's and Asda have admitted fixing the price of milk and cheese and who along with a number of dairy firms, have agreed to pay fines totalling at least £116 million following an inquiry by the Office of Fair Trading . Cases against Tesco and Morrisons will continue after no deal was struck.

The OFT said that its evidence found that while dairy product prices went up after the collusion, the price received by farmers did not increase. The price fixing saw customers being charged 3p extra for a pint of milk and 15p extra per quarter-pound of butter. Customers also being allegedly overcharged 15p per half-pound of cheese .

In September, the watchdog provisionally found evidence of collusion by 10 firms relating to price-setting in 2002 and 2003. Now Sainsbury's and Asda have admitted price-fixing of milk and cheese, as has Safeway - before it was bought by Morrisons. Safeway has also admitted colluding on the price of butter. Dairy product processors Dairy Crest, the Cheese Company and Wiseman Dairies were also fined .

So , indeed, "Every Little Helps" "That ASDA Price"

THE PRICE OF GOLD

About a quarter of a million mineworkers downed tools on Tuesday in South Africa, the world's top producer of gold and platinum.
"This year's death toll has reached 200, mostly owing to rock falls and explosions in several mines. Many mines have been unchanged for decades but recently reopened, thanks to high world prices that have made them profitable again." (Times, 5 December) The miners are concerned about the lack of safety in the mining industry which one striker described as "dripping in blood". The average wage of a miner in South Africa is about $200 a month. None of them will be wearing gold or diamonds that is for sure. RD

HEIRESS ON THE RUN

She was left $12 million but it was a mixed blessing as she received threats from blackmailers and kidnappers. "Their threats forced concerned friends to bundle her onboard a private jet under a new identity and take her into hiding. Her location is a closely guarded secret but she is reportedly living somewhere in Florida under 24 hour guard." (Times, 4 December) It is reported that her annual upkeep is $300,000 but this includes a rotating security team. Oh, did we mention she has weekly grooming visits and has to visit the vet for her liver condition? Yes, the vet! For she is a white Maltese dog called Trouble whose former owner was the hotel tycoon Leona Helmsley.
Go on tell us that capitalism isn't crazy! RD

OLD AGE FEARS

In so-called primitive societies that practiced a hunting/gathering existence, the elderly were protected and respected as knowledgeable members of the group. In modern capitalism the old are looked upon as a burden as can be seen from these findings.
"Britons are living in fear of growing old in a society that fails to respect the over-65s or provide adequate support for those in need, a Guardian poll reveals today. It found a country struggling to come to terms with demographic pressures that are set to see an increase in the number of older people by more than 60% over the next 25 years, putting a huge strain on the resources of the welfare state. The ICM poll found: 40% of Britons fear being lonely in their old age Two thirds of the adult population are "frightened" by the prospect of having to move into a care home; More than 90% said they knew they could not survive on the state pension and would need to rely on savings." (Guardian, 3 December) RD

THIS SPORTING LIFE

In the mad competitive struggle that is capitalism, the use of steroids by athletes has become commonplace, but what is not so well known is their use by school kids."Probably next week, but certainly before Christmas, the state of Texas will become the first to implement mandatory drug testing for high-school students." (Times, 1 December) This legislation is being introduced partly because of the suicide of Taylor Hooton, a 17 year old baseball pitcher at a Texas high school, but also because of a series of surveys that suggested that 2 - 6 per cent of high school take steroids. RD

PROMISES, PROMISES

Back in 1999 the then Prime Minister, Tony Blair promised to halve the number of poor children in 10 years and eradicate child poverty in 20 years. "The government's approach to tackling child poverty has lost momentum and is in "urgent need" of a major rethink, a charity has said. A Joseph Rowntree Foundation (JRF) report said there has been no sustained progress in the past three years. One in three UK children live in poverty. A report by the Treasury select committee fears the pledge to halve child poverty by 2010 is in doubt. Ministers say progress has been made, but acknowledge more needs to be done." (BBC News, 3 December) This is typical of reformist politicians - make promises, preferably far into the future and they will probably be forgotten when the next election comes along. RD

The Poor Pay More

Following up an earlier post we see from the BBC that energy companies have been accused by an industry watchdog of exploiting some of the poorest people in society.

Customers with pre-payment meters are paying hundreds of pounds more for electricity and gas than those with access to the cheapest tariffs . Customers on the meters are charged an average of £195 more a year than those paying by direct debit . In some cases, customers using meters have been found to pay as much as £304 more a year. There are 3.5 million electricity and 2.2 million gas pre-payment meters in Britain. Some 580,000 pre-payment meters were installed in 2006. Energywatch claims that 63% were installed by companies to recover debts, which would limit the ability of those households to switch to cheaper suppliers or payment methods.

"That they should ramp up the rates and exploit those with no access to alternative payment methods is morally bankrupt," said Energywatch chief executive of Allan Asher.

According to Energywatch, the industry is making conservatively close to £300 million a year in revenues from customers on pre-payment meters.

Bank Fraud

Elsewhere and if committed by others this would be classed as fraud and the perpetrators would be hounded but with such influence and clout with the State the banking industry can do no wrong under the eyes of the Law , it seems .

Britain's high street banks have raised billions of pounds in funds through complex financial deals that use supposedly charitable trusts which are not donating a penny to good causes . Trusts are set up during an elaborate process known as securitisation, which has increasingly replaced the traditional mortgage model in which banks made loans to home buyers and held on to the loans until they were paid off.
Over the last seven years, banks have been pooling many of their loans and turning them into mortgage-backed securities which can then be sold to large investors.
The banks have been doing this through trusts which they can control without owning, isolating financial risks, and keeping their liabilities off their balance sheets in a way that makes them appear more profitable. By giving the trusts a charitable status, they can be operated indefinitely. The trusts are not obliged to make any payments unless they are eventually wound up, and even then the amount any charity might receive would be only a small fraction of the sums raised.

Of the 12 institutions investigated by the Guardian, all admitted that their current series of "charitable" trusts had given nothing to charity.

Halifax names the National Society for the Prevention of Cruelty to Children (NSPCC) as a beneficiary, and has since raised funds on the back of almost £50bn of home loans. The Halifax admitted that this trust had not paid a penny to the NSPCC, however, and the charity said it knew nothing about the arrangement.

Northern Rock had raised £71bn through a Jersey-registered trust called Granite, which issued a prospectus that told potential investors: "Any profits ... will be paid for the benefit of the Down's Syndrome North East Association (UK) and for other charitable purposes."
Down's Syndrome North East, a small charity run by volunteers from a semi-detached house on the outskirts of Newcastle, was told nothing about this and did not receive any money.

Standard Life's trust, named Lothian, says it operates "for the benefit of charities involved in the domestic and international wellbeing of children". Standard Life would not identify these charities, but acknowledged that it had not paid them any money.

The Alliance and Leicester, for example, said it was one of the last UK banks to enter the mortgage securitisation market, and protested it had merely copied its competitors. "When entering the market, we took legal advice and followed a well-established structure already in use by very many other UK banks," a spokeswoman said. What an excuse but that's capitalism -- no scruples at all in the hunt for profits and always ready to join others with their snouts in the trough .

Christmas Good Cheer

The Herald reports that food prices are set to rise around the globe after years of decline, with climate change making it harder for the world's poorest to get adequate food . Rising global temperatures as well as growing food consumption in rapidly developing countries such as China and India are pressuring the world food system, meaning that prices will rise for the foreseeable future, according to the International Food Policy Research Institute. In addition, switching to crops used for biofuels will also reduce the amount of available food and increase prices

Hunger and malnutrition could rise as poor agricultural communities most sensitive to the environment, such as in Africa, are affected. Dependency on food imports will also increase as cereal yields decline in poorer countries. The world's agricultural production is projected to decrease by 16% by 2020 due to global warming, the report said, with land used for certain crops shrinking.

And we have the Independent reporting that the World's wealth already cannot provide for all its population and it is making the customary Christmas appeal for charity and alms .

Even in this supposed rich developed country there are tens of thousands of homeless yet according to Empty Homes Agency, a campaigning charity there are currently 663,000 wasted empty homes in England .

There are three main reasons for these 663,000 empty homes:-

First group have small-scale owners who've let the properties fall into disrepair, or have bought/inherited them in that state. But they don't have the time or the means, and so nothing is done year after year.

The second group are a consequence of property speculation. They are new-builds bought for investment. People buy off-plan with the intention to sell, will wait for their high expectations to be met rather than to accept what they're worth now or to rent them out. They'll gamble for big returns in the future rather than settle for a small but good income now .

The third group are publicly owned such as the Ministry of Defence or local authorities compulsory-purchasing homes with a view to regeneration. But some of those regeneration projects take forever, and in the meantime, homes that could be put to good use are sitting vacant.

Meanwhile between July 2005 and June 2006 139,760 were found to be homeless and the rate of homelessness in London is twice as high as the rest of England with over 50,000 homeless households. In Scotland , the number of households officially recognised as newly homeless in 2005/06 was 40,000.

BUDDY, CAN YOU SPARE A DIME

"Food banks around the country are reporting critical shortages that have forced them to ration supplies, distribute staples usually reserved for disaster relief and in some instances close. “It’s one of the most demanding years I’ve seen in my 30 years” in the field, said Catherine D’Amato, president and chief executive of the Greater Boston Food Bank, comparing the situation to the recession of the late 1970s. ..“It’s the price of oil, gas, rents and foreclosures,” said Melanie Gosselin, executive director of the New Hampshire Food Bank. Ms. Gosselin said household budget squeezes had led to a drop in donations and greater demand. “This is not the old ‘only the homeless are hungry,’” she said. “It’s working people.” (New York Times, 30 November) All this is happening in the most developed capitalist nation in the world at a time when billionaires are coining it in as never before. RD

POVERTY RECRUITS

Socialists have always maintained that poverty is the biggest recruiting agent when it comes to young workers joining the military and here is a recent example of it in the USA.
"One in 10 public high school students in Chicago, wears a military uniform to school and takes classes -- including how to shoot a gun properly -- from retired veterans. That number is expected to rise as junior military reserve programs expand across the country now that a congressional cap of 3,500 units has been lifted from the nearly century-old scheme...But opponents say the programs divert critical resources from crumbling public schools and lead to a militarization of US society. ..While military officials say the junior reserve programs are not used as recruiting tools, about 30 to 50 percent of cadets eventually enlist, according to congressional testimony by the chiefs of staff of the various armed services in February 2000. This is particularly troubling given that the programs are concentrated in low-income and minority neighbourhoods, said Sheena Gibbs, a spokeswoman for the Chicago branch of the American Friends Service Committee which lobbies against the programs." (Yahoo News, 25 November) RD

AN INSANE SOCIETY

That capitalism is a crazy social system is summed up by the following news item that occurs in a society where millions try to survive on less than a $1 a day. "One of the biggest truffles found in decades has fetched $330,000 (£165,000) at an auction held simultaneously in Macau, London and Florence. A Macau casino owner, Stanley Ho, made the record-breaking bid for the white truffle, which weighed 1.5kg (3.3lb). Luciano Savini and his son found the highly-prized fungus after it was dug up by his truffle dog near Pisa, northern Italy, last week." (BBC News, 2 December) RD