A MAD, MAD WORLD

"Just a few weeks ago, we reported with patriotic fervour the British businessman who paid almost £500,000 for the licence plate "F!". Stout, upstanding, well-adjusted fellow. But now an Abu Dhabi property magnate has smashed the world record for the most expensive number plate, paying - ready for this? - £7.1 million on the plate '1'. Cash-addled fool. "I bought it because it's the best number," said Saeed Khouri at the auction in the United Arab Emirates. "I bought it because I want to be the best in the world." (Top Gear, 18 February) RD

A WASTEFUL SOCIETY

"President Bush asked Congress on Monday for $515 billion for military spending, an increase of 7.5% compared with last year. Among the major factors driving the increase is the Pentagon's plan to bolster the ranks of the Army and Marine Corps, forces stretched thin by two wars. The budget calls for an $8.7 billion hike to $20.5 billion in 2009 to add 7,000 soldiers and 5,000 Marines. (USA Today, 4 February) RD

Tesco move to the Cayman Islands

Tesco has created an elaborate corporate structure involving offshore tax havens which enables it to avoid paying what could be up to £1bn of tax on profits from the sale of its UK properties. The complex new structures uncovered by a six-month Guardian investigation include a string of Cayman Island companies. These are being used by the supermarket giant as it proceeds with its announced programme to sell and lease back £6bn worth of its UK stores.
The stores are being sold to external investors providing Tesco with a big one-off gain which, ordinarily, would be liable to tax, while allowing it to remain in the stores and pay rent to the new owners. The first two deals, worth £445m and £650m, have already used the companies set up in the Cayman Islands - where the rate of corporation tax is zero - allowing Tesco to avoid tax on about £500m profit. Large corporations are increasingly developing strategies to cut tax bills and Tesco is not alone in its tax planning.
The Guardian's analysis of Tesco's accounts over the past five years also shows that the company has paid an effective tax rate of just over 20% on the rest of its profits, at a time when the UK corporation tax rate is 30%.

The investigation has found:
· New company structures set up by Tesco to own stores that are being sold and leased back mean that 99.9% of the company that owns the stores could end up being held offshore. Tesco would be liable to pay UK tax on only the 0.1% of its profit on the sale of the stores held in the UK. Tesco's first two property deals, worth about £1bn, have used this structure and will avoid tax on £500m of profits.
· Although its accounts for the past five years report an average rate of corporation tax of 29%, the actual rate of tax Tesco paid, according to its cash flow statement, is closer to 20%. This is on profits separate from the property deals. UK corporation tax is 30%.
· Tesco has sold its 37 stores in the first two sale and leaseback deals at twice the book value that is included in its accounts, making a profit of about £500m on the £1bn of stores sold. If it achieves the same rate of return on all its disposals as expected, its share of profits from property sales would come to about £3bn. The UK corporation tax due on this would be as high as £1bn, but the retailer could avoid paying this because of its offshore structure.
· A string of other company structures leading to the Cayman Islands have been set up and more of Tesco's properties have already been transferred to them so that they could be quickly activated for the next tranche of store sales.

Tesco Red (GP), which acted as general partner in the £445 million sale-and-leaseback partnership with the British Airways pension funds did indeed pay UK tax on its share of income from ongoing business after the deal. Tesco Red (GP)'s UK income for the period to February 28 2007 was just a measly £832 and its UK tax bill was £494.

Tesco claim since they pay corporation tax, business rates, employer's national insurance contributions and other taxes. Combined with the approximately £750m of PAYE tax, employee's NIC and net VAT that we collected in that financial year, this means they are in the top 10 taxpayers in the UK. We wonder how their rival supermarkets and competitors feel - or are they up to the same tax avoidance [ tax avoidance rather than tax evasion or tax cheating, of course ]



Nearly a third of the UK's 700 largest businesses paid no corporation tax in the year 2005-6. A further third paid less than £10m each, according to figures from the National Audit Office released last year.

Charity begins at home

An urgent appeal for food for families and individuals in need has been made by a Highland charity. Blythswood Care, known for transporting relief aid to Eastern Europe, said there has been an increased demand in the Highlands over the winter months.

It warned that it had already helped 340 people this year and that stocks were running low. The Highland Food Bank gives a three-day supply of foodstuffs to households in financial crises.

Co-ordinator Lorna Dempster said that the Highland Food Bank helped more than 1,700 people in 2007 - an increase of 70% over the previous year, when 1,000 clients were helped

Tax Fraudsters

THE tiny principality of Liechtenstein is one of three countries to be blacklisted by the OECD for failure to co-operate with a clampdown on tax avoidance.With a population of around 35,000, Liechtenstein has a banking system shrouded in secrecy.The OECD named it, along with Monaco and Andorra, as a country that could do more to clean up its tax laws. It has also been accused of condoning money laundering, and tax evasion.Non-residents can set up a foundation, allowing them to avoid taxes. Foundations also minimise requirements to file returns or accounts and guarantee anonymity for the investor.There is no need to keep accounts or submit financial statements if the foundation does no business or trade. If the foundation qualifies as an offshore company, it is not subject to income tax or capital gains tax in Liechtenstein. The only requirement is to maintain an "office" in Liechtenstein, but this can be a mailing address.

THE identities of wealthy British tax evaders will be kept secret, even though UK tax authorities now have access to their details, it emerged yesterday. HM Revenue and Customs has admitted it has details of about 100 Britons who evade an estimated £100 million in taxes through Liechtenstein. The names will only be unveiled in the improbable event of a criminal prosecution. A spokesman for HMRC admitted this was "highly unlikely", because it was so difficult to prove tax evasion in court and it would cost taxpayers too much to pursue a trial. Of an estimated 130,000 inquiries into alleged tax fraud last year, only a "handful" ended up in criminal trials.

Not quite the same zeal the State puts in when it comes to hounding those of the working class who may be claiming a little more than the rules and regulations of the so-called welfare system .

Scottish Capitalists - Little Changes

Scottish investment trust boards are still open to the charge that they recruit their members primarily on the golf course, according to research .

Coburn Blair, an Edinburgh-based specialist in recruiting non-executive directors, has analysed the boards of the 48 investment trusts managed by Scottish-based fund managers and concludes: "... in truth, not a lot has changed."

Although some boards now go through a formal selection process, others in practice continue to recruit informally in the way they have always done.
"If you want to join an investment trust board it still certainly helps if you're already known to the chairman or other board members. So, if it's fair to say that the Edinburgh mafia of old is no longer such a cosy clique as it used to be, it is still true that once you're on the board of one investment trust and can demonstrate you know how to hold your knife and fork at the after-meeting lunch, it's usually only a matter of time before you're invited to join a second board and then another and another."

James Ferguson, a former director of Stewart Ivory, holds the record for purely Scottish trusts, sitting on five boards, while Douglas McDougall, the former senior partner of Baillie Gifford, currently holds seven appointments including English trusts. [ This seems to reflect a general trend within capitalism as an American blog reports "Several studies show that those 15-20% of corporate directors who sit on two or more boards, who are called the "inner circle" of the corporate directorate, unite 80-90% of the largest corporations in the United States into a well-connected "corporate community" and that the upper class has it's own exclusive social institutions which include private schools, summer resorts and retreats, and social clubs and gatherings.]
Turnover on the boards is not as high as the industry's trade body, the Association of Investment Companies (AIC), suggests it should be.The AIC recommendation is that directors serve no more than nine years unless they show a good reason, but in practice many serve much longer. The average length of tenure of chairmen in Scotland is 10 years, and Sir William Thomson, now 67, has been on the board of British Assets Trust for 23 years. Sir Angus Grossart gave up the chairmanship of Scottish Investment Trust after 27 years, under pressure from shareholders in 2003, while Sir George Mathewson, 24 years a director of the same trust, recently stood down from two of its key committees but not from the board.

The report says: "The non-execs are paid on average between £10,000 and £20,000 a year and while the highest-paid Scottish chairman earns £63,000, most earn less than £30,000, which is not a fortune - but not bad when one considers the hours required: most boards meet formally no more than six times a year."

Capitalism - Bad for your health

There could be thousands more heart attacks if the Northern Rock crisis was repeated at other banks across the UK, a Cambridge University study suggests. Cardiac deaths surged "briefly and regularly" every time there was a systemic bank failure, the team found.

The report, which examines how banking crises have affected health in the last 40 years, is one of the first to look at the relationship between the two. When a financial crisis hit a developed country, heart attacks rose by 6.4%. This figure was even higher in the developing world, the Globalization and Health journal study suggested. In countries such as India a combination of both poorer banking regulatory systems and inferior health care could lead to an even higher death toll - with deaths rising by as much as 26%, the researchers suggested.

Extrapolated to the UK, more crises in the style of Northern Rock, where funding problems last year triggered the first run on a British bank in more than a century, could lead to as many as 5,000 more fatal heart attacks. The elderly, who would be more likely to be at risk of heart problems in the first place, would be the most likely to feel threatened by risks to their life-long accumulated savings.

Capitalism should come with a health warning .

And if that news depresses you , it is also revealed that the new generation anti-depressants have little clinical benefit for most patients and in most cases had no more effect than taking a dummy pill.

Kids'R'Profits

Most adults in the UK believe that children's well-being is being damaged because childhood has become too commercial, a lifestyle poll has found. The children's market is worth an estimated £30 billion a year.

The Children's Society said adults had to "take responsibility for the current level of marketing to children...To accuse children of being materialistic in such a culture is a cop-out," said the chief executive of the society. "Unless we question our own behaviour as a society we risk creating a generation who are left unfulfilled through chasing unattainable lifestyles."

Dr. Rowan Williams, the Archbishop of Canterbury, who is patron of the inquiry, said: "Children should be encouraged to value themselves for who they are as people rather than what they own. The selling of lifestyles to children creates a culture of material competitiveness and promotes acquisitive individualism at the expense of the principles of community and co-operation." [ The capitalist press certainly aren't making this remark by the Archbishop front page headline news as they did with his Sharia law comment , are they ?]

One member of the childhood inquiry panel has warned that the commercial pressures on youngsters may have damaging psychological effects. Professor Philip Graham, Emeritus Professor of Child Psychiatry at the Institute of Child Health in London, said:
"One factor that may be leading to rising mental health problems is the increasing degree to which children and young people are preoccupied with possessions; the latest in fashionable clothes and electronic equipment. Evidence both from from the United States and from the UK suggests that those most influenced by commercial pressures also show higher rates of mental health problems," .

The Good Childhood report found:
"Advertising to children was ruthless and exploitative and they should not be viewed as small consumers, particularly for younger children with impressionable minds."

MISERY IN THE USA

"By virtually every indicator, 2007 was a dismal year for American workers. Job growth slowed, unemployment jumped and wages lost what little ground they had gained against inflation since 2003. There is one sliver of good news: the percentage of American workers who belong to a union rose for the first time in three decades. ...There is little doubt that American workers need unions. Wages today are almost 10 percent lower than they were in 1973, after accounting for inflation. The share of national income devoted to workers’ wages and benefits is at its lowest since the late-1960s, while the share going to profits has surged. The decline in unionization has been a big part of the reason that workers have lost so much ground." (New York Times, 7 February) RD

MIDDLE EAST SUPRESSION

"Predictability is a trait that few would ascribe to the Middle East, yet Arab interior ministers have gathered quietly, every winter for the past 25 years, to talk about how better to secure the regimes they serve. At this year's summit, in Tunis, the security chiefs agreed to toughen rules on publishing, recording or distributing material that might promote terrorism. A worthy goal, surely, except that the region's authorities have a habit of defining as crimes the kind of things their critics would deem legitimate dissent. Despite the flourishing of alternative media, such as satellite television and internet blogs, that challenge once-impregnable state monopolies on the flow of news, governments keep finding new ways to suppress contrary views. Whereas the dictatorships of old snuffed out opponents or chucked them in jail, today's softer incarnations achieve similar silence by subtler means. Hyper-regulation via catch-all laws, plus financial carrots and sticks, tend to replace cruder direct control. In draconian Syria, the vague crime of “disseminating false information” carries a stiff jail sentence. But as many journalists in relatively liberal Morocco have discovered, to criticise public officials is to risk libel charges that carry ruinous fines." (Economist, 7 February) RD

RELIGION IN ACTION

"Baghdad, Iraq: - The images in the Basra police file are nauseating: Page after page of women killed in brutal fashion -- some strangled to death, their faces disfigured; others beheaded. All bear signs of torture. The women are killed, police say, because they failed to wear a headscarf or because they ignored other "rules" that secretive fundamentalist groups want to enforce."
(CNN.com, 8 February) RD

MORE CONSPICIOUS CONSUMPTION

"The best way to a man's heart is through his wheels. And the Ecosse Heretic Titanium motorcycle is about as palpitation-inducing as they come. The first bike made with an all-titanium chassis, it marries high-tech engineering with old-style design. Built for speed, the handmade engine is composed of solid aluminium and is fuel-injected and supercharged. But thanks to a radial braking system with 12 individual brake pads in front, it's easy to stop, too. Made with a carbon-fibre body, the Heretic Titanium is also shockingly lightweight, tipping the scales at about 192kg. And it's comfortable, with an adjustable, ergonomically correct gel-padded seat. As the world's most expensive bike, perhaps it's only fitting that it comes with a matching timepiece ($275,000; www .ecossemoto.com). But with this baby, he'll never be late. (Newsweek, 11 February) RD

THE CLOAK OF RELIGION

The French President has lately been making all sorts of religious speeches for the attention of the media. "When Mr. Sarkozy was made an Honorary Canon of the Basilica of St. John Lateran in Rome last December, he proposed a “positive secularism” that “does not consider religions a danger, but an asset.” He was even more provocative in declaring that “the schoolteacher will never be able to replace the priest or the pastor” in teaching the difference between good and evil. ...In France, a country where one’s religion is typically kept private, Mr. Sarkozy heralds his religious identity, referring publicly to his Jewish grandfather and wearing his Roman Catholicism on his sleeve. “I am of Catholic culture, Catholic tradition, Catholic belief, even if my religious practice is episodic,” he wrote in a book of essays in 2004. “I consider myself as a member of the Catholic Church.” Still, Mr. Sarkozy’s conduct in his personal life seems to contradict the image of Catholic spirituality. Twice divorced, three times married, he has alienated the country to the point that there is widespread disapproval of his behaviour in his personal life." (New York Times, 16 February) It could be that like many politicians before him Mr Sarkozy's religious zeal owes more to expediency than conviction. RD

FASCISM IS NOT DEAD

One of the lies about the Second World War that socialists had to deal with was the illusion that the war would destroy fascism. At the time we pointed out that this was not the case and today we have evidence to prove it. Not only is there a growing fascist movement in East Germany and Russia but now we learn of the situation in Hungary."The far right is on the march in Hungary, literally. In recent months, hardly a week has gone by without a rally being held by the Magyar Garda or "Hungarian Guard," their members decked out in black boots and uniforms bearing nationalist symbols last employed by Hungarian fascists during World War II. Their target: Romany (gypsy) criminals and those who want to integrate Romany children into the country's schools. Their rallies usually take place in communities with a large Roma population, where they style themselves as protectors of ethnic Hungarians." (Yahoo News, 13 February) RD

NO CLASS STRUGGLE?

"British employers are hiring aggressive US-style “union busting” consultants to persuade workers against joining trade unions, Brendan Barber, the TUC general secretary, warned on Tuesday. The TUC and its US equivalent, the American Federation of Labour and Congress of Industrial Organizations (AFL-CIO), are joining forces to “thwart employer efforts on both sides of the Atlantic to demonise trade unions and scare employees from joining up.”
(Financial Times, 12 February) RD

MIND THE GAP (2)

"Economic gloom is spreading. In December a Guardian/ICM poll found that economic confidence remained strong, with 55% voters either very or fairly optimistic about their prospects. Now 51% are pessimistic. The shift is most marked among poorest voters, where confidence has plunged from 51% in December to 33% now. By contrast voters at the top of the economic scale are not alarmed: 64% are confident about their prospects now, against only 60% in December. That suggests the gap between rich and poor is widening, a source of growing public resentment. A large majority, 75%, say the gap between high and low incomes is too wide in Britain, the highest ever level found by ICM." (Guardian, 20 February) RD

RECESSION! WHAT RECESSION?

"But on the evidence of the last three days, art sales are as healthy as ever. Christie's on Monday had the second highest total sales for an individual European sale at £105m, only for Sotheby's to take that title 24 hours later when it made £117m. Last night's sale made £72.9m and saw a record paid for a Bridget Riley work - Static 2 (1966) - as well as artist records for Lucio Fontana (£6.7m) and Gerhard Richter (£7.3m). Pilar Ordovas, head of post-war art at Christie's, said the sale showed the incredible strength of London: "It's a fantastic result, I'm incredibly proud. We beat Van Gogh you know - it's great." Bill Jackson, an independent art and auction consultant, who advises Deloitte on its art collection, said there was no sign of any downturn. "The market is very buoyant, it's extraordinary. I think it can last because there are a lot of very rich people who are not affected by mini-recessions or the market effect." (Guardian, 7 February) RD

British Gas Prices

Latest estimates put 4.5 million UK households in fuel poverty; spending more than 10 per cent of their income on gas and electricity. Just one month after British Gas increased energy bills by 15 per cent British Gas, the country's biggest energy supplier, is expected to announce a 500 per cent rise in profits today.

"It's quite sickening when companies make these huge profits while, at the same time, we are expecting 25,000 excess winter deaths as a result of people not being able to keep warm," said Lesley Davies, the chairman of the National Right to Fuel Campaign. "They prattle on about the winter fuel payments for pensioners but there are just as many single-parent families and others who cannot get the payment."

And like other businesses it isn't only the customer that is suffering but also the employees - The GMB union complained that as well as "fleecing its customers and making record profits" British Gas was scrapping its final-salary pension scheme.

But Capitalism and the competitive market benefits the consumer surely - or at least that is what the capitalist economics textbooks like to state .

In all, 20 active suppliers have reduced to six companies . These big six energy companies are both producers or generators and retailers. That means they make money when the wholesale price is high and they make money when the wholesale price is low. In the most contested part of the market place – the average direct debit, dual fuel customer – only £13 separates the offers from the five companies which have raised prices so far. An average consumer switching from one such deal to another stands to save 25 pence a week.

Capitalism - Delivering a service - But for a price .

THE FREE PRESS?

"According to Reporters without Borders, a Paris-based lobby, more than 200 media workers have lost their lives in Iraq since 2003. In the same period, prominent journalists in Algeria, Egypt, Iran, Lebanon, Libya and Sudan have been killed or gone missing in suspicious circumstances. In the past two months alone, the authorities in Gaza, Saudi Arabia and Sudan have summarily jailed reporters or internet bloggers. ( Economist, 7 February) RD

MIND THE GAP

"When Forbes magazine began compiling a Russian rich list in 2004, it stated that there were 36 billionaires. Last year there were 53, worth a total of $282 billion; and in this year's the editor believes there will be "at least 80" - only the US has more. The 100 richest citizens are reckoned to be worth almost 25 per cent of the nation's GDP, while 20 per cent of the country lives below the poverty line, according to the most conservative estimates."
(Observer Magazine, 17 February) RD