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On a day when tradition dictates that my countrymen and I celebrate the disposal of thirteen troublesome colonies (one of our more successful attempts to jettison a colony), ever the contrarian I will post about the continent which houses the site of my birth and in which I continue to live (showing a terrible lack of get-up-and-go in the author).

Europe, as a name at least, has been with us since the sixth century BCE thanks to Anaximander and his pals – though I suspect he may have been a little sketchy about its north-western regions, including the one where I reside.  Then again, it may be unwise to underestimate the Greeks (ancient or modern) and they may well have been better informed via networks of trade than I imagine.  I am regularly surprised (which probably demonstrate what a slow learner I am) how much that I consider modern is (much like myself) surprisingly ancient.  In many ways, as a species we have not progressed very far from the ancient Greek polis – and in some, any progress seems to have been retrograde.  I am far from convinced that possession of an iPhone makes us better people than our ancestors – though the technological society which permits its existence does mean we can do far more harm to our supporting biosphere than our antecedents could ever have dreamed (or desired).

I was somewhat disappointed to discover that the naming of the continent seems unrelated to any funny business between Almighty Zeus, in the form of a white bull, and a posh Phoenician bint.  Oh well, etymology can’t always come to the aid of the blogger in search of comedy gold.

In contrast to their Plantagenet precursors, many modern Britons view Europe with suspicion – and harbour positive hatred for the European Union and its evil plans to force human rights and low cost mobile phone calls upon us.  We folk of the UK wish to retain our age old rights to be tortured and overpay to use Facebook when on holiday – did Magna Carta die in vain? (To paraphrase Anthony Aloysious St John Hancock.)

On the whole, I approve of the ethos behind the whole European project – though frequently despair at its actual implementation.  I would far rather European countries indulged their desire for conflict with Johnny Foreigner via petty trade disputes than the laying waste of the continent.  As the conference I attended on Monday, and the events of Srebrenica twenty years ago it commemorated, reminds us, a continent free of bloody strife is far from a given: even in our supposedly enlightened times.  Sadly, in common with all large human organisations the EU is rife with inefficiency and bureaucracy and tends to attract those desirous of personal power and gain rather than with a genuine interest in improving the lot of its stakeholders (i.e. the rest of us).  This seems to be a problem which has been with us since not long after Europe was named (and perhaps even before, my Akkadian history is a little rusty) without a decent solution being implemented.

I believe without the EU we would have to invent something similar.  So many things today require transnational solutions, whether it be efficient delivery of low cost energy or the preservation of fishing stocks (to name but two).  Slow as the EU can be, it still manages to achieve rather more than the United Nations – albeit in a more modest geographical realm and much of it fairly pointless.  However, in a couple of years we could be out.  I have no idea whether the EU is a net benefit to the UK or not, even on a purely financial basis – and I’m pretty convinced that no-one else does either.  I’m fairly sure that leaving will prove rather expensive and disruptive in the short term, but have no doubt the UK – or the bits of it that remain attached (let’s just call them Greater London) – will continue, whichever way the referendum goes.

The one area in with I think the EU has gone badly awry is with the introduction and subsequent management of the Euro.  Don’t get me wrong, I find it dreadfully convenient when crossing the Channel or Irish Sea for either business or pleasure, but I’m not sure that this modest gain at the expense of Travelex and its ilk is really worth the rather serious costs.  I am reminded of A Third, the play I saw on Sunday evening, in which a couple want to be the sort of people who would enjoy a threesome and so act this out in the hope that this will make it true.  I feel Europe wanted to be the sort of place which enjoyed the benefits of a single currency, and so introduced one in the hope that acting out their desires would similarly make them a reality.  However, for a single currency – like a threesome – to work, the underlying fundamentals of the relationship have to be right – and this has been rather neglected.  In both the play and the continent, a bunch of rules were established before you were allowed to join in and then the scope of the activities grew and the rules were ‘adjusted’.  My reading of the play was that the original relationship was destroyed: we shall have to wait and see what happens to the EU.  I must admit that when watching the play, I did not think “gosh, this is an analogy for the Euro” – this rather dim epiphany came later (and aren’t we all glad that it did?).

I am far from convinced that a single currency makes sense for the UK (let alone the whole continent), and through my lifetime the pound which is run for the benefit of London (or so it has seemed to me) has been unhelpful for regions which are distant geographically and structurally from this single, dominant centre.  The same story has played out in Europe, where countries with markedly different economies from the dominant German centre have lost control of a critical economic lever (something which our government seems determined to do on its own with several of its levers) and suffered as a result.  Frankly, the Germans should have seen this coming given their own challenges (and costs) bringing the country together under the Deutschmark following reunification. Trying to do the same thing for an entire continent was always going to be problematic, though initially disguised by the apparent growth years at the start of the millenium.  As a result, my sympathy for the Hun is rather limited.

As I write this, I am starting to believe that I must be quite a decent economist – drawing lessons from both German unification and a play about increasing the team size for bedroom games.  Perhaps this is what is lacking in the training of modern economists – they need a little more history and drama in their intellectual diet.  Once again the Arts and Humanities prove their value: if only more people were paying attention.  Forget PPE, HDE should be the future educational choice for those seeing political advancement.  I could be persuaded to teach a module or two – let’s face it, my teaching is unlikely to create a worse shambles than the current Greek and EU leadership have achieved.  Of course, it is probably just this sort of self-delusion which has brought the world to the plight it is suffering today – though, to be fair to the author, he is only writing about it in a thinly-read blog rather than trying to inflict it on a continent of half-a billion people.

Definitely not The Economist

Not even an economist – I could never really handle all the hand-waving.  (Mathematicians will recognise this as a deadly insult, the rest of you will have to take my word for it).

There has been a lot of ill-informed discussion about large corporations (mostly hailing from one of our less successful ex-colonies) not contributing their fair share of tax to the UK exchequer in the media of late.  Never one to avoid a band-wagon – even well after it has passed – I figured it was time to jump on.

Much of the previous discussion has focused on the disparity between turnover in the UK and tax paid.  As I’m fairly sure I’ve mentioned before, turnover is no guarantee of profit – just look at Comet or all the banks we’ve been required to bail out: plenty of turnover, but not much sign of an elusive profit.

If we assume a profit has really been made – something of which these tax-shy corporations have presumably managed to convince their shareholders – then there are quite sensible reasons for a foreign domiciled company to try and avoid tax in the UK.  Tax treaties between countries are generally fairly poor (as both tax authorities want the money) and so unless they are careful, companies can end up being taxed on the same profit twice (something they are understandably keen to avoid).  Unfortunately, a company based in country (US)A and operating in country (G)B having discovered how to avoid corporation tax in B can use much the same bunch of tricks to avoid paying tax in A.  Rather a classic prisoners’ dilemma – by both tax authorities trying to keep all the money, both in fact receive almost none.

Still, all is not lost – these companies do buy stuff (some of it might even be sourced in the UK) and will have to pay VAT on some of this, they also pay business rates and employ staff.  These staff will have to pay income tax and NI (well, those well enough paid to owe tax and too poorly paid to avoid it) and, should they be foolish enough to spend any of their salary, will also pay VAT and a range of other duties enriching UK plc.

So, how does this balance out I wondered?  Sadly, numbers are hard to come by without a large team of spies and statisticians – so I shall resort to a qualitative look at a couple of the case studies.

Starbucks saw the early brunt of outrage.  They entered the UK by buying an existing and rapidly-expanding chain of coffee shops: the Seattle Coffee Company.  I will assume that SCC paid normal UK corporation tax as it operated in the UK alone – so UK plc has lost all of this revenue.  SCC also provided all the other revenue advantages of Starbucks to UK plc, albiet in a rather smaller scale,  Such has been the growth of Starbucks that you are now (on average) closer to a purveyor of mediocre, over-priced coffee than you are to a rat.  The big question is: if Starbucks had not come to these shores, would all these coffee shops be empty and their staff unemployed or would other coffee vendors or better still, for the non-coffee drinker (such as myself), something more useful have taken their place?  This is a hard question to answer, but on balance I suspect Starbucks presence on these shores has not been a net benefit to the UK exchequer – so I shall continue my quest to buy hot chocolate and cake from independent coffee shops (the Indigo Cafe is my preferred venue in Cambridge) and leave Starbucks to wither on the vine.  Admittedly, whilst I have had some great chocolate and cake, Starbucks is withering quite slowly despite my endeavours.  I must redouble my efforts – it won’t be easy forcing myself to eat more cake, but George Osborne is depending on me!

Amazon is another whipping boy.  To the best of my knowledge, they did not enter the UK by taking over another business – so no corporation tax lost there.  On the negative side of the ledger, they have been one of the primary reason for the loss of bookshops, record shops and the like from our high streets.  That seems like quite a major loss of corporation tax and I have a nasty feeling that Amazon employ an awful lot fewer people than the businesses they have displaced.  They may well shift a lot more product, but until very recently a lot of this avoided VAT by using a tax loophole relating the the Channel Islands.  I rather fear Amazon has had a very negative effect on revenues for UK plc – and so my use of a Kindle and Lovefilm is looking ethically rather dodgy (I don’t buy anything physical from them, I stopped when they ceased using the Post Office for deliveries).  Sadly, ethical alternatives are hard to find, but at least Lovefilm does give the Post Office some business.

When I was in Edinburgh, I had a few minutes to kill and wandered round Blackwells: I’d forgotten the joy of wandering round a bookshop and the serendipitous finding of interesting new books; whilst Amazon recommends stuff, it is utterly useless in this regard.  I have resolved to spend more time in bookshops and to buy books there.  Yes, I know, I’m almost too selfless…

This has not been a terrifically scientific survey of the tax issue, but I think I shall try and use smaller, UK-based business for my spending needs (or, more honestly, wants) in future wherever I can.  It also leads to a more interesting life away from the corporate uniformity that seems to dominate in so many places.  Feel free to join me!