Author: johnredwood

When we leave the EU we will not leave Europe. We will still trade with them, have many agreements with them, we will travel, enjoy each other’s culture and language, foster student  exchanges, undertake joint research, common investment projects and much else.

Anyone from another member state currently living in the UK under the legal provisions of the EU treaties will be welcome to stay and will  be protected under international law anyway. So will all UK residents living in continental EU countries. It is only the rules about new entrants that will change.

An independent UK will still want to offer many university places to European students, and many UK students will still travel and study on the continent. The UK will remain an important part of the academic global community with many links and common programmes with our European, American and US allies and partners.

All the money that the EU sends to universities, farmers and others will be continued as UK government payments, as we have to send Brussels the money in order for them to send some of it back.

A free UK will still welcome in many qualified and talented people to take jobs here, and will make sure our border system allows UK business access to the talent worldwide it seeks. The new border controls will simply create a fairer system of control for people seeking low paid and unskilled jobs, with the same rules for non EU and EU people. It will also give us back the ability to limit the total numbers in any given year.

The UK leaving the EU will still be willing to import continental goods and services with no new restrictions on our trade. We can look forward to the rest of the EU wanting trade arrangements that preserve their present access to the UK market as they sell us so much more than we sell them.

The Labour, Conservative and Lib Dem parties are united in wishing to keep the EU employment laws that offer protections to UK employees. There are no proposals to water down employment protections on exit.

Yesterday we discussed the Remain campaign’s repetitive question, and the misleading answers they give to it though it should be for us to answer. What does Brexit look like? We have never suggested it looks like the Norwegian or the Swiss model, which they want it to be so they can knock those down.

 

We decided that we often tell them what Brexit looks like, and we should spend the next few weeks telling people again and again what Brexit looks like, because it will be a more prosperous, freer and  more democratic Britain that we create on exit from the EU. So here goes:

 

 

Brexit means taking control of our own money and spending it on our own priorities. It means offering that Brexit budget to banish austerity, spending £10bn more on what matters to us. It means  s an immediate and substantial improvement in the UK  balance of payments as our contributions to the EU stop.

 

Brexit means taking control of our borders, so we decide how many people to invite in to our country. It means a fair migration policy offering the same opportunities to  people from the rest of the world as from the rest of Europe. It means inviting in students to study, welcoming skilled and talented people into jobs where we need them,  accepting entrepreneurs and investors who want to create jobs and own assets in the UK. As Lord Rose of Remain has said it means higher wages as we cut the flows of EU migrants into low paid jobs.

 

Brexit means setting the taxes we want to impose. It means we can keep the corporate taxes we raise from big business, instead of losing £7bn every five years from European Court judgements making us send money back to those rich  companies. It means we can abolish VAT on domestic fuel to tackle fuel poverty, scrap the hated tampon tax and take VAT off green products and insulation materials.

 

Brexit means making our own laws without having to get the agreement of 27 other countries.

 

Brexit means restoring the UK’s influence in the world, as we regain our vote and voice on world bodies which the EU has taken from us. We will be able to negotiate our own free trade agreements with the fats growing economies of the world.

And Brexit means continuing to trade with the rest of the EU as we do today. As Lord Rose has said, after Brexit little on trade and  business matters will change. The rest of the EU does not wish to sell us less and realises they cannot impose new barriers to a profitable trade.

 

Brexit means a more prosperous, freer, more influential UK . Referendum Day can be  Independence day, the day we restore our democracy.

We can be sure of just one thing about the voting intentions of Cabinet members on June 23rd. The six ( now 5 after resignation) brave enough to declare for Brexit will vote for it. It is not easy for a serving Cabinet Minister to disagree so fundamentally with the Prime Minister, so if they do so they will see it through.

But can Mr Cameron rely on the votes of all the other 16 in the privacy of the polling booth? There are some very unlikely converts to the joys of the EU amongst the Cabinet. They will live through some very uncomfortable interviews, problems with explaining their positions to their Conservative Associations and no doubt a good few constituent emails and letters. In the end their own inner beliefs may come through in what after all is a secret ballot.

Those who come out and speak about the topic are often quick to criticise aspects of the present EU. None of them want us to join its two central features, the common frontiers and the single currency. It’s as if we had joined a football club, only to state we have no intention of either playing or watching any football, and then demanding a lower subscription to the club because we don’t join in its main purposes.

Listening to the Prime Minister himself who will vote to stay in I am struck by how much of what he says about the EU is negative. He stresses all the things we are out of thanks to past opt outs, or things he wants us to be out of but probably are not owing to the weak deal. The Remain side  wants to win based on describing unappealing versions of Out which we do not have to choose, whilst stressing Eurosceptic negatives on the organisation they are  in practice recommending to us!

So who is the genuine EU enthusiast in the Cabinet? The curious thing is there isn’t one. Mrs May is as close as you get to someone who can see some good in the organisation and wants to expand its power a bit. You need to go to the next layer down to find a believer like Anna Soubry. Never has a Cabinet risked so much to argue such an unpopular case when so few of them believe in it.
The face of the EU is the face that has launched a thousand whips. Most of those whips have been as unpalatable as the EU’s face is unattractive to many Conservative MPs.

The news background for the beleaguered Euro area has remained poor. It has not received so much prominence against the competition of the migration crisis, but it remains serious.
The latest easing from the European Central Bank has not resolved the difficulties of credit creation in a zone with too many weak banks. The Bank of Portugal is now being sued over bond changes applied to Novo Banco in Portugal. The Head of the IMF has been undertaking an acrimonious correspondence with the Greek authorities about the lack of progress in their implementation of austerity policies as a prelude to extending further credit to them. The Italian authorities are said to be looking at ways of getting more capital into their weaker banks and relieving them of some of the problem loans that enfeeble them.

The Euro area economy remains mired in unemployment in much of the zone. The Spanish economy has improved a bit but one in five are still out of work. The Greeks are living with one in four out of work. In Greece one in two young people are out of a job and youth unemployment is still at 45% in Spain. Greece needs to borrow more to keep going. The European authorities and the IMF want Greece to make further cuts to pensions, and to press on with privatisations that many Greeks oppose.

The ECB has now set negative interest rates and is offering more cheap money to the commercial banks. All the time it also needs them to raise more cash and capital, which acts as brake on credit expansion. The Greek banks received extra capital in the last bail out package, but were damaged by the last Greek euro crisis.

The Greek crisis has not gone away. The recent flare up with the IMF is over the need for a longer term solution. The IMF appears to think Greece will need debt restructuring, a polite way of saying some of Greece’s large outstanding state debt has to be written off or put onto easier terms. The IMF also argues that there need to be more cuts all the time Greece is struggling with the present interest burden on her debts. It takes more reductions in public spending, more sales of public assets and more tax revenue, given the magnitude of interest charges and the future debt repayment burden.

We may be about to see a re-run of well rehearsed arguments and tensions. Germany is reluctant to give Greece more money, German electors are not in a giving mood. Any write off of debt burdens means in effect that money advanced to Greece by Germany and others ceases to be a loan and becomes a grant. Meanwhile Greece has a new argument to deploy in opposing austerity. The arrival of large numbers of migrants in Greece coupled with closing of borders to the north leaves Greece with substantial financial obligations to cater for the refugees and migrants. If Greece is to house and feed these people on behalf of the Schengen area and the wider EU, shouldn’t she be allowed some relaxation of the financial constraints?

To many in the rest of the EU the UK referendum is an unwelcome distraction from these big problems that swirl around the single currency. Wouldn’t the UK’s exit help the rest concentrate on the problems their currency scheme has created?

The latest debate about investing and tax has an added salaciousness because some of the investments concerned are abroad or “offshore”. The first thing to grasp is most overseas investments by UK savers are nothing to do with tax planning, but are undertaken to diversify the person’s investments and obtain income and gains from the success of foreign companies and countries.

Again let’s start with the MPs. The MP Pension Plan has substantial investments in foreign assets, like most company and government funded pension plans. These assets are not bought to save tax. The beneficiaries of the MP Pension Plan are enjoying complete tax relief on all the income and gains whilst the money stays in the fund anyway, so it makes no difference where the holdings are invested. For taxpayers saving money and investing abroad, again there is no tax advantage as long as they declare things honestly. If you buy a foreign investment from UK money outside a Pension Plan or ISA you have to pay full income tax and capital gains in the normal way on income and gains made.

Many UK people own unit trusts or Exchange Traded funds that provide them with ready made portfolios of shares. Many of these are based abroad. Under EU UCITs rules providing a legal framework for such funds most are set up in either Ireland or Luxembourg, two of the EU’s “tax havens”. All this is legal under EU and UK rules. UK holders of units or shares in these funds pay full UK tax on income as they earn it and gains when they take them. It is an interesting sidelight on how good the EU single market is for the City that most of these funds are resident outside the UK.

A minority of overseas arrangements are designed to allow rich people or companies to change tax jurisdictions. These could be tax evasion. The people involved need to take good advice and to declare what they are doing to the relevant authorities. The UK now has a requirement for people to register schemes prior to entering them. Any UK citizen and resident who withdraws a load of cash, takes it out of the country, and then invests it elsewehere without declaring the income and gains to the UK authorities is committing an offence and should traced and prosecuted. There are sophisticated electronic versions of the same thing which are also against the law.

Like most people I think rich individuals and companies should obey the tax laws in the places where they earn and spend. They should be pursued and prosecuted where they knowingly falsify their declarations, deliberately conceal income and assets that should be taxed or set up complex arrangements with the express purpose of changing jurisdictions in ways which are unlawful. Tax evasion is against the law and has to be tackled, as governments seek to do. If the Panama papers do reveal tax evasion rather than avoidance their leaking should help speed prosecutions of those concerned.

Practically all the MPs currently in full cry against tax avoidance, the legal reduction of tax bills whilst declaring your affairs honestly, avoid tax themselves. They are members of the MPs pension plan, a legal scheme to avoid tax and defer tax on a part of their income. The 25 % tax free lump sum they can draw on retirement means complete tax avoidance on those contributions and subsequent gains and income in the fund. The money drawn out as pension may be taxed at a lower rate than the tax relief they got on saving the money in the first place. All income and capital gains on their savings in the fund are accumulated tax free.

I suspect many of those MPs quick to condemn also have savings in an ISA. The sole purpose of an ISA is to avoid tax on interest, dividends and capita gains on your savings. Anyone who holds an Isa is not in a strong position to condemn tax avoidance or tax planning.

Labour and Lib Dem MPs helped set up complex financial and tax regulation in the UK between 1997 and 2015 which included new rules to train and regulate financial advisers. Under their system Financial Advisers are trained to include tax planning as part of good advice. An Ifa who did not tell a saver of the tax advantages of holding savings through an Isa would not be meeting normal professional standards. An IFA should also ask clients about future pension provision and see if they should be using their tax free allowances for pension savings.

Are these critics of tax avoidance now saying all this is wrong? If so do they now support the abolition of these common tax saving schemes? Tomorrow I will look at the vexed issue of overseas investments.