200317NCBlogThere is nothing quite like government to get people excited. Supranational, national and local, these venerable institutions provide constant copy for newspapers and broadcast news, almost always about the dire bureaucratic or political failings. What would journalism do without them? And it doesn’t stop there; taxi journeys would be a bottom shuffling, embarrassed silence were it not for public sector stupidity and waste. The business community gets excited too and it sometimes feels as though the potent mix of regulation and tax has positively monstered the state in all its forms.

Aberdeen and Grampian Chamber of Commerce was visited by Adam Marshall of the British Chamber this morning on the thorny topic of Brexit and other matters. Taxation came up, described by one member as “feeding the monster”. Enterprises, young and old, struggle with the seemingly random decision making of the elected, the flip-flopping, or in some cases no decision making at all, whilst watching tax being taken out of the business. I feel as frustrated as the next person. Scotland has by far the least “local” local government in Europe but at the same time we demand leadership and drive from it. The truth is of course complicated and for all its weaknesses, the state makes a significant contribution in return for dipping into our corporate pockets. Commerce and industry rely on local and national government for so much: infrastructure, whether that be roads, rail, sewers or fresh water; educating the next generation of employees; even handed regulation and sometimes over-regulation; policing and other emergency services; and for a raft of support and intervention when it comes to trade. Along with death as the saying goes, tax is one of life’s certainties and the state is not a monster.

What is very much in the gift of government is a fair and sensible tax system, and consideration for private sector needs. Right now fairness is lacking because multinationals like Amazon and others are not paying their fair share of corporation tax. Local competitors can’t run their profits through tax havens like Ireland. Amazon has also become a winner through the revaluation of business rates, because its warehouses are situated in deprived or low value areas where the tax bill has not changed much, whilst local businesses are set up on the High Street. Adam Marshall pointed to a further unfairness: where government chooses to make its tax take. I guess because it is easier and more predictable, a lot of direct and indirect taxation is targeted at the organisation and its assets and not the bottom line. This means that tax hits the cost of business, whether the enterprise is small or large, start up or grand dame, dripping with profits or scraping by. Using corporation tax, taken as a share of profits, with checks and balances for companies trading in difficult circumstances, is surely fairer and more sustainable. Of course it’s more of a headline grabber, or am I being cynical?

The main topic was of course Brexit. Candid? I almost dropped my skinny Mocha! For many there is a worrying lack of competence at UK government level, with no credible plan and a feeble opposition. Five to ten years of difficult negotiations are ahead and although some bodies like the fishing industry want to concentrate on a relationship with the rest of the world, the advice is to resource securing trade with the EU. Nothing is going to be easy or quick and ironically the fabled EU red tape is being replicated or transferred into this brave new world. No bad thing: there are good things in there around working conditions and rights, and regulatory volatility helps no one. When it comes to pointing the finger, Adam tells us that two thirds of the over-regulation we complain about is the result of British “gold-plating”. Asked if we had exited the EU on a false premise, he diplomatically did a Sir Humphrey: “You may say that but I couldn’t possibly comment”!

 

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