The rise and rise of the tax avoiders
The London Taxi trade are again taking to the streets on Wednesday the 10th of February. Our grievance is the UK Government’s interference in Taxi trade regulatory affairs whilst actively supporting a tax avoiding global company.
Some very sensible proposals were put forward by the regulator yet they have been quashed by central government interference. This has angered decent hard working Taxi drivers in London who pay their taxes and conform to the rules. Why would a the UK government actively support a global tax avoider and provide it with a competitive advantage over its own domestic workforce?
How tax avoiders are undermining legitimate business.
With each new venture launch comes a new and exciting way for large investors to increase their wealth and keep it away from the tax man. In some cultures this is seen as a national sport and people pat each other on the back for doing so. In other cultures it’s very much seen as a duty to society to pay your taxes. In Sweden, Finland and Norway people can see how much tax each other pay, they are published online.
It used to be that tax avoidance was the favourite way for the middle classes to save for their children’s private education. But in recent years whole business plans are created around the financial benefits the new technology start-up sector.
Increasingly the avoidance of tax underpins the financial viability. Such is the case with Uber. Last year in the UK Uber paid less tax than four London Taxi Drivers. They take 25% to 35% of every journey undertaken in an Uber vehicle. They paid just £22,134. Even paying this derisory amount they are still losing their investors money while they establish themselves.
One thing is sure, these new tech businesses are about stripping out cost AKA wages, with wages falling comes a reduction in tax and an increase on reliance on the state.
The Question this must beg is… If this is the future, who will pay for our hospitals, schools, police, defence etc?
Does safe come cheap?
Back in the 1950’s if we wanted music we bought 78/45rpm vinyl, by the 80s we could record the top 20 from the radio sunday night onto a cassette tape, the choice was clear pay for the quality or accept inferior quality and break copyright laws, everyone knew the choice. Then in the late 1990s along came Napster and there were copycat services too. One was even run by a chap called Mr Travis Kalanick (the founder of Uber), the music industry reacted sharply and shut him down. But this digital era had done something very fundamental, it broke the link between price and quality by allowing people to easily circumvent legislation (copyright) and obtain the quality without paying for it. As the younger generation grew up pirated DVDs and CDs and MP3 files became the normally accepted way to obtain entertainment. A new generation grew up knowing the price of everything, but not the value.
With this link broken how does legitimate business survive? An economist will tell you that market forces will drive down costs, but how can it do that if a normally heavily regulated market cannot control costs? The answer is that corners need to be cut, it’s the only way you can survive when others have financial advantage and in some cases active assistance from a Government who have little or no understanding of an industry over which they choose to allow to new entrants to cut corners.
We see on London’s streets purpose built taxis. These are subject to three tests per year and the driver subjected to a very rigorous testing process over four or five years (“the knowledge”). This process of producing safe highly trained drivers is just too slow for those who are impatient to get rich. Even the legal requirement of a thorough legal backgound check is slowing them down. So TfL under instruction from “whoever” (Click Here) have dropped the requirement for Private Hire Drivers to have a full CRB/DBS (criminal background check). This means that TfL can now “feed the system” with 600+ new drivers every week while London’s Taxi drivers are often unable to work waiting four months or more for license renewals pending the mandatory requirement of a valid DBS check. The upshot of this is that members of the public can now listen to free music on their mp3 players whilst being driven around by rapists or murderers. There are over 100 reported sexual assaults in minicabs in London every year and we know less than 10% of rapes and sexual assaults are reported.
What time will show also is there will be a lack of proper maintenance on these cheap minicabs. When costs are cut to the bone and it’s a choice of having the vehicle serviced on schedule or paying the rent, what decisions will these drivers make? These are the vehicles the public are being driven around in, blissfully unaware the vehicle hasn’t been maintained.
The end game.
We have seen how you cut costs in a regulated environment, you just ignore regulation. But how can those impatient to get even richer deregulate a loved and respected industry? It has to be done through Parliament, but this is too slow, too much opposition, so you just simply ignore the regulations and sit back and watch the incumbent players, who play by the rules and pay their taxes, be undercut by those with the unfair competitive advantage assisted by a government so obsessed with deregulation that they are blind to the danger.
Once the incumbent players in a market are driven out by unfair competition, those investors who have been waiting impatiently to get rich rake in the profits. Gone are the cheap rides to and from Heathrow airport, or central London to the suburbs.
Where there is no choice, there is Monopolistic pricing, predatory and ruthless. This is the pot of gold the investors are promised for their patience. The panacea of all globalist corporations, the Cartel, the Monopoly, the Duopoly… A new 50 meter Super-Yacht, the fourth Rolls Royce? the fifth house? When is enough – enough?
To those impatient to get rich I can offer this thought….
Better is the poor who walks in his integrity than he who is crooked though he be rich.