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Value Added

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There was a silly story the other day about a company boss who had threatened to fire any employee who didn’t vote Conservative on 8 June. Silly because a secret ballot means you aren’t obliged to fess up, to your boss or anyone else, so who’d be so dumb? But also because the email that the boss in question sent was clearly very friendly. ‘Hi Everyone,’ John Brooker wrote to his staff on polling day.

I hope you all exercise your right to elect your chosen candidate/party. Just a heads up though, VOTE CONSERVATIVE if you believe in free enterprise and progression without being taxed out of the game … If by any chance Labour win, we’ll have to re-think a few things here at the company so if you value your job and want to hold onto your hard earned money vote Conservative … Anyway, just sharing my personal thoughts with you. Feel free to vote for whoever you want but I have said my piece. JB

Brooker had good reason for feeling strongly. The company he owns, Storm Technologies, based in Watford, describes itself as ‘one of the fastest growing independent IT Value-Added Reseller’s in the UK’. In other words, it’s one of those IT outfits that persuades regular suckers to buy software and hardware they could perfectly easily buy themselves off the shelf – antivirus tools, servers, printers etc – from them instead. You can buy a copy of Microsoft Office from Microsoft for £120, or you can buy it from a reseller for £120 plus the cost of their ‘complete support at every stage of the process’. ‘Value-added’, here, means value is added to the coffers of Storm Technologies.

And an awful lot of value has been added. In 2015, Storm made a profit of nearly £2.2 million after tax. The company has more than a hundred employees, a large number of them in sales, and two shareholders, John Brooker and Soraya Brooker (his wife). Also in 2015, the shareholders – that’s John Brooker and his wife – received dividends of £1,688,000, three quarters of the company profits. The highest-paid director – could it be John Brooker? – was paid a salary of £355,000. Now, as Brooker rightly understood, a Labour government would reduce those sums, thanks to its manifesto promises of an increase in corporation tax and in income tax for those earning more than £80,000 a year (that’s 5 per cent of earners), and to its proposed levy on companies paying salaries over £330,000. It’s almost as if they had him in mind. He, personally, has every reason – well, maybe two hundred thousand of them – for voting Conservative. Thanks to its ruthlessly clear and unapologetic manifesto, Brooker would have been able to calculate exactly how much he would lose under Labour. Just before the election, I heard of another boss who, having run his own calculations, had taken out a £75,000 bet on a Corbyn victory, as insurance against the £5 million he would expect to lose out on over five years.

A Labour government – which would explicitly tax the John Brookers, on £330k+ per annum, plus a million-whatever in dividends, so as to pay for the schools, hospitals, police and fire services that 60 million other people rely on – would mean tighter times in the Brooker household. But it would also be good news for the average sales rep or technical assistant at Storm Technologies Ltd – as whoever leaked the boss’s letter to the GMB union clearly realised. For the sake of the many, you know, not the few.

Comments on “Value Added”

  1. streetsj says:

    Except what would happen in practice is Mr Booker would probably pay himself £80,000 and a much smaller (if any) dividend. He would let the cash build up in his company until such time as a more friendly regime came along. Or he might move off shore and then pay himself a dividend.
    He might find jobs for his wife and children and pay them £80,000. Im no pension expert but he could probably find a way of putting money in a pension scheme and avoiding tax.
    He could certainly look at some schemes for investing the cash in the business too – farmland or forestry or whatever.
    And that’s a classic example of why putting tax rates up doesn’t necessarily raise more cash.

    • Stu Bry says:

      We’ve heard it all before.

      Choose any progressive legislation from universal suffrage, the NHS, paid holidays, the minimum wage, gay marriage etc. Go to Hansard. Read the debate. What you will find is Tory politicians claiming that the legislation is flawed and will create more problems. They were wrong and you are wrong.

      • streetsj says:

        I haven’t read about any “progressive legislation” I’ve only read about raising tax rates. I recently had a letter published in The Times explaining how corporate taxation could be restructured to stop basic avoidance and restrict the advantages of scale. And encourage job creation. My point was, if you read what I wrote, is that if you think just raising tax rates will increase tax take, you are naive.

        • Amateur Emigrant says:

          A letter in The Times, you say? Oh well done, sir.

          • streetsj says:

            Ah! Mockery! very good. Insults are clever too.

          • IPFreely says:

            And how would we find you, Sir?

            • CarpeDiem says:

              Perhaps IPFreely is being facetious, but I would like to read the arguments you put forth in the letter. How do I go about accessing the letter ?

                • streetsj says:

                  You have to scroll down to the letter titled “Taxing business”

                  • streetsj says:

                    That may be behind a paywall. Here is a copy of what I sent.

                    Dear Sir
                    Philip Aldrick rightly identifies that corporations have grown too successful at the expense, partly, of their employees and that too much profit is accruing to the mega corporations that dominate industry sectors. There is a solution to this and it involves a wholesale change of the corporate taxation system. Three key changes are needed: make interest payments non deductible – this will cut out an enormous amount of financial engineering solely designed to reduce tax; have a graduated tax rate, just like income tax, where higher levels of profit attract higher tax rates – this will reduce the benefits of size; and remove employers’ national insurance which is just an anachronistic tax on jobs.
                    I believe these three radical measures would encourage a more vibrant and competitive economic environment, would encourage smaller businesses and job creation, and wrest some of the impetus back from big business. If only there were a government not so beholden to the fat cats and their insidious lobbyists.
                    Yours faithfully
                    Jason Streets
                    Frant
                    East Sussex

    • Squeeth says:

      No, it demonstrates that tax rates are only part of the story, the other part is the frauds (loopholes) put there to reduce tax rates to propaganda. Abolish the tax privileges and the tax will be paid.

  2. Michael Taylor says:

    “If by any chance Labour win, we’ll have to re-think a few things here at the company so if you value your job and want to hold onto your hard earned money vote Conservative.” To be fair (yes, I know, who’s interested in fairness, the battle lines are drawn), this isn’t a threat to sack people but a warning that the boss expected a Labour government to be inimical to business, to use it as a cash cow, which he expected to have consequences.

  3. Graucho says:

    What is grossly unfair in the tax system is that the large corporations can afford fancy accountants to comb the rule books and come up with any profit figure in any jurisdiction that suits. The SMEs, supposedly our future, have to pay the full whack. Set a threshold of £1billion per annum. Below that the current rules apply above that you are zero rated for corporation tax and have to pay a turnover tax based on your global turnover instead. That is the price of your entry ticket for doing business in the U.K.
    The effect will as follows.
    a) No point in fancy accounting.
    b) Might as well assign all sales and profits possible to the U.K. as makes no difference to U.K. tax and reduces tax paid in other countries.
    c) Other countries will see that they are losing tax revenue and switch to the same system.

  4. XopherO says:

    Maybe I am naive, but it is funny how when unions go on strike they are accused of being unpatriotic and bringing the country to its knees, but when rich individuals and companies ‘go abroad’ to avoid/evade tax they are not accused of being unpatriotic and bringing the country to its knees, and very often they are the ones accusing the unions – hypocrisy added to greed. We know that if they all paid the tax they know they should, there would be no recession, and nurses etc would be properly paid. I suspect that until there is a different attitude to taxation as fair and a civic necessity these manipulative individuals and companies will continue to enrich themselves to the detriment of society, whatever taxation laws are invented to try and catch them. This includes rock stars and footballers. Of course I’m just dreaming.

  5. Marmaduke Jinks says:

    I’m fairly new to the LRB & I already love its range & erudition. The on-line archive is a delight!
    Is it always, however, so nakedly partisan in its political commentary? Reading this blog and the responses one could be forgiven for thinking one’s reading the ‘Labour List’ or ‘Canary’ websites.
    Just saying.

    • deano says:

      Indeed, the leftist bias in the British media has become intolerable. How can it be right that the lrb excludes rightwing contributions to its blog such as yours?

      • Marmaduke Jinks says:

        Sorry, didn’t make myself clear: I am far from right wing and I apologise if my post didn’t make that clear. Also, I make no claims that the media as a whole has a leftist bias: it’s clear that the contrary is probably true.
        I am simply a little surprised at the monochrome tone of the blogs in the LRB. Perhaps naively I expected a little more range and nuance.
        As I say, I love my new-found LRB so this is merely a minor irritant.

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