Category Archives: Politics

Britain, Business, Economic, Finance, Government, Legal, Politics, Society, Taxation

Amazon’s tax advantage is economically unfair. Time to put a halt to it…

 

TAX LOOPHOLES

The age of the internet has brought colossal benefits to many large, multinational companies. No more so than for Amazon, a distribution giant. The company has earned very lucrative revenue streams, but has managed to deftly reduce its corporation tax bill through skilful use of tax loopholes. Last year, Amazon paid just £4.2 million in UK corporation tax, despite generating UK sales of £4.3 billion. The firm has been heavily criticised because it has now emerged that it avoided paying billions of pounds in tax last year by funnelling revenue of £11 billion through an overseas company based in Luxembourg. Amazon is also reported to have received a financial inducement and rebate amounting to £4m from the authorities in Luxembourg as part of the controversial arrangements.

This is all the more startling considering Amazon has received more than £10m in financial assistance from the Scottish Government, with the company opening a logistical distribution hub in Dunfermline, alongside its customer call centre in Edinburgh.

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Striking the right balance between competitive rates of Corporation Tax to attract foreign direct investment such as this while ensuring companies pay their rightful share is a difficult and complex area for politicians of all parties. Whilst Amazon’s avoidance causes public anger, governments have to take into account the investment the company has made in a country and the employment which that investment has created. Amazon may well argue that it would not have invested if it had been discouraged from exploiting this position.

A low rate of Corporation Tax which the UK offers in comparison to other countries is generally attractive for foreign firms wishing to make direct investment. But such schemes should also encourage companies like Amazon to pay and reduce the incentive for elaborate avoidance schemes of this sort. The loopholes provide too much of an economic and financial advantage for many large multinational firms. These require to be reined in through tighter political scrutiny and more exacting and better enacting of legislation.

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Britain, Defence, Government, Military, National Security, Politics, Society

New round of British Defence Cuts…

DEFENCE

Intro: Our severely reduced military capability amounts to a mere standing defence force, and one that is barely equipped enough at present to deal with the most basic of future threats

The announcement from Whitehall that there is to be further cuts to Britain’s already shrinking Army, albeit on grounds of economy rather than strategic priorities, is deeply alarming.

The new rounds of cuts are aimed, primarily, at Britain’s elite rapid reaction force – the most unwarranted target for making economies and savings through cost-cutting. A prime target earmarked is 16 Air Assault Brigade, a core component of which is Britain’s elite Parachute Regiment. It is to be stripped of half its regular infantry battalions, as well as reductions in some of its helicopters, artillery and armoured vehicles. The Royal Engineers, who support our elite forces through maintenance of equipment and servicing, are also to suffer wide ranging cuts to its budget. 16 Air Assault Brigade is to be reduced from the current level of 8,000 troops to 5,000 by the end of this year. Such a scaling-down is difficult to discern given Britain’s post-Afghanistan strategy. This was meant to be focused on our military capability deemed agile enough to respond and execute contingency operations as they arise in the future. A diminishing capability raises fresh concerns over the Government’s overall defence policy.

Alarmingly, these latest cost reductions are to be implemented alongside the already massive cuts inflicted on the Armed Forces. The last strategic defence review in 2010 proposed the reduction of the Army’s strength from 102,000 regular soldiers to just 82,000 by the end of the decade. Parallel reductions of 8,000 personnel in the RAF and 5,500 in the Navy were also part of the defence reconfiguration. Not since before the Napoleonic Wars has Britain had such a low level of manning to call upon in the event of defending sovereign interests.

Some £10 billion has already been cut from the defence budget. Whilst understanding the need for austerity and for efficiency gains to be made where they can, of which the Ministry of Defence cannot expect to be excluded given its high wastage rate on incompetent procurement programmes, defence of the realm is a paramount obligation of every government. If that duty is neglected, a government runs the risk of all of its other priorities and government policies becoming compromised in the process. It is crucial, then, that Britain retains an effectively trained army with a full complement of experienced and professional troops. For many, though, our severely reduced military capability amounts to a mere defence force, and one that is barely equipped enough to deal with the most basic of future threats. Yet, the world is a far more dangerous place than it has ever been, and Britain should be punching above its weight: diminution of military resources reduces the UK’s global influence – military cuts which go against the Government’s aspiration of retaining a place at the top table around the world. To have a positive influence, it is crucial that Britain’s Armed Forces are sufficiently maintained if that ambition is to be met.

There is no doubt that Britain’s military Armed Forces have been pared to the bone. It has reached the stage where any further cuts may well imperil national security.

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China, Economic, Foreign Affairs, History, Politics, Russia, Society, United Nations, United States

The new and emerging Russia-China pact bodes ill for the United States…

GEOPOLITICAL STRATEGIC TRIANGLE

It was in 1972, at the height of the Cold War, when President Nixon made his impromptu (but famous) visit to China in an attempt to normalise relations with Beijing. His aim was for the United States to gain an advantage over its superpower rival, the Soviet Union. In recent days, Russia’s Vladimir Putin made his journey to China. The countries in this geopolitical strategic triangle may be the same, but their roles are far different from what they once were.

Transformation in Russia, the successor state of the former Soviet Union, has been huge. Moscow is a diminished power now and not the threat it once posed. The US, the only remaining superpower, is also in decline, at least in relative terms. But this trend in turn reflects the emergence of China, almost dormant 40 years ago, but now accepted as being a mighty global force on the world stage. China’s economy is soon expected to surpass that of the US, and many economists suggest that China’s currency poses a serious challenge to the US dollar, the world’s main currency reserve.

In the 1970s, the odd man out in the triangle was Moscow. Now, though, Presidents Putin and Xi Jinping are trying to forge an alliance that will cut the US down to size.

Symbols of intent are apparent in this new and emerging joint partnership. The launch of the current joint naval exercises, for example, was attended by both leaders. And, far more importantly, is the massive 30-year deal signed this week for the sale of Russian gas to China. This will start in 2018, but the deal also contains contractual terms which allows for substantial Chinese investment in Russia’s infrastructure. The agreement will provide a new outlet for the energy exports on which the Russian economy largely depends. More broadly, Moscow’s orientation is being seen as part of a ‘pivot to Asia’, with a focus on deepening ties with the East (rather than the West).

The driving force and logic behind this new alignment has been accentuated when we consider the sharply deteriorating relations between America and its emerging eastern superpower rivals. In the case of Moscow, the annexation of territory in Ukraine has raised tensions with the West to levels not seen since the Reagan era. Ongoing difficulties have generated a fear of a looming second Cold War, which are by no means fanciful. Mr Putin’s unconcealed ambition to restore a de facto Russian empire continues to fuel such suspicions.

China and the United States, economic and increasingly geopolitical rivals, could well be described as being at loggerheads. Notwithstanding Beijing’s perceived expansionism in South-east Asia, which has brought it into direct conflict with several close American allies in the region, this week’s announcements of unprecedented criminal indictments in the US against Chinese military officials for cyber spying has raised the political stakes even further. Not surprisingly, Beijing has referred to a major setback in relations with Washington, while simultaneously proclaiming that relations with Moscow have never been better.

In some respects, however, this Sino-Russian rapprochement may make little difference. Economically, Russia needs China far more than the other way round: not just as an export energy market, but also as a source of vital capital.

When Russia’s economy is slowing and tensions over Ukraine threaten future financing and investment by the West, having Beijing as a strategic partner could unsettle relations with the West much further. China is already increasingly supportive of Russia’s position on Ukraine and, with both countries being permanent members of the United Nations Security Council, with the right to exercise the power of veto, the prospects of resolving the crises in Syria and elsewhere seems remoter than ever. Between them, too, they could also make it even harder to secure a satisfactory nuclear deal with Iran. Whichever way we turn, the loser in this changing eternal triangle of geopolitics is the United States.

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