Winter Dreams

By Global Tax Weekly

The Tory toffs who are running the British Government seem to be doing a reasonable job, despite the LibDem barnacles encrusting their hull and slowing progress. The Chancellor’s Autumn Statement last week had some disappointing aspects, but by and large it does the right things, particularly by helping small businesses in various ways. I don’t know quite what to make of the grandiose package of tax avoidance measures: surely it is mostly grandstanding? Having committed themselves so thoroughly at the Lough Earne G20 summit to abolishing BEPS, they probably had no choice but to make a big song and dance about it. But most thoughtful commentators have by now concluded that the whole BEPS circus will change very little in the real world. So there is no point in criticizing the Brits for continuing to push the bandwaggon along. Even the imposition of capital gains tax on non-resident property owners is probably just another case of gestural politics, meant to de-fang the mansion tax threat from their LibDem “partners”. The real problems the Government has are the deficit and the debt pile, and there is little to be done other than to keep noses to the grindstone and hope that the Fed doesn’t start tapering too soon, which would send interest rates skyward and rip apart the British fiscal tight-rope act. Not to mention the similar French, Italian and Spanish turns. Mario Draghi would have to shovel another couple of trillion euros down the throats of European banks if tapering happened. It’s a mystery to me how all of this money creation doesn’t result in more inflation. Sooner or later it has to; but perhaps for now the global economy is still in a state of shock. George Osborne must be hoping it stays that way for quite a long while.

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