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March 09, 2007

The State of Education Today

If this is the best that an academic can do then no wonder the education system is in a mess.

In 2005, retail entrepreneur Philip Green's Arcadia Group, which owns Burtons, Topshop and Dorothy Perkins, declared a dividend of several billion. A staggering £1.2 billion went to Mrs Green, but she did not have to pay income tax of nearly £300 million because she is resident in Monaco.

This is true of course. As Mrs. Green is not resident in the UK (nor domiciled I would wager) then she does not need to pay income tax in the UK.

Last year, Britain's 54 billionaires had an estimated income of £126 billion. At the normal rates of income tax, they should have paid nearly £50 billion in tax, but are estimated to have paid only £14.7 million - an effective tax rate of only 0.14 per cent.

Really? Billionaires earn a billion each and every year? 54 people received over 10% of GDP in income last year? This man is dribbling from the ears! He's confusing wealth with income.

    Prem Sikka is professor of accounting at the University of Essex

Sigh.

March 9, 2007 in Taxes | Permalink

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Comments

Well spotted.

Posted by: Mark Wadsworth | Mar 9, 2007 9:12:25 PM

This man isn't confused at all. He's jealous.

Posted by: pete | Mar 9, 2007 11:26:27 PM

Unbelievable.

The man appears to be a classic case of mediocratic academic. According to his CV, he got two A-levels but has had 43 papers published in refereed journals. A triumph of style over substance?

It does make one fear for the sanity of the public sector finances, if the people at the Treasury are anything like our accounting professors. The “Golden Rule” requires a sound appreciation of the difference between capital and revenue …

Posted by: Fabian Tassano | Mar 10, 2007 12:30:20 AM

Concerning Mrs Green, is it not true that the company pays Corporation Tax and that a UK resident would get a 20% credit against income tax because of that; however, Mrs Green would not get that tax credit from the UK government?

Thus, does not Mrs Green pay to the UK government, effectively, 30% tax on the dividends she receives? This is rather than the nominal 32.5% (but actually 42.5% because of the way tax credits are handled) she would pay if resident in the UK.

Best regards

Tim adds: Could well be. I'm a little confused myself about how dividends are taxed now.

Posted by: Nigel Sedgwick | Mar 10, 2007 3:42:11 AM