No More Fat Cat Investments For Me!
16 September, 2007
The reinsurance industry is admittedly a special case, being strictly a business-to-business affair, without brands, and not needing to appeal to the public for capital. And one by one, its operators are filing out of the door.
One can see that for 'national champion' sorts of companies like say General Motors in the US or Citroen in France it's partly a question of patriotism and brand - imagine the hail of negative publicity that would accompany a decision by Citroen to relocate to Bermuda. But what is stopping multinational conglomerates with feet in a dozen different markets from leaving?
What is the logic for, say, GlaxoSmithKline to remain based in London? In 2006, that company paid GBP2.3bn in tax, much of it to the UK Treasury, a tax charge of 29.5%, very close to the UK's headline rate of 30%. Of course it does have a substantial business in the UK, and it is always going to pay tax on its UK profits, but compare it with Rupert Murdoch's News International, which normally has a tax charge below 10% due to clever use of holding companies in the Cayman Islands and other tax havens.
If you ask the bosses of GSK why they are gaily tossing billions of pounds of shareholders money at the taxman, they will tell you about the importance of being close to government (but does Gordon Brown listen?), ease of communications (Heathrow, anyone?) and such twaddle.
No, the real reasons are because the bosses of UK plcs want knighthoods, they like their Park Lane mistresses, their chauffeur-driven Daimlers, and their plush Thames-side penthouses. When are the shareholders going to wake up to this brazen thievery?
Now I've woken up to it (a good friend told me about it over dinner last night) I'm going to take my money out of FTSE companies and stache it somewhere it can't put the jam on Gordon Brown's bread and butter.
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