MILLIBRANDS lost the plot,

they like taxes that hit the little people ernie hence VAT is ok but wealth taxes are the real no no all the while selling the myth they are low taxation.

Former prime minister Sir John Major

mcboo – Member
Yeuch – Socialism. No thanks.

POSTED 1 DAY AGO # REPORT-POST

…whoever thinks a tax is the best mechanism to solve perceived excessive retail pricing issues is a grade a nincompoop.

It’s a tactic the Tories have used before. In 1981 Thatcher slapped a windfall tax on the banks to curb their excessive profits which were causing her, and it has to be said also probably the banks themselves, some embarrassment.

Of course the extra cash came in handy for her as she needed some dosh to pay for the staggering levels of unemployment that she had created – the 1980s under her premiership ended up having the highest tax burden in British history.

But tax only takes cash out of the profit slice. The power companies are genuinely running at pretty standard profit margin (c. 5%). Unarguably at times banks have captued excessive profits. I agree, tax them. But the deluded argument around power company revenues is disappointing.

The former Prime Minister, Chancellor, and bank executive, doesn’t agree.

According to John Major a “one-off retrospective” tax should be considered “given the scale of their profits and the unjustified nature of the price increases they have just proposed”.

Someone ought to tell him that there is a difference between profits and profitability.

I nominate teamhurtmore.

He could also give him a quick lesson on “basic investment maths”.

“I can announce, which I am sure the hon. Gentleman will welcome, that we will be legislating so that energy companies have to give the lowest tariff to their customers—something that Labour did not do in 13 years, even though the Leader of the Labour party could have done it because he had the job.”

David Cameron during Prime Minister’s Questions on 17th October 2012

ernie_lynch – Member

The former Prime Minister, Chancellor, and bank executive, doesn’t agree.

Hardly surprising, considering the stuff the current prime minister and chancellor don’t agree on.

wasnt major the only PM to leave the office with a budget surplus in quite some time ?

But tax only takes cash out of the profit slice. The power companies are genuinely running at pretty standard profit margin (c. 5%). Unarguably at times banks have captued excessive profits. I agree, tax them. But the deluded argument around power company revenues is disappointing.

Stoner – I think you need to scratch the surface beyond the corporate PR spiel. Their parent companies make profits in excess of 20% and pay next to no tax after taking the usual circuitous route of tax-haven offices, creating ‘debt'(loan from the parent company) on the UK company balance sheet to offset taxes on the rather questionably low profit declared by the poor hard-done-by UK subsidiary to HMRC.

Yet another politician going on about tax – nothing new is needed, just proper enforcement of existing tax laws would net billions.

make profits in excess of 20%

❓

E.ON, ultimate and quoted parent company of E.ON UK, Net Profit Margin 2012 1.97%

RWE, ultimate and quoted parent company of nPower, Net Profit Margin 2012 3.36%

EDF, ultimate and quoted parent company of EDF UK, Net Profit Margin 2012 4.53%

SSE is the top level company, it is not a subsidiary. Net Profit Margin 2013 1.73%

I can do this all day long if you like.

stoner you obviously need educating, allow me 😀 ………..

The Parliamentary Committee on Energy & Climate Change reported in July 2013 that while energy companies could claim a measly 1.5% profit margin on supplying domestic electricity, this was covering up a more than 20% profit margin taken by the wholesale generating end of these same companies.

http://www.publications.parliament.uk/pa/cm201314/cmselect/cmenergy/108/10807.htm#n108

Without getting into the specifics of this case, I think anyone who takes company profit numbers at face value these days is probably a mug bribed tax inspector.

it is extremely difficult to work out whether or not energy companies are making excess profits. Figures used in the public debate – for example percentage figures for the amount of profit energy companies make, or the profit announcements energy companies make – are difficult to interrogate, for many of the reasons outlined above.

http://www.carbonbrief.org/blog/2013/10/are-energy-companies-making-excess-profits/

Not just power companies:

http://www.independent.co.uk/news/uk/politics/david-cameron-to-be-questioned-in-parliament-on-governments-failure-to-close-tax-loophole-8897529.html

Private companies running care services for NHS, funded by taxpayer, avoid tax:

http://www.independent.co.uk/news/uk/home-news/tax-special-investigation-firms-running-nhs-care-services-avoiding-millions-in-tax-8892925.html

Camelot avoiding millions by using same scheme:

http://www.independent.co.uk/news/uk/home-news/jackpot-camelot-avoided-10m-in-tax-from-lottery–thanks-to-a-legal-loophole-and-canadian-teachers-8895219.html

Sorry, they’re all very open and transparent about it aren’t they… like Npower for example, who paid precisely zero corporation tax between 2008 and 2011 with parent company RWE creating a bizarre network of loans and subsequent debt via a Maltese subsidiary to pay 5% tax on dividends instead of the UK 26% at the time. Of course their HMRC claimed profit margins are 5% or lower, but that does not reflect the reality which takes a good deal of investigation to bring to light, see for example the recent Private Eye report ‘Where there’s muck, there’s brass plates’.

I’m seriously not playing the ‘it’s all evil corporations and governments fault’ card, just pointing out that what hits the media is never going to tell the whole story and is purely aimed at creating acceptance(quite reasonably TBH, 2-5% profit isn’t exactly going to get people incensed).

I think the thread is missing out a large part of the real issue here.
People need to reduce their energy usage.
Over the last 30 years people (in the west)have got used to a very wasteful lifestyle:
– heating the whole house to a level that means everyone can wander around in t-shirts 12 months of the year
– leaving lights on throughout the house
– leaving a range of electrical appliances on standby.
etc,etc
Higher prices SHOULD serve a useful purpose if people behave rationally.
Higher prices => reduced consumption => reduced demand => lower prices

I dont doubt there’s plenty of tax planning going on. But the idea that there is a big chunk of profit that can be ransacked for price reductions and/or a punitive tax (for why though?) is silly. Generation profit margins ought to be up in the high teens and even low 20%s reflecting the far riskier aspect of that part of the business. Im working on a couple of power projects at the moment and know that while the business will aim for those kind of returns they can be wiped out by unforeseen/uncontrollable external influences very easily.

Yes, Ive read the Private Eye report. Yes the Eurobond wheeze is frustrating.

or a punitive tax (for why though?)

Reallyyou dont understand

pick one of
* Justice
* Politics of envy

😉
Its a given the electorate are stupid or I would have that as the third!

People want to “hurt” those they see as excessively profiting from them whether true or false – I dont know enough to decide.
They probably moan about it to friends in starbucks whilst reading a book ,bought from Amazon, on their kindle [bought from ebay] .

There are worse offenders for sure but we dont mind them shafting us as they are also cheap!

ernie_lynch – Member
Someone ought to tell him that there is a difference between profits and profitability.I nominate teamhurtmore. He could also give him a quick lesson on “basic investment maths”. business”

Snide dig aside, there is some truth here. At the very least we could point Major in the direction of the Energy and Climate Committee’s own report. Why waste all the hard work, time and analysis there when can replace it with sound bite politics! Great politics, lousy business. And that’s from a Tory. Blimey, Ed really hs rattled the blue cages. The compromise on the hinkley C strike price and now we have a quick test for a policy U turn perhaps?

But they really should read the report especially the bit about beingclear what we are talking about and where energy companies make their money. So prices, profits, profit margins etc are banded around as if they are the same thing. Brilliant. Which bank employed Major for his acumen?

But for political brilliance, Ed beats him by a country mile. So what figures did he use? profitability, margins, prices? None of the above. Their argument is based on EBITDA. More brilliance!!! Guess what that shows. So we (rightly) criticise energy companies for poor transparency and castigate OFGEM in the process and what do the politicians do? Deliberately use misleading stats. What’s new there?

I guess reading their own reports and implementing the largely sensible recommendations is too much like hard work in the end. Just freeze prices and tax the ***********. That’ll do it!!!

Brilliant. Which bank employed Major for his acumen?

He was an executive at the Standard Chartered apparently.

Anyway, when you inform him of the difference between profits and profitability, and give him his quick lesson on basic investment maths, don’t forget to do it all in a very condescending manner.

I find that when you tell me how funny my opinions are and how they make you laugh works well. And yesterday’s tactic of repeatedly talking to me in French also worked very well.

Still, I’m sure I don’t need to tell you how to speak in a condescending manner, do I ? 🙂

Will do Ernie and we will share another laugh with him, en francais bien sur.

If you missed the irony and the rhetorical question, sorry 😉 but Major knows exactly what he is doing, He is a politician after all and a grandee of a party that is currently in a flap over Ed’s mini masterpiece. And he can mislead with the best of them. Wondered why he made those comments?

If you missed the irony and the rhetorical question, sorry

Well you know me……daft as a brush.

😀 oh good some humour. C’mon, let’s keep it sensible and just agree to disagree nicely. FWIW, I am closer to your conclusion on the other thread but not from the same (voiced) reasons. But these threads can get misread, misinterpreted etc. No need to push it too far (my last bit of French was un peux childish!!!).

Funnily enough I deleted a post on the difference between profits and profitability yesterday in case it came across wrongly. And then JY ask for a simple explanation of what I meant. You can’t win at times! 😉