Towards the end of the Today programme yesterday Morning at 8.35am, the programme introduced two people to talk about the U turn plans announced by Boris Johnson at the CBI conference to reduce corporation tax cuts to Businesses and release £6Bn into the Public Sector instead. It would have made sense to have introduced people from a different part of the political sector so that alternative points of view would have been heard that went beyond a few nuances. However the two people were Rupert Harrison who according to Wikipedia is “is a British Economist and a Portfolio Manager at BlackRock. He was from 2006 to 2015 the Chief of Staff to George Osborne and Chair of the Council of Economic Advisers in the UK Treasury” and Kate Andrews who is the News Editor at an organisation that claims to be a Think Tank called the Institute of Economic Affairs. Sadly the IEA is not a neutral agency with lots of different points of view, it is instead a right wing body that is deeply committed to us leaving the EU. However as a Think Tank, one would assume that its contributions would be credible when being broadcast. If on the other hand either Rupert or Kate had made a mistake, one would have assumed that Radio 4 would have corrected that. Even if that was not the case one would assume a think tank would have corrected any mistakes made live on Radio.
Before the interview Kate re-tweeted what the IEA had tweeted to say that “Coming up on @BBCr4today, our @KateAndrs will be discussing the Prime Minister’s decision to postpone corporation tax cuts. Tune in from 8.30am!” and after the interview the IEA have put the interview out on twitter stating “Corporation Tax is, fundamentally, inefficient. And there’s plenty of evidence to suggest that the burden is really borne by workers and consumers.” The IEA’s @KateAndrs to @BBCr4today on plans to postpone a reduction in the UK’s Corporation Tax rate”
The real problem with what Kate said on the Radio and indeed what was quoted by the Financial Times and what has appeared on twitter in several places is that workers (and indeed consumers) do not bear any burden from the implementation of corporation tax. Indeed the opposite is true, unless she is suggesting that a business will increase its profits even more to compensate for the cost of the tax. If a business makes a profit after all of its costs which include its payroll have been taken into account, then it will be obliged to pay Corporation Tax. On the other hand if it makes a loss it will be able to use any loss to compensate for any profit in adjacent years. If it does not make a profit, whilst that may make it look lacking in credibility, by some people, then it will not pay any Corporation Tax. Of course if it puts up its prices that will enable it to make a profit, and if it restricts wages, then that will enable it to make a profit. However if it keeps wages at a high level or if it keeps the prices at a low level, it won’t make a profit and so won’t have to pay Corporation Tax. This is not complex or difficult to understand. Kate should know this, but even if she doesn’t the BBC broadcast team would know this and certainly Rupert would so the lack of challenge to what she stated twice makes one wonder if the BBC are working to promote the IEA lies and misunderstanding?