City Guide to Edinburgh, Scotland

City Guide to Edinburgh, Scotland

Edinburgh Book Festival: Richard Murphy, Why Britain Needs a Fair Tax System

By Allan Alstead - Posted on 18 August 2016

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Richard Murphy with Magnus Linklater in the Chair.

Tax may not sound like the most exciting subject but the Studio Theatre was packed with around 275 of us to hear Richard Murphy, author of the recently published "The Joy of Tax".

Magnus Linklater, in the Chair, appeared blown away by the sheer energy of Richard Murphy who seemed like a human dynamo throughout his presentation and question period. We were told that we would actually enjoy talking about tax and we were all pressed to buy his new book which he assured us contained all his ideas. These, we were told, would turn on its head most of our preconceptions about the monetary system and tax.

He asked the audience who would like to pay more tax - no one put their hand up. Then he asked who would move to another location to avoid tax and again he got a nil response.

As a tax enthusiast he confessed to talking about tax on the BBC at 6.15am this morning. As for his background he said he was initially a Chartered Accountant and very carefully paid all his tax. Both he and his firm refused to take any part in tax avoidance. When he moved to the academic environment he said that he had chaired the first meeting of a group who said that, "Tax is a good thing" but he found that he was fighting against George W. Bush who held the opposite view!

Murphy recounted how one day he was rung up by the Labour Party and invited to come and cast an eye over the new (Corbyn) tax and finance policy. He accepted and then found that 70% of what Labour and Corbyn proposed was actually what he, Murphy, had suggested in his writing! He added that he had from time to time worked with George Osborne and had briefed the SNP on their policies. As for his own allegiances he claimed that he was probably a Parliamentary Democrat by political persuasion.

Murphy strongly maintained that tax is a 'good thing' and that it makes things happen. He stated that money is actually debt - the real value in the system is in the "promise to pay" which is printed on every banknote. However, he maintained that some 97% of money is electronic and there is no cash behind the figures on the bank statement. If a person went to a bank and asked for the equivalent in gold this would not be forthcoming. Similarly, if someone wanted to repay a loan in Euros this would not be accepted.

Murphy said that once money is paid to a bank it then belongs to the bank and is not 'yours'. He said that the best way to generate development is to give the money to the people who actually spend it. This, he said, was the theory behind quantitative easing as it produced more money in the markets. This, in turn, created a demand for government bonds which are good investments for those with pensions or those about to be reliant on a pension.

Richard Murphy made the point that tax is really important, quite apart from an election and he made some points (there would be six in the book!) which he felt were key to economic policy. The first was that wealth needed to be redistributed - some governments, mainly Labour had tackled this problem, but Margaret Thatcher was the worst example of someone who helped the rich prosper. Currently we have some people who are earning some seventeen times the average salary.

Most of these would not notice the loss of the odd £20 note whereas it would mean a great deal to those on a lower wage. Giving money to people who need it means that they will spend it and thus benefit the economy.

Mason would also reorganise the economy so that there would be a lot more borrowing. He stressed that he loves deficits!

Most people Mason suggested were overpaying their mortgage and this was in effect a way of saving. The Jeremy Corbyn way was to extend borrowing much further and this should have a stimulus to the economy in his view.

He would also tax centres where there was 'taxable activity' so there would be no more yachts for Chairmen! But his feeling was that there needed to be a better tax system which took tax from the people best able to pay.

This was yet another very excellent session with Richard Murphy simply buzzing with energy and vitality. On this subject he is a formidable speaker.

Richard Murphy's The Joy of Tax (June 2016) is published by Corgi.