We have heard a lot about the price of Labour's promises from the Tories and their oress. Of course Wilson has counter-attacked put we want to dwell a little on a virtually mimow cost of Toryism: that of the LOOL business fiddles, which are not even declared for tax purposes. Hecently there came into our possession copies of a Property Letter which proudly proclaims across its heading, "Circulated privately to businessmen”. Some quotations from this are, we think, in order. Im issue number 34,which was described as "our Property Company issue", there appeared: “...the conecpt of the limited company is one of the most marvellous legal fictions ever imagined..." Why? becruse "In general tax regulations very much favour limited companies," and "Here is an interesting example of tax savel...2 married man.ewho has a eross rental income of £1,500. He will normilly suffer some £390 in tax. Suppose that this income is received not by him but by a company in which he and his wife have an equal shareholding. They are both directors. The husband draws £640 a year salary, his wife £520. Expenses amount to £10, ‘he remaining £130 gross is paid to them as dividends. The total tax suffered drops to about £165." Another example: "Say a property dealing company buys a property for £8,000 and selis it 3 years _ later for £12,000. The £4,000 profit will be subject to the full rate: of income tax, #s will the income from the rents...How, say an investment company were to buy the same property and sell it for the same profit after 4 years, lt pays no tax on the £4,000 because this cannot be distributed as dividersis but mast be credited to the capital account..." (our emphasis)
However, our business advisors. don't.confine themselves. to advising their clients how to avoid paying tax. In another lasue which “is devoted to money" there arc some tips for would-be Clores. We read: "The best substitute. for capital you haven't sot is. cumming. Here are three lessons in finance that. prove Sinen was. far Irom simple...The First demonstrates how to get the highest return on invested capital == and the wisdom of borrowing always, Wo matter how big your assets. Ite based on this Tinanciel premise: "The greater the amount borrowed at fixed interest, the greater the return on personal capital invested"..,Take aA simple sum-of £100 ..and suppose you buy property for it with a 20% return. You borrow nothing and you earn a straight £20 on your £100 capital. Now say you borrow 50% at 6% interest and therefore at a cost of £3 a year. So you've then invested 50% of your personal capital and after paying interest you receive £17. So £17 on-250 invested gives you a return of 54% — 1.¢., you've upped your capital return from 20% to 34%. Now consider 75% borrowed...This gives you a 62% return...(and you get tax relief on the interest)."(our emphasis) "Lastly, to rub in the point, suppose you can borrow 90%..."this leaves you withs..ea return of 149%! In tines of rising profits and rising rents" (our emphasis) " this high gear ratio leads to greater returns..." The second tip is thet of “Booster contracts" and the letter says: "This operation is thoroughly immoral. It could even constitute fraud. We don't recommend it, but it is done...” It then goes on to deseribe the operation — one oon almost hear the clicking of tongues in cheeks. However we have quoted enough to neke our point.
usa tiny commer is Lifted p Boavy table-cioth which closks a myriad fiddles, Somevhere in the Letter there was reference to a uagical effect, but there is no magic _ All this money comes from our work, our taxes, and our efforts. We, the TesLo pay for Toryism and its Eingo-type economy, Labour must complotely eradicate this kind of thing by mobilising the working class around the slogan of ‘opening the books’,