Tax Allowances On Plant & Machinery

[bogbrush]

So a company engaged in a process of automation, replacing their staff base with various pieces of expensive equipment, is going to be incentivised further to do so.

Yes, amongst other things the kit can do (make new/better product etc.) it's not all automation.

The only alternative is bankruptcy and poverty all round.

[Boom Boom]

Yes, amongst other things the kit can do (make new/better product etc.) it's not all automation.

The only alternative is bankruptcy and poverty all round.

Which is more useful to society?

1. A company employing 100 people and making 50 million profit a year

2. The same company reducing its staffing numbers to 10, but making 100 million a year.

[easy2012]

So a company engaged in a process of automation, replacing their staff base with various pieces of expensive equipment, is going to be incentivised further to do so.

So, we should provide an incentive for the British farm to go back into manual labour?

Of course automation is good. The ex-staff can then go on to do something else useful (like those pre computer age secretaries - they found something else

to do, which now the society gets more things/services from the automation + reallocation of human resources)

[Boom Boom]

So, we should provide an incentive for the British farm to go back into manual labour?

Of course automation is good. The ex-staff can then go on to do something else useful (like those pre computer age secretaries - they found something else

to do, which now the society gets more things/services from the automation + reallocation of human resources)

It seems perverse to me that businesses should be incentivised to make people unemployed.

[easy2012]

It seems perverse to me that businesses should be incentivised to make people unemployed.

No... business is incentived to be more productive. If Western economies are not so automated, you reckon there is so much wealth

to be redistributed ?

If most of the work force can only make enough food to feed themselves, how are you going to do international aid or redistribution (capacity benefits etc?) ?

Another example is if you have a UK government owned steel factory that employs 30 million people and do you think the result will be prosperity ?

Edited October 24, 2010 by easybetman

[Boom Boom]

No... business is incentived to be more productive. If Western economies are not so automated, you reckon there is so much wealth

to be redistributed ?

If most of the work force can only make enough food to feed themselves, how are you going to do international aid or redistribution (capacity benefits etc?) ?

Another example is if you have a UK government owned steel factory that employs 30 million people and do you think the result will be prosperity ?

As wonderpup mentioned on the CI thread, there seems to be an incongruity at work here. On the one hand the unemployed are told they must find gainful employment to support themselves, and on the other business wants incentives that will lead to more people becoming unemployed. Society can't have it both ways, you can't chide the unemployed for failing to find work, and then promote an agenda that seeks to remove opportunities for them to work from the economy.

Edited October 24, 2010 by Boom Boom

[shipbuilder]

It seems perverse to me that businesses should be incentivised to make people unemployed.

Only if society punishes unemployment and sees it as a problem. This gets back to the other thread - perhaps we need a re-think on how people work. Automation usually replaces cr*p jobs.

If we move beyond the goal of 100% 9-5, 5 day week employment, then automation isn't a problem. The question is how we do that.

Edited October 24, 2010 by shipbuilder

[shipbuilder]

As wonderpup mentioned on the CI thread, there seems to be an incongruity at work here. On the one hand the unemployed are told they must find gainful employment to support themselves, and on the other business wants incentives that will lead to more people becoming unemployed. Society can't have it both ways, you can chide the unemployed for failing to find work, and then promote an agenda that seeks to remove opportunities for them to work from the economy.

You're right, but increased automation seems inevitable - so the problem lies with the other side - the employment question, I think.

[Boom Boom]

You're right, but increased automation seems inevitable - so the problem lies with the other side - the employment question, I think.

It is inevitable, and it will creep up the skills ladder, in the same way outsourcing has done. We either grasp the nettle and decide as a society how we deal with this reality, or we pretend it isn't happening and continue to spit poison at those currently below the water level in terms of the value they provide over an automated system. I fear it will be the same story as with outsourcing, it will only be recognised as a problem when cozy middle class professions are at threat,

[easy2012]

As wonderpup mentioned on the CI thread, there seems to be an incongruity at work here. On the one hand the unemployed are told they must find gainful employment to support themselves, and on the other business wants incentives that will lead to more people becoming unemployed. Society can't have it both ways, you can chide the unemployed for failing to find work, and then promote an agenda that seeks to remove opportunities for them to work from the economy.

Nope. In fact a truly advance society is one where it is so automated and productive that no one needs to work and everything is free ( think Bible write about such a place, isn't it - and the Saints are not complaining unemployment...)

A society is richer if more goods and services are produced, not just simply because people are 'employed' (think most North Korean are 'employed' ?)

[Boom Boom]

Nope. In fact a truly advance society is one where it is so automated and productive that no one needs to work and everything is free ( think Bible write about such a place, isn't it - and the Saints are not complaining unemployment...)

A society is richer if more goods and services are produced, not just simply because people are 'employed' (think most North Korean are 'employed' ?)

Whilst we wait for this utopia to emerge, what do we do to deal with the material needs that are not met of those unable to find work? A post work future is coming, but the transition is going to be very painful.

[shipbuilder]

Whilst we wait for this utopia to emerge, what do we do to deal with the material needs that are not met of those unable to find work? A post work future is coming, but the transition is going to be very painful.

All roads lead to CI !

Edited October 24, 2010 by shipbuilder

[easy2012]

As wonderpup mentioned on the CI thread, there seems to be an incongruity at work here. On the one hand the unemployed are told they must find gainful employment to support themselves, and on the other business wants incentives that will lead to more people becoming unemployed. Society can't have it both ways, you can't chide the unemployed for failing to find work, and then promote an agenda that seeks to remove opportunities for them to work from the economy.

Just a bit of curiosity here - why do you think that one must be 'employed' by an employer before one can support oneself ?

In Asia, when people faced with unemployment, they just go and setup stores on the streets

(more restrictions here on this, but then you got Ebay and paypal in the UK)

[shipbuilder]

Just a bit of curiosity here - why do you think that one must be 'employed' by an employer before one can support oneself ?

In Asia, when people faced with unemployment, they just go and setup stores on the streets

(more restrictions here on this, but then you got Ebay and paypal in the UK)

Sorry to keep butting in, but one is either employed by an employer, or employed by a customer. There used to be another option, which was provide for yourself, from the land. That was real freedom - the option of not being employed by someone else. That option doesn't exist anymore. There's no free market without addressing this issue.

[ken_ichikawa]

Just a bit of curiosity here - why do you think that one must be 'employed' by an employer before one can support oneself ?

In Asia, when people faced with unemployment, they just go and setup stores on the streets

(more restrictions here on this, but then you got Ebay and paypal in the UK)

A lot of people do, the problem I suppose is that there are no real niches and EVERYTHING is saturated to the extreme these days. 12 years ago I used to import stuff from Japan. I used to share a container with Liam (who imported cars from Japan). In that things like ebay have again opened up overseas sellers to undercut UK companies. A smart phone stylus I bought recently had UK seller plastered all over it. When it dropped through the letter box it had a HK stamp on it!

I used to make a fair amount of money from importing Japanese toys and comic books, then loads of people caught onto it and I jumped before ebay became too big.... heh in 1999 I had well over 1400 feedback things.

[Boom Boom]

Just a bit of curiosity here - why do you think that one must be 'employed' by an employer before one can support oneself ?

In Asia, when people faced with unemployment, they just go and setup stores on the streets

(more restrictions here on this, but then you got Ebay and paypal in the UK)

Because for most people selling their time to an employer is the only way they will earn a reliable income, the kind of thing required to pay a mortgage, put food on the table, and meet other fixed costs. Your solution seems to be that millions more people chance their arm on Ebay using capital they don't have to setup business there. It's not a serious solution is it?

[bogbrush]

Which is more useful to society?

1. A company employing 100 people and making 50 million profit a year

2. The same company reducing its staffing numbers to 10, but making 100 million a year.

It's a false choice, the former company goes broke in the face of competition from the latter, which drops its prices.

The only choice is to go forward, and attend to the business of people being able to create new wealth. Helpfully, these former companies will provide stuff cheaper and cheaper, so there is greater wealth available.

Of course, this only works providing more and more people are inclined toward this activity.

Edited October 24, 2010 by bogbrush

[Boom Boom]

It's a false choice, the former company goes broke in the face of competition from the latter, which drops its prices.

The only choice is to go forward, and attend to the business of people being able to create new wealth. Helpfully, these former companies will provide stuff cheaper and cheaper, so there is greater wealth available.

Of course, this only works providing more and more people are inclined toward this activity.

So you're saying I shouldn't be able to find an example in which the 1st example exists if the 2nd exists in the same market ? I'm pretty certain I can.

[bogbrush]

So you're saying I shouldn't be able to find an example in which the 1st example exists if the 2nd exists in the same market ? I'm pretty certain I can.

They won't be providing the same service to the same people, and not for an extended period of time. Given time one will force the other either to change or to leave.

For example, Tesco forced the High Street into a different role (convenience, specialisation).

[Boom Boom]

They won't be providing the same service to the same people, and not for an extended period of time. Given time one will force the other either to change or to leave.

For example, Tesco forced the High Street into a different role (convenience, specialisation).

So you agree with me then that the inevitable trend is to fewer jobs being available in the economy. In which case isn't it rather pointless to talk about the fecklessness of the unemployed when the real issue is there aren't the jobs there to meet the needs of the unemployed population.

[bogbrush]

So you agree with me then that the inevitable trend is to fewer jobs being available in the economy. In which case isn't it rather pointless to talk about the fecklessness of the unemployed when the real issue is there aren't the jobs there to meet the needs of the unemployed population.

No, because there can be new things done and provided.

50 years ago there wasn't a mobile phone industry. Wealth creation has no upper limit.

[rone]

One of my favourite sneakers of the emergency budget was the little known reduction in AIA due 2012 by our 'pro-growth' coalition from £100,000 to £25,000

AIA was great for us in terms of capital, it did away with the the write down and forced us to invest probably £70,000 on equipment - okay we had less money to spend but we were thinking long-term.

I would prefer the AIA at pre-coalition rate of £100,000 than the forth-coming corporation tax reduction. One forces you to invest, the other lands you with a tad more profit. Now I may be old-school but I prefer investment incentives than just lining my own pocket, which is why I believe tax cuts aren't the correct way to stimulate growth.

Flat rate VAT has been another less showy improvement of affairs.

[bogbrush]

One of my favourite sneakers of the emergency budget was the little known reduction in AIA due 2012 by our 'pro-growth' coalition from £100,000 to £25,000

AIA was great for us in terms of capital, it did away with the the write down and forced us to invest probably £70,000 on equipment - okay we had less money to spend but we were thinking long-term.

I would prefer the AIA at pre-coalition rate of £100,000 than the forth-coming corporation tax reduction. One forces you to invest, the other lands you with a tad more profit. Now I may be old-school but I prefer investment incentives than just lining my own pocket, which is why I believe tax cuts aren't the correct way to stimulate growth.

Flat rate VAT has been another less showy improvement of affairs.

Yes, agree wholeheartedly. The reduction writing down rate to 18% is crazy, basically you can forget being able to offset genuine investment against taxable profit for years. How that is supposed to steer us toward World Class manufacturing I really don't know.

[abharrisson]

Youre missing the point; it's not about hiding profit, it's being forced to pay tax on cash I don't have. For example, if I make £10m and spend £12m on plant, I have no extra cash at the end of the year BUT pay tax on 10 - (12*.18) = 7.84, @ 27% = £2.12m. So I pay >£2m tax when in fact I've invested all my profit and more.

The system for investing manufacturers does the opposite of tax avoidance, it goes looking for ways to tax businesses on money they literally don't make!!

Edit to add: As an aside, 100% PMAs would reduce work for Accountants.

I'd agree with you in principle as without the investment ongoing you'd have no business...... however it's a very complicated area and it's quite possible ( as I have done recently with a business purchase ) to effectively take the piss..... I'd say the whole area needs re-working to encourage genuine investment and hinder the swines like me.

[bogbrush]

I'd agree with you in principle as without the investment ongoing you'd have no business...... however it's a very complicated area and it's quite possible ( as I have done recently with a business purchase ) to effectively take the piss..... I'd say the whole area needs re-working to encourage genuine investment and hinder the swines like me.

Could you elaborate, (i) to add to the debate and (ii) to give me a few tips