Vince Cable Gets His Way On Intra-Company Transfers

[pl1]

I think this might have been missed, I can't find a post on it. It appears the immigration cap on skilled workers from places like India will not apply to companies who (ab)use the Intra-Company transfer system. An astonishing back-stab to all those who took Computing at University and a pandering to business first from the once untouchable Mr. Cable. Shame it's not a two way street. Hands up here, who would like to go to India for a couple of years, take in the sights, earn four times what you do in the UK, then after two years move back to the UK and buy a property mortgage free? Thought so.

How is it fair these onshored Indian IT workers pay no NI contributions at all? They can be paid a minimum wage salary and grab a tax free allowance of up to £18,000. The UK Borders Agency rules are passed, their Indian IT workers are happy, and they can significantly undercut UK workers, avoid UK income tax and national insurance, both employer and employee.

It's one thing to say this is a result of globalisation it's quite something else not to have a level playing field with regard to NI and Income tax that Indian onshorers pay compared to their UK counterparts. How is this fair?

Nov. 4: The British Prime Minister, Mr David Cameron, has succumbed to the pressure from British businesses and his business secretary, Mr Cable Vince, and made it clear that intra-company transfers, the visa route used by foreign companies including those from India, “should not be included” in the immigration cap.

“Things such as inter-company transfers should not be included in what we are looking at. I do not think we will have a problem. Given the very broken system that we inherited, there should be no problems improving it,” Mr Cameron said in the House of Commons, replying to a question about inward investment.

The business secretary, Mr Vince Cable, has been voicing reservations about the immigration cap and has been lobbying for more “flexibility” on allowing skilled workers into the UK.

Continues..

Edited November 8, 2010 by pl1

[no accountant]

It appears the immigration cap on skilled workers from places like India will not apply to companies who (ab)use the Intra-Company transfer system.

Read Bastiat's chapter on Restriction

By restricting the movement of goods or labour all you do is make IT services more expensive for us. So if you're asking me to pay over the odds to give someone a job, I say no. For selfish reasons, and economic. If it would cost me £100 less to use imported labour/goods, I have £100 to spend on something else I want, and by buying it I give someone a job that he or she wouldn't otherwise have.

As Bastiat says, you looking at that which is seen, not that which is not seen!

[ExecutiveSlaveBox]

Read Bastiat's chapter on Restriction

By restricting the movement of goods or labour all you do is make IT services more expensive for us. So if you're asking me to pay over the odds to give someone a job, I say no. For selfish reasons, and economic. If it would cost me £100 less to use imported labour/goods, I have £100 to spend on something else I want, and by buying it I give someone a job that he or she wouldn't otherwise have.

As Bastiat says, you looking at that which is seen, not that which is not seen!

Are you an accountant, "no accountant"? The exact same thing is starting to happen in your industry. I doubt wheather the above will be of much comfort to you when you can't put bread on the table for your wife and kids.

There is no reason at all why we should have to compete against 3rd world wages in our own country.

Edited November 7, 2010 by ExecutiveSlaveBox

[ZeroSumGame]

..............................

It's an important point this. Hence

http://www.housepric...howtopic=153993

Mods - merge?

Posted Today, 09:02 PM

Read Bastiat's chapter on Restriction

By restricting the movement of goods or labour all you do is make IT services more expensive for us. So if you're asking me to pay over the odds to give someone a job, I say no. For selfish reasons, and economic. If it would cost me £100 less to use imported labour/goods, I have £100 to spend on something else I want, and by buying it I give someone a job that he or she wouldn't otherwise have.

As Bastiat says, you looking at that which is seen, not that which is not seen!

Best of luck to you matey if you think that this is not going to happen to you too.

Edited November 7, 2010 by ZeroSumGame

[no accountant]

Best of luck to you matey if you think that this is not going to happen to you too.

I admit it sounds dispassionate,. but we can't afford to waste money paying people to do jobs can could be done cheaper. It amounts to subsidy for some people. Where does that end? Will you subsidise my job if I ask nicely please?

It's like the paying people to dig ditches argument. Yes it's jobs for the boys, but it takes money from the people are adding genuine value (without subsidy) and distorts the supply and demand of labour. Better to get more people to move jobs and add proper value that people are willing to pay for without subsidy.

[Orsino]

Many British IT workers have been well paid over the last 15 years, and not because of their spectacular talents but because demand has significantly outstripped supply. That situation was never going to last. The most successful people I know who work in IT are always fighting to learn new skills rather than whining about increased competition. They're still paid a fortune and are worth every penny. The mediocre ones need to improve their skills or drop their prices. Market forces cuts both ways - as do tax arrangements. I don't remember any IT contractors complaining about the tax avoidance ruse of setting themselves up as a company and so avoiding income tax.

[erranta]

Are you an accountant, "no accountant"? The exact same thing is starting to happen in your industry. I doubt wheather the above will be of much comfort to you when you can't put bread on the table for your wife and kids.

There is no reason at all why we should have to compete against 3rd world wages in our own country.

Typical and bloody thick - what's accountant going to account for if no one has any lolly left in this country - except the super rich.

Your elected 'chosen ones' in Govt do NOT work for the interests of the UK population - just bring in measures to ensure slavery, debt and coercion of the people in the interests of Big Business.

They become bolder and more brazen by the day, whilst manipulating the population to turn on each other with deliberate blame culture (deflecting the destruction caused by the Elites) - thru the elite run media.

Edited November 7, 2010 by erranta

[Si1]

I admit it sounds dispassionate,. but we can't afford to waste money paying people to do jobs can could be done cheaper. It amounts to subsidy for some people. Where does that end? Will you subsidise my job if I ask nicely please?

It's like the paying people to dig ditches argument. Yes it's jobs for the boys, but it takes money from the people are adding genuine value (without subsidy) and distorts the supply and demand of labour. Better to get more people to move jobs and add proper value that people are willing to pay for without subsidy.

+1

most of the best people working in IT don't have It degrees and are much more flexible in future employ (engineers, hard scientists, business backgrounds etc)

It barely rates as a 'profession', it is just a job that has hitherto been well paid

[no accountant]

Typical and bloody thick.

At least I don't insult people.

Please read some economics. Protectionism will put us into depression, as it did in the 1930s.

Edited November 7, 2010 by no accountant

[mdman]

I admit it sounds dispassionate,. but we can't afford to waste money paying people to do jobs can could be done cheaper. It amounts to subsidy for some people. Where does that end? Will you subsidise my job if I ask nicely please?

It's like the paying people to dig ditches argument. Yes it's jobs for the boys, but it takes money from the people are adding genuine value (without subsidy) and distorts the supply and demand of labour. Better to get more people to move jobs and add proper value that people are willing to pay for without subsidy.

The trouble with your analysis is it doesn't count all the costs

Intra-company transfers pay less tax. Increasingly companies are domiciled off-shore so they pay bugger all tax too. The pecuniary benefit of the wage arbitrage accumulates primarily to the company, who may choose to pass on some saving to the consumer

But there are other costs. The welfare and social costs of unemployed local workers are borne entirely by the taxpayer (and the out of work jobseeker). This was vividly bought into sharp relief by Total employing Italians to work at an oil refinery in the UK, leaving many locals unemployed. Knock on effects include decimating consumer disposable income which is a killer in consumer credit economies (especially now the credit part is all messed up too).

Companies have a duty to shareholders. As such they have a duty to regard society and communities with psychopathic detachment.

James Goldsmith was entirely correct about free trade. When you introduce a global low cost labour pool on this scale (>2billion workers), unrestricted freedom to employ from that pool will decimate our sovereign nation, something employers have no allegiance to. Ultimately, this becomes a wealth transfer from the middle classes (including accountants) to the rich and will decimate prospects for future generations

Until we find some radical new disruptive technology

Adam Smith would not recognise this World his ideas have been shoehorned into fitting

[erranta]

At least I don't insult people.

Please read some economics. Protectionism will put us into depression, as it did in the 1930s.

In case you hadn't noticed we have not made a penny for a decade under Brown - just borrowed Billions, PFI'd on the never, never whilst the City bankers walked off to early retirement with the skimmed loot for arranging loans.

So we've been in a 10yr depression masked by an illusory "Service Economy" & false economic 'statistics'

I'll leave it up to others to gauge how thick you are!

Edited November 7, 2010 by erranta

[no accountant]

The pecuniary benefit of the wage arbitrage accumulates primarily to the company, who may choose to pass on some saving to the consumer

If they don't another company will, and the company that pays too high share dividend will become uncompetitive and obsolete.

e.g. the 99p mobile phone.

But there are other costs. The welfare and social costs of unemployed local workers are borne entirely by the taxpayer (and the out of work jobseeker).

As a tax payer, if I have to subsidise an IT worker £100 a week it's the same cost as paying unemployment benefit, but the advantage is that there's a good chance that the unemployed person will find a job, and I'll get the benefit of cheaper IT and another service. Edited November 7, 2010 by no accountant

[no accountant]

Bastiat on Machines (those nasty efficient machines that take away people's jobs)

Men have a natural propensity to make the best bargain they can, when not prevented by an opposing force; that is, they like to obtain as much as they possibly can for their labour, whether the advantage is obtained from a foreign producer, or a skillful mechanical producer.

The theoretical objection which is made to this propensity is the same in both cases. In each case it is reproached with the apparent inactivity which it causes to labour. Now, labour rendered available, not inactive, is the very thing which determines it. And, therefore, in both cases, the same practical obstacle - force, is opposed to it also. The legislator prohibits foreign competition, and forbids mechanical competition. For what other means can exist for arresting a propensity which is natural to all men, but that of depriving them of their liberty?

Rendering labour available is a good thing, not a bad thing!

Basiat, written in 1850. True today as it was then, a real eye-opener, it's changed my outlook completely:

http://bastiat.org/en/twisatwins.html#machinery

Edited November 7, 2010 by no accountant

[Si1]

The trouble with your analysis is it doesn't count all the costs

Intra-company transfers pay less tax. Increasingly companies are domiciled off-shore so they pay bugger all tax too. The pecuniary benefit of the wage arbitrage accumulates primarily to the company, who may choose to pass on some saving to the consumer

But there are other costs. The welfare and social costs of unemployed local workers are borne entirely by the taxpayer (and the out of work jobseeker). This was vividly bought into sharp relief by Total employing Italians to work at an oil refinery in the UK, leaving many locals unemployed. Knock on effects include decimating consumer disposable income which is a killer in consumer credit economies (especially now the credit part is all messed up too).

Companies have a duty to shareholders. As such they have a duty to regard society and communities with psychopathic detachment.

James Goldsmith was entirely correct about free trade. When you introduce a global low cost labour pool on this scale (>2billion workers), unrestricted freedom to employ from that pool will decimate our sovereign nation, something employers have no allegiance to. Ultimately, this becomes a wealth transfer from the middle classes (including accountants) to the rich and will decimate prospects for future generations

Until we find some radical new disruptive technology

Adam Smith would not recognise this World his ideas have been shoehorned into fitting

you're missing the other side - the opportunity to trade with OUR advantages with other nations

skills that India CAN'T yet replicate are required for decent salaries, IT and accounting are NOT amongst those now or in the near term to a significant (tho not total) degree

coal miners in some parts of the country used to get paid very well in the 1960s

what goes around comes around

[DeepLurker]

At least I don't insult people.

Please read some economics. Protectionism will put us into depression, as it did in the 1930s.

Anyone with a basic understanding of economics would understand that destroying your tax base is doubleplusungood.

Bringing lots of Indians over here, letting them get away with paying far less tax than the UK employees that they are displacing while enjoying the same benefits (e.g. hospitals)... it's just nuts.

[DeepLurker]

Incidentally, I wonder if a UK IT contractor could rent a hovel in Colne as his home address, then go work in the City, rent a flat in London and put it on expenses?

[_w_]

At least I don't insult people.

Please read some economics. Protectionism will put us into depression, as it did in the 1930s.

It didn't put any of the Asian economies into depression (and still isn't). Funny thing that.

But let's not hurt our pretty heads and stick to the old 'economic' preconceptions planted a long time ago by VIs.

For other spurious ideological plants and similar mantras see also:

- the Laffer curve

- supply side (trickle down) economics

- etc.

Edited November 7, 2010 by _w_

[Si1]

It didn't put any of the Asian economies into depression (and still isn't). Funny thing that.

that advanced Asian economies have pretty free flow of skilled labour (and other things of value) don't they?

the less advanced ones don't, and there are good arguments to support that they benefit from this. However, we are in the former camp and should still not, IMHO.

[Si1]

Anyone with a basic understanding of economics would understand that destroying your tax base is doubleplusungood.

Bringing lots of Indians over here, letting them get away with paying far less tax than the UK employees that they are displacing while enjoying the same benefits (e.g. hospitals)... it's just nuts.

most of the public costs incurred by a person seem to be in your youth or old age - in your working years you are a net tax contributor, so I can't see how this point stands??

[Orsino]

Where would the digital economy and all its IT jobs be if we'd protected employment and wages in all the industries it's transformed or replaced? Where would the British economy be if it still employed armies of typists?

[no accountant]

For other spurious ideological plants and similar mantras see also:

- the Laffer curve

So you don't believe in the Laffer curve? I take you believe in the two end points?

If you charge 0% you raise no revenue and if you take away 100% then people don't bother working, so you also get zero.

So what shape is it in between?

[tomwatkins]

At least I don't insult people.

Please read some economics. Protectionism will put us into depression, as it did in the 1930s.

Crap argument matey. 1930's was about trade protectionism not movement of labour. Chalk and cheese.

[tomwatkins]

you're missing the other side - the opportunity to trade with OUR advantages with other nations

skills that India CAN'T yet replicate are required for decent salaries, IT and accounting are NOT amongst those now or in the near term to a significant (tho not total) degree

coal miners in some parts of the country used to get paid very well in the 1960s

what goes around comes around

Coal miners never got paid "well". They made above average wages because they worked like stink and most never lived much beyond retirement age (like my Dad). Shifting twenty tons a day in 100 degrees on a face no more than three feet high deserves a bit of a premium wouldn't you say?

[needsleep]

Comparative advantage is a great tool for static analysis. It tells you where an economy may be competitive or uncompetitive at a given point in time and therein lies a fundamental weakness - it encourages the search for short term efficiencies. It doesn't consider the long term impact of making those efficiencies and in fact assumes that a short term efficiency will result in long term growth. Hmmmmmm. And ICT visas blow a fundamental of it out the window anyway - the assumption that skilled labour is not mobile across nations. Any decent entry level economics book and a little thought will quickly expose all the fundamental flaws in 'Ye Olde Theory of Comparative Advantage'.

My dad was a coal miner too. Underground locomotive driver at a pit that was 600ft deep and mined a seam under the sea bed. That was the 60s. He hated it and got paid naff all.

Edited November 8, 2010 by needsleep

[_w_]

So you don't believe in the Laffer curve? I take you believe in the two end points?

If you charge 0% you raise no revenue and if you take away 100% then people don't bother working, so you also get zero.

So what shape is it in between?

Oh so simple yet so misleading a propaganda tool for ideologues.

How the US did in 1910 with a top income tax rate of 77% I know not :-)

And what deep depression they must have gone through with a top tax rate of 90% in the 1950s :-)

But that shouldn't get in the way of cutting public services and helping our wealthy friends now should it.

Edited November 8, 2010 by _w_