‘Open­ing bishop’ s gate was my best de­ci­sion’

Belfast Telegraph - Business Telegraph - - News - byrichardram­sey, Ul­ster­bankchiefe­conomist @Ub_e­co­nomics In next week’s Econ­omy Watch, we hear from Danske Bank chief econ­o­mist Conor Lambe

Qwhat’s the best piece of busi­ness (or life) ad­vice you’ve ever been given?

ADO all the small things in busi­ness well. If you fix the small prob­lems, the big prob­lems tend not to be an is­sue.

Qwhat ad­vice would you pass on to some­one start­ing out in busi­ness?

ABE clear about what it is you want to achieve from the busi­ness and set your­self short, medium and long term tar­gets. Speak with oth­ers and learn from their les­sons. It is crit­i­cal that you are pas­sion­ate about what the busi­ness is and re­cruit peo­ple with the skills that you don’t have. To be suc­cess­ful in any busi­ness you will have to learn to let oth­ers suc­ceed in their re­spec­tive roles.

Qwhat was your best busi­ness de­ci­sion? Aleav­ing the big cor­po­rate world of a ho­tel man­age­ment com­pany and tak­ing the op­por­tu­nity to open Bishop’s Gate Ho­tel in my home town of Derry.

QIF you weren’t do­ing this job, what would be your other ca­reer?

AI have never re­ally thought about it… But what­ever in­dus­try I chose, I would have to be in charge.

Qwhat was your last hol­i­day? Where are you go­ing next?

AWE are just back from a fam­ily hol­i­day in Flor­ida with all the grown-up chil­dren. The next one will just be me and my wife, Anne Marie, sneak­ing away some­where warm and book­ing a nice ho­tel.

Qwhat are your hob­bies/ in­ter­est? Agolf is my Sun­day morn­ing penance and our new Great Dane puppy Wil­bur fills any chance of ever hav­ing an­other in­ter­est!

Qwhat is your favourite sport and team? Athe Ry­der Cup and Europe ( above) ev­ery time.

Qand have you ever played any sports? AI have tried my hand at most sports and was pretty good at most of them. I played a lot when I was a teenager but I just play golf now and rep­re­sent my club at com­pe­ti­tion level when the op­por­tu­nity arises.

QIF you en­joy read­ing, can you rec­om­mend a book? AI would rec­om­mend to any­one who leads a team or is start­ing a new role in man­age­ment to read ‘ The Ice­berg is Melt­ing’.

Qhow would you de­scribe your early life? AI grew up in Canada so I was al­ways out­doors play­ing sports 24/7 and had a re­ally happy child­hood.

Qhave you any eco­nomic pre­dic­tions?

AWE need to be very care­ful as North­ern Ire­land has never pros­pered or had the booms our neigh­bours have ex­pe­ri­enced. Brexit will bring op­por­tu­nity for North­ern Ire­land to po­si­tion it­self as a unique place to do busi­ness from. But in the world of tourism which my busi­ness op­er­ates in, we could re­ally do with­out it at this point in the jour­ney, as we are see­ing real suc­cess in our sec­tor over the last num­ber of years.

Qhow would you as­sess your time in busi­ness with your com­pany?

AI am in my fourth year of the Bishop’s Gate Ho­tel jour­ney from con­cep­tion to real­ity, and most of all sta­bil­ity. We em­ploy over 100 staff be­tween the Ho­tel and Soda and Starch in the Craft Vil­lage. Qhow do you sum up work­ing in the ho­tel and hos­pi­tal­ity sec­tor?

AI love hos­pi­tal­ity and work­ing in ho­tels. We are in the job of mak­ing mem­o­ries and help­ing peo­ple en­joy life’s jour­ney. Not many in­dus­tries can say that.

If Philip Ham­mond has learned from the his­tory of tax­a­tion, we could see some in­ter­est­ing devel­op­ments in the Bud­get on Oc­to­ber 29. When we look back at some of the taxes we’ve had in the past, it is clear that tax­a­tion has had to con­tin­u­ally change to keep pace with the times. In 18th cen­tury Bri­tain, a hat tax was in­tro­duced to raise rev­enue from the gen­tri­fied.

It was ef­fec­tively a stamp duty on the head­dress of the more wealthy — the big­ger the hat, the big­ger the tax. Top hats had a top rate of 14%.

Can­dles were also viewed as an ex­trav­a­gance in Geor­gian Eng­land and there­fore drew the in­ter­est of the ex­che­quer, lead­ing to the in­tro­duc­tion of a can­dle tax.

Sim­i­lar taxes to tar­get the wealthy at the time in­cluded a beard tax in­tro­duced by Henry VIII, or an 18th cen­tury win­dow tax (the big­ger the house, the more win­dows it had and the more tax the own­ers would pay).

The pur­pose of tax is prin­ci­pally to raise rev­enue, but it is also in­tended to in­cen­tivise par­tic­u­lar be­hav­iours and to help re­dis­tribute wealth.

Many of the taxes we have to­day are vastly dif­fer­ent from what went be­fore, but their pur­pose has re­mained broadly the same.

The win­dow tax of to­day is rates or coun­cil tax, and the cur­rent equiv­a­lent of the hat tax is VAT, which came into ex­is­tence in 1940s as Pur­chase Tax — the more you spend on items, the more VAT you pay.

The lat­ter change widened the tax base, mov­ing away from more spe­cific taxes like the hat or wall­pa­per tax to­wards the pop­u­la­tion at large.

An­other rea­son for con­tin­u­ally chang­ing tax­a­tion has been the ever-present is­sue of avoid­ance.

The hat tax def­i­nitely passed its sell-by date when­ever milliners be­gan to re­brand their wares as head­gear rather than hats so that their buy­ers didn’t have to pay the levy.

The 18th cen­tury wall­pa­per tax in Eng­land was avoided when the savvy aris­toc­racy be­gan to dec­o­rate their homes by putting up plain pa­per and sten­cilling the pat­terns on af­ter.

Mean­while, brick­ing up win­dows was an­other tax avoid­ance mea­sure.

To­day’s ma­jor taxes are in­come tax, cor­po­ra­tion tax, Na­tional In­sur­ance and VAT. But a whole host of smaller taxes have re­sulted in a highly-com­plex tax sys­tem.

In­deed, the tax book has tre­bled in size since 1997 and is now over 28,000 pages long. It in­cludes new taxes like the sugar tax which have been cre­ated to tackle new prob­lems such as obe­sity.

But such has been the pace of change in the world in the last decade that the tax sys­tem hasn’t kept pace, and there is lit­tle doubt that change needs to hap­pen again.

Two big prob­lems are that ex­ist­ing taxes such as in­come tax aren’t gen­er­at­ing as much rev­enue as in the past, with the ‘gig econ­omy’ a sig­nif­i­cant is­sue in this re­gard, and the fact that the na­ture of com­pa­nies has changed, with cor­po­ra­tion tax rules hav­ing been drafted be­fore dig­i­tal busi­nesses ex­isted.

With re­gard to the lat­ter, it is in­ter­est­ing to note that whilst in the past protests about tax tended to be against their in­tro­duc­tion — such as the poll tax ri­ots — whilst to­day we see protests about their avoid­ance by big firms such as Voda­fone and Star­bucks.

A big chal­lenge for the UK Ex­che­quer now is how it brings the tax sys­tem fully into the 21st cen­tury to en­sure that the Ama­zons of this world are taxed ap­pro­pri­ately and fairly from the Ex­che­quer’s and wider busi­ness com­mu­nity’s per­spec­tive.

The cur­rent mis­align­ment be­tween where dig­i­tal busi­nesses are taxed and where they cre­ate value threat­ens to un­der­mine the cor­po­ra­tion tax sys­tem.

The fact that House of Fraser is said to be pay­ing more in rates on its flag­ship Lon­don store than Ama­zon is pay­ing in UK cor­po­ra­tion tax on its £9bn in rev­enues, tells us much about how the tax sys­tem is out­dated.

At a time when­ever rev­enue needs to be raised to pay for the £20bn per an­num of ad­di­tional funds promised for the NHS, our ag­ing pop­u­la­tion puts more and more pres­sure on pub­lic ser­vices, and ef­forts are on­go­ing to fix the deficit, it is in­evitable that more and more fo­cus has been placed on ad­dress­ing the ‘Ama­zon anom­aly’.

Pub­lic spend­ing cuts did the heavy lift­ing in deal­ing with the deficit in the past — go­ing for­ward, the ba­ton will be passed on to tax rises.

We’ve al­ready heard the UK Chan­cel­lor Philip Ham­mond call for large on­line re­tail­ers to face a tax on their rev­enues rather than their prof­its in or­der to in­crease the amount of tax they pay in the UK. Whether we hear more about this in the Oc­to­ber 29 Bud­get re­mains to be seen.

But what is clear is that the di­rec­tion of travel is more tax and from more sources rel­e­vant to the 21st cen­tury.

From Philip Ham­mond’s per­spec­tive, the pos­i­tive is that the Bri­tish So­cial At­ti­tudes Sur­vey sug­gests more peo­ple — some 60% — are pre­pared to pay more tax.

In­deed, since 2010, re­search shows the pro­por­tion of peo­ple who want more ‘ tax and spend’ has dou­bled. What we may see in the Bud­get is even more rolling back of tax re­lief on a range of things, such as pen­sion con­tri­bu­tions, and fur­ther means-test­ing on ben­e­fits.

A new ‘plas­tic tax’ to dis­cour­age man­u­fac­tur­ers from us­ing un­re­cy­clable plas­tic looks in­creas­ingly likely. But we’ll also need to see some new taxes to raise ad­di­tional rev­enue — per­haps an NHS adult so­cial care tax beck­ons?

Hip­sters have made fa­cial hair fash­ion­able again, but a beard tax to help shave the deficit may be a step too far for the Chan­cel­lor. But one thing is for sure, as beards have be­come fash­ion­able again, taxes on wealth are likely to make a big come­back too.

The di­rec­tion of travel is for more tax and from more sources rel­e­vant to the 21st cen­tury

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