A TALE OF TWO LEDGERS

 Dear 50 International,

Paraphrasing Dickens: it was the best of margins, it was the worst of margins. In the land of the economically overextended, policy-makers, faced with mounting debts, demographic decline, competition and AI are turning to instruments of extraction: the ruinous combination of Taxation and Tariffs!

Taxation, flagged as fiscal virtue, leaves the OECD to report that the UK’s tax-to-GDP ratio reached 35.3% in 2022, its highest in 70 years. Now with frozen thresholds (stealth taxes), these add an increasing burden to the 28% on Capital Gains, dividends at 39.35%, Corporation Tax at 25% and Inheritance Tax fixed at a £325,000 threshold unchanged since 2009 (since when UK house prices have doubled)!

Tariffs, meanwhile, with nationalistic bombast, have re-entered global policy only to hit consumers directly! Post-Brexit, UK food prices surged 25% higher in just two years, with trade friction estimated to have added £250 to £300 per household per year. The Bank of England noted that tariff and non-tariff barriers contributed to persistent inflation and supply constraints.

As pincers, excessive taxes and tariffs remove liquidity, erode savings, distort markets, punish work, and discourage innovation. Wealth preservation is now akin to our Georgian forebears smuggling tea past the hated Exercise men. Whilst the international wealthy can move their Capital those rooted in the UK smuggling has to be done via spreadsheets and structures.

History shows us the result of over-enthusiastic revenue-raisers. The 1765 Stamp Act and 1773 Tea Act sparked a little disagreement across the Atlantic. In France, the hated salt tax helped create a revolution! Today, a more stealthy fiscal guillotine is year by year at work and while no one’s storming the Bastille just yet, families and individuals need to plan with rigour to defend their ledgers.

Which is why history matters. In 1750s Italy, before unification, there were over 500 independent family principalities, each with its own rules, revenues, and coat of arms; most founded not by royal decree, but by careful planning, clever alliances, and a determination to keep the estate in the family. Today’s families should use the same energy not into castles and city-states, but rather into well-crafted corporate and fiduciary entities moated against ill-conceived taxation. Flexibility and governance, not secrecy, being their shields.

Globally, the tariffs unleashed by Trump will, free from hyperbole, add billions to consumer prices. The Tax Foundation estimates that these could cost the US over 500,000 jobs and raise household annual costs by $1,700.  The analysts see the US stalked by a recession! Thus it would be well to consider what might come of a contemporary writing of Dicken’s story of Sacrifice with tragically little Redemption!

Which brings us back to the ledger. So whether one’s interests lie in London or Lombardy,  planning must be defensive, deliberate, and above all, dynastic. It is wise, in a world of worsening fiscal unpredictability, to have the mind of both a 1750s prince and that of a modern CFO.

All the best

Alistdair