Stop43.org.uk stop confiscation of your property and Human Rights in the UK Enterprise and Regulatory Reform Bill






If a monopsonist Dutch Sandwich-class corporation (1), (2), (3) supplied mostly by freelancers and micro-businesses cuts its costs and grows its market by driving down the level of fees it pays to its suppliers it reduces HM Government's overall tax take from that corporation plus its suppliers as a percentage of the gross turnover of that corporation's microeconomy. From HM Government's perspective this result is deflationary even if that corporation's microeconomy grows because any sector in which high value is initially created at the individual and micro-business level always contributes more tax revenue as a percentage of the value of its market than a similar sector that has become corporatised.

Let us imagine a cottage-industry photographic market in which in 1 day 100 photographic micro-businesses each sell a license for 1 image at an average license fee of £100:

Total images used that day: 100
Total market value that day: £10,000.

Let's say those photographers pay corporation tax after expenses and allowances at an effective rate of 10%:

Total HMRC tax take that day: £1,000 - 10% of market value

Now let us imagine that industry entirely corporatised in which a multinational monopsonist/monopolist intermediary, representing all photographers in that market, grows the number of photographers in that market by a factor of 10 and also grows image license sales by a factor of 10 by reducing the average license fee per image by 80% to £20, which it splits 50/50 with the photographers:

Total images used that day: 1000
Market value that day to photographers: £10,000
Market value that day to intermediary: £10,000
Total market value that day: £20,000
Market value growth: 100%.


Now let us suppose that as a result of much reduced individual turnover, after expenses and allowances the photographers only pay corporation tax at an effective rate of 5%, and by running a 'Dutch Sandwich' the intermediary pays corporation tax at an effective rate of 2.5%:

HMRC corporation tax take that day from photographers: £500.
HMRC corporation tax take that day from intermediary: £250.
Total HMRC corporation tax take that day: £750 - 3.25% of market value

In allowing an intermediary to monopsonise/monopolise the market and double its overall value, HMRC's share of the market's value has reduced from 10% to 3.25% and overall corporation tax take has reduced by 25%.

This example is a fair illustration of how the stock photo industry has changed since it was largely corporatised by three major photo stock libraries, except that average actual license fees have gone down further than 80%.

Now let us suppose that in the cottage industry photographic market, actual daily image use is 200 but illegal unpaid use is made of 1 photograph in every 2 by users copying images from the photographers' websites or using images that they already have 'on file' but not reporting use to the photographers:

Total image use that day: 200
Total potential market value that day: £20,000
Actual market value that day to photographers: £10,000
HMRC tax take that day from photographers: £1,000 - 5% of market value

Finally let us suppose that as a result of the strengthening of photographers' rights and means of redress against infringement and improving the ease of use of the licensing system, total image use remains as above but illegal unpaid use is reduced to 1 photograph in every 4:

Total image use that day: 200
Total potential market value that day: £20,000
Actual market value that day to photographers: £15,000
HMRC tax take that day from photographers: £1,500 - 7.5% of market value

Double the total value of the photographic markets by strengthening individual and micro-business creators results in a doubling of tax take. Doubling the markets' value by allowing a Dutch Sandwich-class corporation to monopsonise/monopolise it reduces tax take by 25%.

"According to the Government's own analysis, the creative industries account for around 8% of UK GDP, and probably a rather larger proportion of total employment. That's roughly the same size as financial services, and a good sight less dangerous to the wider economy these industries seem to be too. Many would put the figures much higher.

Clustered around the unlikely location of a busy North London intersection – which some already refer to as Silicon Roundabout – there are indeed a number of quite promising little technology start-ups. Many of them complain that antiquated copyright law gets in their way. But in a sense, so it should.

You don't kiss goodbye to a highly successful, employment sustaining content sector on the off chance that one of these tiddlers, living like parasites on the pig's belly of supposedly free content, might one day become the next Google". Jeremy Warner in The Daily Telegraph.