Death
and Taxes
Anthony Perrinott Lysberg Barber, politician:
born 4 July 1920; called to the Bar, Inner Temple
1948; Lord Commissioner of the Treasury 1955-57;
PPS to the Prime Minister 1958-59; Economic Secretary
to the Treasury 1959-62; Chairman of the Conservative
Party 1967-70; Chancellor of the Exchequer 1970-74;
Chairman Standard Chartered Bank 1974-87; died
16 December 2005.
Read an obituary, and you'll see just how much
value can be added by a human life.
Anthony Barber saw action at Dunkirk in 1940,
and then joined the RAF as a pilot. Captured in
1942, he spent the rest of the war as a PoW. Not
a man to give in, he made a number of daring escape
attempts, which later featured in the film 'The
Wooden Horse'. Succeeding once, he was recaptured
as he reached Denmark. Back in prison, he decided
to study for a law degree in his spare time. He
got a First.
When he returned to civilian life, he read Politics,
Philosophy and Economics at Oxford, then passed
his Bar exams and became a barrister. Interested
in politics, he was adopted as the Conservative
candidate for Doncaster (Labour maj: 23,000) in
the 1950 election. He was the only applicant.
He reduced the majority to under 1,000, and in
the following year, won the seat.
Twenty years later, Edward Heath gave Barber
the role of negotiating Britain's entry in the
EEC. However, when Chancellor Iain Macleod died
six weeks after the election, Tony Barber was
given the job.
All of which brings me to his greatest legacy
– his introduction of Value Added Tax.
One newspaper this week ran the headline: "Barber,
creator of VAT and the 1970s boon, dies".
Strictly speaking, that isn't true. A German economist
first thought of VAT during the 18th century,
as a sales tax on goods that did not affect manufacture
or distribution; the tax would be a fixed percentage
of the final price.
Like most things European, it took an age to
come into effect. The French finally made the
first move, in 1954. Thereafter, it was decided
that the imposition of a form of VAT was a requirement
to join the Common Market. So Barber's hand was
forced, and Vatman was born.
But what is 'value add'?
Those very helpful people at the DTI have come
up with a scoreboard that measures value added:
http://www.innovation.gov.uk/value_added/home.
It ranks "the top 800 UK and 600 European
companies" (reassuring that a government
department doesn't seem to know that we are part
of Europe) by Value Added, which it says equals
'operating profit + employee costs + depreciation
+ amortisation.'
So that's cleared that up.
In a previous memo, I wrote about pricing and
value in the art market, and concluded that value
pricing is the result of aggregate customer perception;
a piece of art is worth what buyers in the market
believe it is worth. Value is a subjective measure.
The same applies to value add.
My friend Eddie went to Dublin a couple of months
ago with a few of his mates. Three of them squeezed
into the back of a minicab, and as the driver
pulled away from the airport, he looked in his
rear view mirror at them: "Come over fer
a wake, hev ya?"
"No," said Eddie. "Fer a stag
weekend."
"Ahhh, get away," said the driver.
"Oi’ve seen happier funeral directors.
S'gonna be a miserable toime if you lot carry
on like that." He then told them a couple
of jokes that are unprintable here, and popped
a CD into his car stereo. Pink's "Get this
Party Started" blared out of the speakers,
and within a few seconds, Eddie and his friends
were leaning out of the windows, singing like
Boyzone's uncles and raising smiles all the way
into Dublin city centre.
So with a little personal energy, the driver
transformed a commodity service into an event.
And the economic measure of this? A 25% tip and
a confirmed booking for the return fare. Real
value add.
Last month, a colleague and I went to San Francisco
on a business trip and had a morning to kill.
We took a tram ride downtown to Powell Street
Station, ending outside Nordstrom, the huge department
store. As we stood looking at the tourist map,
wondering how to get to the restaurant for our
lunchtime meeting, we were approached by an African-American
man, carrying a pile of visitor guides like the
one I had seen next to my bed at the hotel.
"'S'cuse me gennlemen. How ken ah help
you?" Just for a moment I thought that he
was an official guide, but the frayed brim of
his cap and his ill-matched shoes said otherwise.
"Yoo are here," he said, opening up
the booklet to the centre-spread map, and pointing
to a blue asterisk he had already marked with
a ballpoint. "Whered'yo wanna be next?"
"Between Valencia and Mission," I said,
still unsure of this guy's status. "Ohhh,
that's easy. You gonna need a cab." I glanced
up and down a very busy Market Street. No dice.
"Best place fer a cab gonna be outside the
hotel just round that corner." He pointed
about 50 yards away. "Corner of Howard Street
and 4th." We'd never have found that on our
own.
"So gennlemen, here is yo guide. That'll
be $3 plus a discretionary tip for the value of
the in-fo-mation." We gave him a ten.
As we walked to the hotel, my colleague said
to me; "You know those guide books are free,
don't you? We just paid $10 for a free booklet."
"No. We just paid $10 for initiative, insight
and information. He's a bum, and yet he's found
a way of earning a crust without begging. By waiting
next to that Tourist Centre map, he knew exactly
where he was going to find his customers. And
he gave us something that we'd never have thought
of on our own. He has nothing, and yet he's created
some value."
I thought of him again while reading about Lord
Barber's life of achievement and persistence.
Despite the fact that our guide paid no taxes,
somehow I think Barber would have approved of
his enterprise.
Wishing you a Value-Added New Year |
