Malcolm Walker Retail Week Columns

The real value of a fat cat’s £1m bonus

Businesses should be seen as the heroes that pay this country’s bills, says Malcolm Walker .


I know a fat cat who earned a bonus last year of £850,000. His employers paid 12.5% national insurance on that so the bonus cost them about £1m. The fat cat then paid 50% tax, leaving him with £425,000.

He decided to spend it all on a boat. The boat actually cost £350,000, the rest was 20% VAT.

The cost of the boat was 60% labour, on which the boat builder paid income tax and national insurance. Plus council tax, and corporation tax on the profit he made at the end.

The fat cat’s 20 friends in the pub were secretly outraged at his extravagant lifestyle. All were either unemployed or worked for the state as teachers, firemen or council workers.

They didn’t realise that their salaries were being paid from the money the Government had taken from the fat cat’s bonus.

The boat builder was in the pub as well and was grateful for the order that had saved his company from going under and kept his employees in jobs. He bought the fat cat a pint but used his company credit card so had to declare it and pay yet more tax.

The fat cat was pleased with his boat but he needed to employ a captain and a cleaner and had to pay tax on the fuel to run it. So he needed another bonus the following year and his 20 friends also needed him to – they just didn’t realise it.

But the politicians in power wanted to stop such excessive bonuses. They had an election coming up and were thinking about the 20 votes in the pub.

That’s my attempt at a parable, but it’s not far from the truth. What is true is that there seems to be an anti-business agenda growing in the UK. When millions are employed by the state or don’t work at all, there are precious few of us left to create the wealth and pay the taxes needed to run the country.

Businessmen should be seen as heroes, not vilified. They work long hours and risk everything, and any personal reward is always recycled back into the economy.

Years ago I employed a very bright guy, highly educated and respected. It took me a year to get him to join.

Three days into the job I sat in his office and he told me his plan. He’d made a list of 100 priorities. My stomach turned over and I knew I’d made a terrible mistake. It was a moment of enlightenment.

Something similar happened recently. I was given a copy of a leaflet produced by Cheshire Fire Service. It was entitled Using Your iPad Safely? It contained gems such as “Don’t walk about using your iPad – you might bump into something” and “Take a rest every 20 minutes or you might get cramp in your hand.”

It was another moment of revelation that things have gone too far. Anyone employed by the state to write tosh like that is stealing my tax money that could be better spent employing an NHS nurse. They are surplus to requirements.

None of us minds paying taxes that are spent wisely. But the Government machine is run by people who have never had to pay the wages at the end of the week, and also have to get re-elected.

It’s like running a public company. It’s PR and results today that keep the share price afloat. Never mind the long term. Anyone who cares for our future prosperity should take a close look at how successful private companies do things, and remember that we ultimately rely on thriving businesses to pay our bills.

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