Home—Blog—Why we need to crack down on the multinationals
Nov 12, 2012, 12:01
Posted byMerryn Somerset Webb
Comments (48)
The big story this weekend? Tax. And how the biggest companies in the UK aren’t paying much of it. The Observer went big on the “scandal of the water giants that pay no tax on profits” thanks to their “byzantine structure of private equity financing”.
The Mail on Sunday had a go at Nissan for selling “UK cars via Switzerland as a tax ruse”, something that is particularly rude given how many tens of billions we have bunged it in bribes to manufacture here.
The Independent fingered Pfizer in an article asking how a company that makes Viagra and has sales of £1.8bn in the UK “escaped paying any tax at all to the UK last year”.
The Telegraph noted that Margaret Hodge is to face “embarrassing questions” given that her family company’s tax bill (steel trader Stemcor was founded by her father) appears to come in at around 0.25% a year.
And of course everyone kept us updated on Google, Amazon and Starbucks and the almost non-existent taxes they pay to the UK government on the profits they make here.
If you wonder exactly how these companies manage to pay no tax, you should probably look at Tim Bennett’s video on the matter: Why does Starbucks pay so little tax?
But the key point is that it is mostly perfectly legal and only to be expected in an era of globalisation. These companies are entirely free to exploit the differences in the tax systems of the various countries in which they operate. And that is exactly what they do.
This matters for the simple reason that it is yet another barrier to free competition in the UK. When we look at the way in which all our book shops have disappeared from our high streets, we blame the fact that everything is cheaper on the internet. But we don’t ask enough about why that is.
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Sure things are cheaper if you don’t have to pay for prime retail sites, but you can also charge a whole lot less for your products if you have a business model that doesn’t involve paying taxes on your profits. And how can a taxpaying business compete with the prices a non-taxpaying business can charge? The answer is on your high street.
You might think about how Google operates, too. The world of journalism is a tough one these days. Magazines aren’t just competing with every blogger in the world for eyeballs, they are also competing with a huge multinational entity for their advertisers – one that isn’t handicapped by the pesky problem of corporation tax. Is this a problem?
The answer is on your local newsstand (or not on your local newsstand, depending on how you look at it). All this makes the fact that the government is finally taking a look at the problem a good thing (Starbucks, Amazon and Google are all giving evidence at the Public Accounts Committee (PAC) – of which poor Margaret Hodge is chairman - today). But that doesn’t necessarily mean they’ll find it easy to come up with a solution.
When I interviewed Douglas Carswell MP a few weeks ago (subscribers can read it here: Government is dead; long live iDomocracy), he was clear that there is nothing to be done about this. The tax base is shrinking, he said, and all governments can do about it is to accept that they at least get something in the form of VAT and employment taxes and to cut their cloth accordingly.
However, there are ways to force something out of the multinationals that currently tread so heavily on our economy but feature so little in our tax revenues. The obvious one is a sales or revenue tax of some kind. But the one that might work better is a unitary tax – as discussed here.
It makes sense for governments to crack down on the multinationals to a degree. We need a level playing field for domestic companies to play on – if scale and international mobility are to be the only drivers of corporate success in the future, the future is likely to be a pretty miserable place for most of us. So we aren’t against a co-ordinated effort to insist on multinationals paying tax at a rate somehow approximating the rate paid by their competitors (although we aren’t particularly convinced this is possible).
However, if you are an investor in big multinationals (and as a Moneyweek reader, you probably are), it is also worth remembering why all this suddenly matters to governments. Governments are broke and corporates are solvent. Governments would prefer it the other way around. That’s a risk.
Published in Blog More articles by Merryn Somerset Webb
By Matthew Lynn, May 23, 2013
By Merryn Somerset Webb, May 21, 2013
By Matthew Lynn, May 17, 2013
May 16, 2013
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(12 November 2012, 06:51PM) Complain about this comment
Luxembourg is the problem here. Luxembourg is the enemy of ordinary EU citizens. Luxembourg should not be allowed to remain in the EU until it cleans up its act. The Cayman Islands of Europe. This little Duchy has kept its independence because it suits the toffs.
(13 November 2012, 12:23AM) Complain about this comment
You got it exactly the wrong way, we should crack down on taxes not on multinationals. Why is it that some 'economists' are so in love with the state. The income tax is a horrible thing. We need to get rid of it.
(13 November 2012, 12:51AM) Complain about this comment
Unitary tax would be so complicated and full of so many caveats, it just doesn't stack up. When things are overly complicated, clever people can often find loopholes, by the time they are discovered/closed by the government many many years passed.I don't think multinationals paying too little tax is the issue here, non-multinationals are paying too much. It has always baffled me, why a companies profits are taxed - it's very difficult to police (multinationals, cash in hand, etc) and more importantly it takes money away from innovation & productivity.
(13 November 2012, 11:32AM) Complain about this comment
It would seem that replacing business rates and corporation tax with a (globally agreed) Turnover or Sales tax makes a lot of sense.It levels the playing field between bricks and mortar retailers and online retailers.It removes the incentive to charge spurious transfer prices between low tax juristictions. Like VAT, it is more efficient to collect and harder to avoid.Perhaps it should also apply to financial transactions (at a low level) to replace stamp duty and reduce financial activity of little social value!!!
(13 November 2012, 11:36AM) Complain about this comment
If a state is expected to provide an infrastructure for its citizens and institutions to thrive in, then it needs the tax raising powers to pay for it. Multinationals expect to be able to employ literate and numerate people educated by its host nation, they expect road and transport links to be ready and available for their use. Why should they be exempt from making their contribution to what they state provides for their use?The creative accounting practice undertaken by Starbucks suggests to me that a flat percentage of turnover, rather than profit, might be easier for HMRC to police.
(13 November 2012, 12:15PM) Complain about this comment
Something needs to change because it will get even easier to avoid corporate taxes if Scotland opts to go it alone. They will set their corporate tax rates at a similar level to Ireland, in order to attract employers to base themselves there rather than the rest of the current UK.They will be happy their citizens are employed and paying tax through their incomes and related national insurance and will take that revenue without worrying about corporate tax.Across Europe it will be a competition to get companies to invest and base themselves in one place to market their products and services across Europe. Tax will govern these decisions so the UK needs to be competitive and raise it's revenues elsewhere.
(13 November 2012, 12:25PM) Complain about this comment
A turnover tax is completely unworkable, firstly some companies work on very low margins (patrol stations for example) and secondly it will distort the free market by moving capital to low-volume high-profit sectors.A sales tax is a better suggestion, but even that has problems; when something is considerably cheaper abroad, it opens up a lucrative black market (booze in the early 90’s for example).Ellen, I agree corporations should contribute towards the country’s infrastructure, but there are ways to do this, taxing innovation and growth is the worst possible tax. The government should be looking to tax money leaving the corporation, not capital that can only be used to expand the company.
(13 November 2012, 01:05PM) Complain about this comment
A fascinating subject and a vital one in the long. I think that to stop these online companies' tax will have have to be applied to the selling of online goods as this is the only way in which they could be taxed to a great extent. Furthermore to stop giants like Starbucks why not add an additional national tax to the premises in which they sell their goods?
(13 November 2012, 02:05PM) Complain about this comment
@GFL You make a case for turnover tax being unfair - but not unworkable. Nothing is more unfair than the smaller businesses (and individuals) bankrolling the bigger ones.I fail to see the innovative advantage of Starbucks on the high street. If you identify specific areas of innovative interest such as science, technology or engineering, then tax advantages could be bestowed on these sectors - and evenly across the board to both multinationals and small workshops.
(13 November 2012, 04:28PM) Complain about this comment
The most depressing thing about all this is where are the anti-capiatalist protestors? Why aren't they waving placards outside Starbucks shops and Amazon's distribution sheds? Because, like Apple, they are cool, trendy must-have brands. Name, shame & boycott should be the order of the day. Alas, deprive us of our coffee shops and our mobiles and life is not worth living it seems. As a species, bring back the Stone Age and we might regain some of our grey matter back - even Boris, although...
(13 November 2012, 04:44PM) Complain about this comment
Ellen,It's unworkable for so many reasons, I'll try to list a few here ...Firstly what do you set the turnover tax at? As every business has different gross profit, it's impossible to have a blanket turnover tax. For example a patrol station makes about 6% gross on patrol, while a convenience store makes about 20% and a food retailer makes about 65%. These are averages, based on my experience, although the numbers don't actually matter, the point is there is huge variation in gross profit, even within sectors; this will result in huge profits for some and others going to the wall.Secondly if turnover is taxed, buying new equipment would basically bankrupt any business that is not capital rich (most SMEs).Thirdly turnover is the most meaningless way of measuring a companies success. A company barely breaking even would get hit for a massive tax bill?I could list endless more reasons why it's not workable.
(13 November 2012, 05:39PM) Complain about this comment
@ GFLIsn't VAT a tax on turnover?It was for my business, as I well know to my cost; I was competing against businesses with declared turnovers of (guess what?) just less than the VATable turnover threshhold.
(13 November 2012, 06:32PM) Complain about this comment
A turnover tax works well for countries like Colombia and Venezuela. A turnover tax is the last throw of the dice when a country admits it has become too corrupt to employ normal taxes. The very idea of it being mentioned in the UK reminds us how far we have fallen. The CoLC and Jersey have worked hard to bleed us dry of any vestige of trust.
(13 November 2012, 06:55PM) Complain about this comment
@GFLI am not saying turnover tax should be a 'one size fits all' and relating the performance of a company to its turnover is far from ideal. But relating the health of a company to its operating profit/ loss does not give any clue as to the health of the company either.SMEs do not benefit from the economies of scale multinational enjoy. Now, this economy of scale, for Starbucks at least, allows their foreign based, loss making subsidiary resell coffee at twice the price they paid to Starbucks here in order to wipe out profits on their P&L. So the final accounts showing an operating loss are just a tax fiddle.
(13 November 2012, 07:52PM) Complain about this comment
Why the fixation on taxing companies profits?It's customers that end up paying it one way or another. If you want to level the playing field between home based companies and their global competitors, do away with corporation tax altogether or set it at such a low rate HQs will flock here.It maybe an anathema to some but sometimes less is more.And if governments truly can't reduce their addiction to spending, do away with the VAT registration threshold so that everyone has to charge it, even for the crappiest pasty.As I said earlier, it's the customer that pays in the end. One way or another.
(13 November 2012, 09:17PM) Complain about this comment
How about doing a 9/11 on the Caymans?
(13 November 2012, 10:14PM) Complain about this comment
#16. I'm with you on that one Rick.....and get the tanks rolling into Liechtenstein while we're about it.
(14 November 2012, 06:08PM) Complain about this comment
I Agree with Critic Al Rick and Romford Dave biggest problem for us as a micro business is VAT competing with companies who charge none. Lower corporation tax right down and make every one pay charge VAT.
(14 November 2012, 10:33PM) Complain about this comment
What about a turnover tax on overseas based internet businesses (as is applied to internet gaming businesses by various jurisdictions) and a restriction on the level of royalty/commissions/management charges to non UK companies (HMRC to decide what is reasonable level and what is abuse)
(15 November 2012, 09:08AM) Complain about this comment
A few factually incorrect arguments here – but I think Ellen has the right viewpoint on not using State resources without paying, unfortunately coupled with the wrong solution. If we focus on the fact this is all about taxing company profits: Incorrect argument 1: the customer will end up paying anyway. Not necessarily, keeping the profits within a company benefits primarily the shareholders. Incorrect argument 2: VAT is a turnover tax, but is paid by the customer, not the business that simply collects it.Incorrect argument 3: Battling against small businesses that do not pay VAT is nothing to do with multinationals avoiding profit taxesWhat’s the solution: see my next post for a suggestion!
(15 November 2012, 09:12AM) Complain about this comment
To my mind, this issue is simply a failure of HMRC to follow its own procedures. For years, the transfer-pricing rules in UK and most other tax jurisdictions have allowed tax authorities to make adjustments for tax purposes to the price paid for goods, services and finance supplied between related parties. They are entitled to treat such arrangements as being on ‘arm’s-length’ terms (including price) and to adjust accordingly for tax purposes. Such an adjustment will affect the taxable profits of the relevant entities that are subject to tax. Simple words, complex arguments, usually won by accountants and lawyers who can run rings around the lower paid, lower skilled HMRC staff. The law of unintended consequences applies here - cut the civil service salaries, lose the skilled staff. Oh dear! Perhaps a skilled specialist unit, paid outside of the civil service pay scales, or paid on results, would lend HMRC the hammer to crack to multinational nut? Too radical?
(15 November 2012, 01:14PM) Complain about this comment
@ 20. Steve TYou are correct when you say: "Battling against small businesses that do not pay VAT is nothing to do with multinationals avoiding profit taxes."You would also have been correct if you had said: "VAT is a turnover tax which should ALWAYS be paid by the customer, not by the business that simply collects it." I know this is not directly relevant to the content of the article in hand but it needs to be said SOMEWHERE that the proprietors of businesses which are predominantly in competition with businesses not registered to collect VAT are effectively being personally taxed at 20% of the turnover of their business.AND THIS IS GROSSLY UNFAIR.Either make ALL businesses collect VAT, orexonerate ALL businesses from liability of paying HMRC VAT on the first £X of turnover, where £X is the VATable threshhold.
(15 November 2012, 03:37PM) Complain about this comment
"Sure things are cheaper if you don’t have to pay for prime retail sites, but you can also charge a whole lot less for your products if you have a business model that doesn’t involve paying taxes on your profits. And how can a taxpaying business compete with the prices a non-taxpaying business can charge? The answer is on your high street."That's a quote taken direct from Merryn's article above.Not sure how you find my comment factually incorrect given its relevance the main topic SteveT, unless it was the main topic that was the focus of your polemical assertion?Whilst I have indeed seen an elephant fly, I've yet to find a business that didn't have a customer as its source of income and ultimate provider of profitability. Discovering this link is hardly Darwin territory.
(15 November 2012, 04:39PM) Complain about this comment
@ Dave. VAT is directed as a consumer tax and it is the last person in the chain, after 'added value' that pays VAT. Its regressive in that the least well off pay a higher proportion of their income in VAT.@ SteveT. Google, Starbucks etc will always employ the most 'innovative' and creative of tax accountants so it is better to keep tax as simple as possible to make sure it acts as a 'catch all' instrument. While a small flat turnover rate may look unfair, I would guess SMEs may pay less tax with them. 'Genuine' start ups and 'special circumstance' could be given grace periods.
(15 November 2012, 05:56PM) Complain about this comment
That's true of course Ellen and TBH it was a throwaway line aimed more at being critical of State spending rather than for radical tax proposals.But taking it further and to use those less wealth off as an example, the weekly food budget is one of the larger components of expenditure for those on smaller incomes. How much cheaper would food get if the premium for CT was removed, particularly as food doesn't attract VAT?Obviously those supermarket chains that are famous for their tax avoidance schemes wouldn't be able to pass on that much in savings, but isn't that the point - a levelling of the field?Fair competition is what drives prices down. Regulators, speculators and complex tax regimes usually achieve the opposite. Keeping the money in the UK, rather than it swilling around in exotic off-shore bank accounts is the best way to help the poor and the abolition or substantial reduction of corporation tax would go a long way in achieving that.
(15 November 2012, 06:03PM) Complain about this comment
#23 Dave from Romford. The point I'm making here is prices charged for goods tend to be set by the market. There isn't a lot of difference in price between Starbucks, Costa, and Cafe Nero for instance, so the customers pay the same. However, where Costa pays tax, the return to its shareholders is reduced; where Starbucks do not pay tax, the return to its shareholders is increased. Hence my assertion (not a Darwinian theory) that the argument ‘the customer pays anyway’ is somewhat irrelevant.
(16 November 2012, 11:18AM) Complain about this comment
Tax levels and the size of the state are the issues constraining growth,not legal avoidance schemes. Lets get real, and understand that capital is mobile. Look at its flight from France after crackpot increases have had unintended consequences. UKplc needs to get competitive in rates to attract business, not kill it. Our competition is Asia, where the state runs on 15 - 20%, not 55%+. Factor in off balance sheet liabilities which will eventually result in higher tax takes and yet more interest bearing debt, and wonder why any sane multinational would remain in the Uk at all
(16 November 2012, 11:46AM) Complain about this comment
SteveT surely that reinforces my point that whatever pricing structure a company employs, it's the customer that ends up paying?Two of them could charge less if they didn't pay Corporation Tax, giving them a commercial advantage over the third. The VAT element ensures taxable receipts are kept in the host country. Ask yourself this, have Starbucks grown into a $13B company by providing excellent coffee or simply by providing a similar coffee experience to a $300M or $165M company, with a mighty sprinkling of tax advantage on top?
(16 November 2012, 12:33PM) Complain about this comment
The unfair thing is that UK citizens are contributing to the profits of these companies, and the companies then contribute to the tax system of other countries.The companies are not avoiding tax altogether, just paying a slightly lower rate to a different country. If the UK matched the corporation tax rate of these other countries these companies would be more likely to pay UK tax on UK profits with no or negligible increase in cost to UK consumers.
(16 November 2012, 06:20PM) Complain about this comment
#29 Jim. Not just these companies. Today we are told it is highly unlikely the UK taxpayer will get the £68 billion given to RBS,Lloyds and N Rock back. Just doing a bit of maths tells us a lot. PPI mis-selling £13 billion, Endowment mis-selling £9 billion, Mortgage exit fees £2 billion ,unrecoverable excess bonuses £25 billion, pension mis-selling £6billion. I've probably missed something as the frauds are too many to list, but just these come to nearly the whole £68billion we gave them. They ripped us off for years. We paid for it. Blair is responsible.
(16 November 2012, 08:37PM) Complain about this comment
Two thoughts:1. Is corporation tax a necessary evil? Not the most efficient tax for all sorts of reasons (like discouraging investment) but necessary to avoid other tax fiddles ( a bit like CGT).2. Why not follow up on Boris's suggestion and expel Luxembourg from the EU? (a) for a laugh and (b) as a relatively cost free experiment? Next Ireland, potentially more expensive, but with a population less than London, not a big issue (and we'll have the evidence of Luxembourg by then)? My uninformed view is that it is small states that impose low taxes to get multinationals to base there. They're small, so let's bully them.
(16 November 2012, 09:03PM) Complain about this comment
Getting rid of competition is never a good idea Luke, even if it sounds like one at the time.The resulting monopoly inevitably creates a position for a knight seeking regulator who retires on a £120k a year of taxpayers money and passes his twilight years threatening cash strapped pensioners to volunteer more.Nothing is ever without cost, not even when freely given.
(17 November 2012, 11:11AM) Complain about this comment
The only long term solution is for the major trading countries to impose economic sanctions against Luxembourg and other tax havens and force them to drop their favourable tax advantages.Governments need tax revenues for - education, heath, defence, state and local government, roads, railways, pensions, helping the disadvantaged, etc. The notion that it is OK for Starbucks and others to pay minimal tax in the UK will ruin the High Street and oblige the Government to raise personal taxes.
(17 November 2012, 11:15AM) Complain about this comment
Spot on Merryn this situation is ridiculous! Huge companies making a lot of money in the U.K and paying next to no tax in many cases- don't forget it is the British taxpayer who has to make up the difference, as well of the issue of putting our domestic companies at a competitive disadvantage.I think the solution is quite simple, aggressive tax collection, HMRC should go through the accounts of any suspect companies and order them to pay any tax owed by the spirit of the law from this year and previous years. Never mind if starbucks were paying all their profits to some tax haven to use the 'brand name'- fine them what they were supposed to have paid. If they don' t pay it then seize their assets to that value (and perhaps more) and stop them from operating in the U.K. If they want to operate here they can pay the taxes set by the democratically elected body here- not pick their own.
(17 November 2012, 01:46PM) Complain about this comment
The TAX system is not only used to raise money - it is also used to influence behaviour. Punitive taxes on smoking are expected to lower smoking related health costs; high fuel taxes are expected to improve the effects of climate change; etc.Flexibility on corporation tax was expected to encourage multinationals to set up businesses in the UK and thereby provide jobs, reduce unemployment and increase payroll taxes and National Insurance Contributions. What multinationals are doing is exactly what the UK Tax system encouraged them to do and so politicians and other outraged members of the public should put the blame where it belongs at the Taxman's door. If you want to change the behavour of tax payers, including the multinationals, change the tax laws you messed up and close the loop holes.
(17 November 2012, 02:01PM) Complain about this comment
There is no incentive to change taxation by the current politicians ie Hodge, Osborne etc. Only way to change this is to vote differently. Vote YPP.
(17 November 2012, 02:29PM) Complain about this comment
If our law makers don't/won't change the tax laws then let it be.All this talk of acting in accordance with the "spirit of the law", "moral responsibility" and even "boycott the villians" get us too close to moving away from the rule of law.We have laws and if people obey them they should be left alone. If the laws aren't working fix them. All the other hysteria is just that.
(17 November 2012, 02:37PM) Complain about this comment
#36 GraemeK - I suspect HMRC would disagree with your approtioning blame in their direction, the opening sentance of their charter puts it firmly at the door of politicians: -"We make sure that the money is available to fund the UK’s public services by collecting taxes and duties as laid down by Parliament"Of course the politicians will say that it was the platform they were elected on, thereby pointing the finger of blame at the voting public.So it seems the multinationals are the only ones who are blameless in all this!
(17 November 2012, 04:58PM) Complain about this comment
Firstly, get out of the EU. Instant £13billion pounds annual saving. Then abolish Corporation Tax completely. It's a really complicated and increasingly difficult tax to collect.Now imagine the sudden immense attractiveness of the UK as a place to do business. The home based businesses would immediately benefit from a more level playing field. But please keep the international companies here too. All Companies pay NI Employer, NI Employee, PAYE, VAT, Business rates, Business rentals insurances etc already. Corporation tax is just the icing on a very big cake. We have a jobs crisis, and our government is the problem. It's too damn greedy. Their solution is more of the same that is causing the problem. Taxation suppresses the economy.
(17 November 2012, 05:07PM) Complain about this comment
We really need to ignore the siren song of the Bankers lending money to bloated over-spending governments composed of self absorbed people who will be long gone when the consequences of their economic illiteracy hit the fan. How immoral is it for us to borrow money children as yet unborn will have to pasy back?Taxation is not the only way to provide services. Government services tend to be inefficient monopolies. One could argue that point about certain industries, but the core point is that allowing government to become more than about 40% of the economy is unsustainable in the longer term. Please look up 'The Laffer Curve'.Additionally, without sound money, we're all screwed. Please look up 'The Cantillon effect'
(18 November 2012, 01:25PM) Complain about this comment
We could abolish all income taxes and replace them with a wealth tax of about 2%. This would have many benefits.Simplifies life (and reduces tax burden) for most people. Saves time and money wasted on bureaucracy. Only increases tax burden on those who can REALLY afford it. Plus it encourages wealth to be put to work rather than be hoarded away. Of course, most of the ultra rich will fight this tooth and claw.
(18 November 2012, 04:33PM) Complain about this comment
#41Faz. A nice, well meaning gut reaction suggestion. But do you mean for all people to pay it? Surely only the richest half. In which case to replace all income taxes you'd need a rate of at least 4%.
(18 November 2012, 05:46PM) Complain about this comment
Abolish all forms of income and corporation tax. Apply VAT on all items sold, no matter how small or large regardless of who they are made by. One might even have to raise the amount of VAT payable. Once this system settles, it will also give the public a chance to compare the performance of one government and another. Nobody is able to make that comparison with the present system.
(18 November 2012, 09:10PM) Complain about this comment
#37 GraemeKI disagree, I think it would be very difficult to close every loophole and predict every contrivance invented to dodge taxes.It is like saying to a child who is painting 'don't draw on the walls', and instead the child throws the paint on the walls and says' you didn't say don't throw the paint on the walls you said don't draw on the walls'. Starbucks paying all their profits to a company based in a tax haven to use the 'brand name' is the same kind of thing. It is disingenuous, it is immature and it is pathetic.HMRC should have the prerogative to act at its own discretion and should take them to task for the money they were supposed to have paid.
(18 November 2012, 09:11PM) Complain about this comment
The U.K seems to be very fair in its treatment of companies and displays very little in the way of protectionism in my opinion, but when companies are not paying back into the system for all the benefits of operating in the U.K they are taking taxpayers for a ride and putting our domestic companies at a disadvantage. In cases where it is quite obvious what should have been paid and it has not been for some spurious reason, these companies should be made to pay.If Starbucks won’t pay seize their assets and stop them operating here, it is not like the U.K needs them, their outlets and the jobs they provide will simply be replaced by independent coffee houses, Costa, etc.
(19 November 2012, 08:50AM) Complain about this comment
I think we need to put the blame where it belongs which is as usual - the political class. If UK wants to attract multinational businesses to the UK with the concomitant advantages such as increases in employment etc then we should create a competitive environment for them. In this instance this would mean reducing the UK rate of company tax so that it is nearer to the rates levied by Luxembourg et al. This would increase the chance of the multis paying tax and will have the advantage of reducing the tax burden on domestic entrepeneurs. A win win as far as I can see?
(03 December 2012, 04:58PM) Complain about this comment
Very interesting article Merryn, but I'd suggest we all need to take a major reality check.The only effective way to deal with tax avoidance is to reform and simplify tax legislation. Anything else is basically asking for voluntary contributions (as we may be seeing now that Starbuck's et al are reportedly talking to HMG in the wake of recent headlines).If you really want companies to pay more tax, then oblige them to do so by law - in ways they cannot avoid.The alternative - to expect or demand that anyone (corporation or individual) pays more tax than they're legally obliged to pay - is I'm afraid just deluded.It also seems to me that demanding what are effectively voluntary payments to HMRC is not the stuff of serious politics.
(03 December 2012, 05:18PM) Complain about this comment
In 2010 the Government gave HMRC an "extra" £900 million with the aim of raising £7 billion in avoided taxes. Now they offer £150 million more, but the same target to get another £7billion. Either Osborne should have been chasing £40 billion with the first lot of funding ,or the first lot was poorly targetted ,or he now wants results on the cheap. I think the latter. HMRC has lost 33,000 staff in 6 years, thelittle bit "extra" is a finger in the dyke. Gesture politics is all the Tories have left. Cameron ......the last ever Tory PM.
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