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back to article Clap Google, Amazon in irons to end tax shenanigans - MPs

New laws and prosecutions could be necessary to force Amazon, Google and other multinationals pay a fairer amount of corporation tax in the UK, according to MPs. The Public Accounts Select Committee today published its report after holding hearings with Amazon, Google and Starbucks on the tiny amount of tax they pay in Blighty, …

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Taxing rich companies that can afford it?

What an awesome idea!

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Anonymous Coward

Re: Taxing rich companies that can afford it?

Personally I'd deny them access to the vital infrastructure which they aren't contributing to. Roads, rail, electricity grid, gas supplies and so on.

Yes, some of this is paid for by bills, but not all of it.

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But what about muh socialism?

How are they not "contributing" to it?

They pay the people who pay income tax.

They buy stuff on which there is VAT.

They buy petrol on which there is excise tax.

Pretty sure their financial transactions are taxed, too.

"but not all of it"

Ok mister, you provide an itemised bill then. Then find out whether it is in any way related to the numbers found in the "corporation tax"

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Re: But what about muh socialism?

"They buy stuff on which there is VAT"

No they don't, they are business.

"They buy petrol on which there is excise tax"

And claim it back as an expense (so a loss)

"Pretty sure their financial transactions are taxed, too."

Yes at other county's rates

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Re: But what about muh socialism?

Can I try that excuse?

"I didn't pay any income tax, but I contribute to the economy by paying VAT your honour."

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Re: But what about muh socialism?

The companies normal technique is to say, by shifting tax obligations around, that they don't make any profit in the UK whatsoever. They do this by being "forced" to pay a 100%-of-their-profits payment to the people who own their franchise. Which is them, in a "fake" company, off-shore, that does nothing but is only where those profits are taxed by miniscule amounts and never get back to the UK.

There's more to it than that, but basically the profits are all sent overseas and, with some fancy accounting, companies that take billions in profit are actually recorded on the forms in the UK as never having made any.

This affects not only things like corporation tax (which is then effectively zero), but also other taxes. They are basically paying themselves for the rights to use their own names and in doing so shifting all profit to off-shore companies that, under UK law, would be required to pay a lot more tax. Even if they were to have just a UK subsidiary that paid that tax properly, and then profits shipped off-shore, the taxation from the UK would be "normal", "moral", and nobody would complain. And, in fact, that's what most of their competitors (e.g. Costa Coffee) do and STILL manage to make a profit and hold themselves against Starbucks in terms of competition.

And literally ANY idiot with a clever lawyer and accountant can set up any number of "empty" companies in tax-free countries and come up with the same arrangement to pay almost zero tax in the UK or elsewhere.

Yes, they pay their employees income tax, for those vital employees that are based in the UK and have to be. But they also pay some other country's tax regime a lot less to house their accounting "fronts" which should also be in the UK (like their competitors do). The VAT is a no-win, you only pay VAT on things that you add value to (so buying in your coffee from your external franchiser at the "sale price" and then selling it direct gives you a lot of ways to NOT add value to it, and thus eliminates a lot of VAT that should be paid in the UK - this is more tricky though, because of the way VAT works, and a lot less companies can scam this side of things successfully - Amazon basically operated from Jersey for years because it basically exempted them from VAT by the same tricks but we cut that loophole just recently).

A company should NOT be able to make more money by playing tricks with international fake firms, shipping goods ten times the distance necessary to deliver a book to you, or anything else along those lines and then twisting the way / location they pay tax. That is a complete failure of a taxation system and that's what they will be rectifying.

Do you know, until recently, you could avoid a lot of tax by saying you were employed by an umbrella company that did nothing but "employ" people and hire them out to others, instead of being self-employed and doing the same jobs? That's a failure of the taxation system and that's been rectified just recently. The biggest players of that one? NHS hospitals and school supply agencies. You're still paying all legally required tax and still paying income tax, but the way you do it means it becomes "cheaper" by avoiding certain taxes and tax requirements.

Nobody is saying they pay zero tax. What we're saying is that (commercially) they are the equivalent of the millionaire next door who, because he can employ an accountant, doesn't pay one-half of what his out-of-work, on-benefits next-door-neighbour pays in tax when both fill out all their forms correctly (there's a difference between correctly and not-morally-repugnant). And that's not an exaggeration. And that's what we're trying to fix.

Imagine that you didn't have to pay tax on fuel. But only if you were part of a large corporation. The next day, a million people would form a company that collectively did nothing but buy fuel for its shareholders. It would pay no tax, and a million people would have avoided a tax that everyone else had to pay. Is that legally allowed? In this case, yes. Is that fair? No. Is it a good taxation scheme? No. Even if it's ONLY the tax on petrol, or income tax, or excise, or whatever - everyone else is playing ball and paying that tax. These companies are not, by doing something where the ONLY purpose of that process is to avoid UK tax.

Just because they paid a few million in tax, it doesn't mean they SHOULDN'T be paying the few billion that their competitors are. Because if you DON'T fix that, we all end up not paying enough tax, which (if you don't reclaim it from those companies) is recouped by raising things like income tax and excise duties, making you and I pay more, or suffer a loss of public services. And if we don't fix that, and all companies in the UK do the same thing, we end up with no "real" businesses operating inside the UK and we're literally just financing other countries indirectly at great personal cost to ourselves.

Nobody is saying they did anything illegal, or paid zero tax. What we're saying is that they provably played accounting games to pay MUCH, MUCH less tax than they would do without them playing those games. Tax that pays for our public services, and provides them with electricity and roads and premises to do business in. The fix is to not only make THEM itemise the bill for the taxman, but to charge a financial transaction tax on such games and anything similar that crops up to replace them.

Otherwise, you might as well just throw the whole taxation system out of the window. The point of a taxation system is to CAPTURE people who are making money and take a fair percentage of it. If that percentage isn't sufficient, or the people making money are difficult to capture, laws are introduced to MAKE it sufficient and MAKE them let themselves known.

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This sort of shit pisses me off.

"Margaret Hodge, Labour MP and head of the panel, said it was clear that the companies were using complex corporate structures and exploiting the current tax law setup to move their profits out of the country."

So they weren't breaking any laws.

"HMRC should be challenging this but its response so far to these big businesses and their aggressive tax planning has lacked determination and looks way too lenient. Policing the tax system must be at the heart of what HMRC does"

And we're going to cut your HMRC budget so that you can't employ anyone to do this.

"We suspect that all these arrangements are devices to remove profits from the UK to these areas with lower tax"

Oh FFS. HELLO! ANYONE IN THERE? It's called "Transfer Pricing" and everyone who works in international tax has known about it for decades - even pre 1970s. WAKE UP YOU DOPEY POLITICIANS AND SMELL THE COFFEE!

"The MPs said HMRC needed a "change of mindset" on big multinationals and had to prosecute the ones that weren't paying the tax due in the UK."

That's the realy cowardice, right there. Blame the HMRC when it's been successive Governments who are the villains. Repeatedly failing to listen to the HMRC about their need for adequate resources.

Only when the mass media starts pointing the finger at the politicians will anything ever get done about this. Trying to deflect blame to the HMRC and the Multi-national Taxpayer like this means NOTHING will get done. It's complete rhetoric and venting of anger. That is all. Nothing will come of this. Tax avoidance will continue to occur. There is nothing to see here. Move on.

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Unhappy

Re: But what about muh socialism?

"I didn't pay any income tax, but I contribute to the economy by paying VAT your honour."

Indeed you do unless you are a company or registered for VAT.

Unfortunately there seems to be a mind-set that the only "tax" that counts is income tax. Just listen to the politicians spout off about "tax payers" being the only ones contributing to the national coffers, and that those in receipt of benefits are "scroungers, cheats and thieves" as they do not pay any "tax".

Of course they do unless they have devised a way of operating in a totally non-monetery system and never, ever buy anything from anyone. The only group of people that comes to mind who get near this are members of a religious order such as monks or nuns and I bet you that the monastery, convent or religious organisation does pay tax.

What the politicians and right wing papers conveniently forget is that VAT, road tax, excise duty, petrol duty and so on ARE taxes and that everyone pays one or more of these.

So, pay no "tax" if you are unemployed and you are a drag on society and should be pursued relentlessly, but if you are a big corporation and avoid or evade tax you are just fulfilling your duty to your shareholders and that's OK.

Talk about double standards!

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Re: But what about muh socialism?

OK so what your saying is that , if I pay a paper boy £10 a week, I can dodge paying my tax because they pay theirs? Christ there are no words to describe your level of stupidity!!

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Re: But what about muh socialism?

How about this, if they don't even want to pay a minimum amount of tax in this country without having the legions of hell set on them, then how about they take a flying feck out of this country , and will see how our home grown companies who aren't losing out on coast basis because of foreign non tax paying scum being in the market, do!

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Re: But what about muh socialism?

quit with this stoopid fucking argument already

amazons staff pay PAYE NOT amazon.

VAT is reclaimable by all but the end user (kinda showing your ingnorance here shill)

Amazon do not operate a delivery fleet, ergo road fund licences and fuel tax are not paid by them either.

not sure what a financial transaction tax is..

you might mean stamp duty - paid on building purchases (wanna bet all them tin sheds amazon use are leased)

or you might mean SRDT paid on share purchases, for which over 70% of transactions are exempt, and the rate is 0.5%

so no

AMAZON DONT PAY ANY FUCKING TAX YOU MORON!

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Anonymous Coward

Re: But what about muh socialism?

How are they not "contributing" to it? :- They pay the people who pay income tax.

They buy stuff on which there is VAT. :- They buy petrol on which there is excise tax.

==

You are frigging idiot!

So where does it stop then? I earn money from work, I buy stuff in TESCO and just 'cos the shop workers pay tax, I don't have to? TESCO workers decide that they don't want to pay tax 'cos they bought some stuff from HOMEBASE, where their workers pay the tax.

They are a company, no company pays VAT and it they do they claim it back ASAP! Right from one man contract service operations like IT workers right up the chain to multi-billion pound firms. It's one of the first things you learn when you set up a limited company, what stuff can I claim the VAT back from! Lost count the number of mates I've got cheap PC parts from 'cos they ran limited companies and claimed back the VAT on the PC parts they bought saying they were for "business use"!

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Joke

Christ there are no words to describe your level of stupidity!!

I can think of a few!

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Re: But what about muh socialism? @Naughtyhorse

Now, I'm not wanting to defend Amazon, but they will pay employer's national insurance contributions, a payroll tax that averages about 13% of the total salary bill. They'll also pay rates on their offices and distribution facilities. If you've been paying attention you'll already have read on the Reg that they paid £74m of taxes last year. Maybe your threshold of materiality is rather different to mine, but I call £74m a lot of money. In passing I will note that Amazon will also have collected some £600m annually in VAT for the British government, for which (like all other businesses) they have to swallow the collection and audit costs for.

I accept they are avoiding corporation tax, but what's that worth? Taking £3.35bn of UK sales, apply their group EBIT margin of 4%, and that's a nominal £134m of taxable profit. A typical corporate tax rate ought to be a couple of percent below the "main rate" (currently 24%) by virtue of capital allowances. Say 22% of the £134m, or £30m. Now, that's a whole lot of tax to avoid, but your cretinous claim that Amazon don't pay any tax is rubbish - they actually pay 72% of the taxes that you would deem that they "ought" to pay.

So, capslock on for the hard of thinking:

AMAZON PAY A SHED LOAD OF TAX, JUST NOT QUITE AS MUCH AS YOU EVIDENTLY WANT, HAVING BEEN WHIPPED UP INTO A FRENZY BY A BUNCH OF MP'S WHO CREATED THE LAW AND SIGNED THE TREATIES THAT BROUGHT THIS TO PASS.

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@Shagbag

Something that may piss you off even further (if you weren't already aware). The family of the very same Margaret Hodge own a company called Stemcor that has a turnover in the billions yet (perfectly legitimately) pays almost no UK tax. She has steadfastly refused calls for it to be brought in front of her committee to explain why this is the case.

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@Chris Miller RE: Stemcor

This seems to be a red herring as Stemcor is UK based and reports a low level of profitability - 1% - in the last year on record. A turnover of billions doesn't mean a profit in the billions.

I'm not saying it shouldn't be looked into, it absolutely should and not least because a politician is involved, but this doesn't seem to me to be a game of shipping profits around to the most favourable place as is being played by amazon et al.

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Boffin

Re: But what about muh socialism?

I think Amazon should say....Screw em and don't do business in those countries at all.

Today's liberal politicians and most of society's dependent scum, sucking on the government tit, will ALWAYS put forth the idea of putting the responsibility on others. Especially companies who lack a single face and thus are not human. They overlook the fact that smart investors do not invest in losing companies (that's a position reserved only for the US Obama Government). Companies exist not to support the needy. The exist to provide a product or service. It's the local citizens who should be responsible for caring for their needy. Employees of those companies work as long as the company can remain an on-going entity and they pay local taxes and keep local businesses open as long as their employed. If you don't think Amazon impacts your local community, think again. Local delivery trucks, fuel or even a driver having lunch in your local eatery.

Here's an analogy: A blood sucking leach attaches its self to a host. The leach is only one and the host is able to replace the blood consumed by the leach and thus both continue to live in relative harmony. If more leaches attach to and start sucking more blood from the host than can be replaced, then the host will die and the leaches will need to find another host or die themselves. Guess who the leaches are? Those sucking on the government tit all their life and their children's life. It's time to expect more for each nations citizens.

Best wishes,

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Re: But what about muh socialism?

@GotThumbs - "I think Amazon should say....Screw em and don't do business in those countries at all."

Awesome, because it would be far better for them just to up and leave rather than pay a percentage tax on their profits.

Do you understand what a PERCENTAGE tax on PROFITS is? Idiot.

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Re: This sort of shit pisses me off.

Oh FFS. HELLO! ANYONE IN THERE? It's called "Transfer Pricing" and everyone who works in international tax has known about it for decades - even pre 1970s. WAKE UP YOU DOPEY POLITICIANS AND SMELL THE COFFEE!

Oh for FFS, WAKE UP YOU DOPEY VOTERS SMELL THE COFFEE. politicians don't give a flying fuck about this sort of stuff, form a committee, make some press releases, go through the motions of giving the impression of doing something while actually doing nothing.

politicians could end this quite easily by changing the laws on transfer pricing, so why don't they?????? I think the phrase I may be looking for is "follow the money".

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Trollface

Re: This sort of shit pisses me off.

While we are at it, can the politicians make Starbucks sell coffee instead of flavoured milk.

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Re: @Chris Miller RE: Stemcor

"A turnover of billions doesn't mean a profit in the billions." Indeed not. Except when your company name is Starbucks, Google or Amazon, apparently (at least, according to the grandstanding Ms Hodge). So there's only two possibilities: either she's too stupid to realise what she's saying; or she understands perfectly well, but is the biggest hypocrite in Parliament (where she's up against pretty strong competition).

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Re: @Chris Miller RE: Stemcor

@Chris Miller

There's a third option - it can be shown that Amazon, Google and Starbucks are profitable in the UK but move profits abroad via various tax-avoiding means (this *is* the case), whereas Stemcor is genuinely having a hard time of it (I have no idea if that's the case).

I have no love for politicians of any stripe, but these allegations seem MIGHTY convenient to me. Totally agree it should be looked into, personally I think everything the politicos are into ought to be investigated, but I'm not convinced this is the same thing that the big multinationals are up to.

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@Lee Dowling Re: "But what about muh socialism?"

Erudite old chap, every word pure gold.

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Re: But what about muh socialism?

@Lee Dowling

"Otherwise, you might as well just throw the whole taxation system out of the window. "

The first sentence here which makes any sense.

"The point of a taxation system is to CAPTURE people who are making money and take a fair percentage of it. If that percentage isn't sufficient, or the people making money are difficult to capture, laws are introduced to MAKE it sufficient and MAKE them let themselves known."

I call BS here. If that would be true we would have a simple tax system easy to follow and hard to abuse. TAX system has a lot of other priorities before you even think about a revenue. The most important role of it is to use it as a political tool with some special allowances or deductions to win some groups which are needed at the moment. That's the reason the whole TAX law is so complicated and it's getting even more complicated when someone is trying to "fix" issues like this (which is political as well).

How hard would it be to just use VAT as the only tax in existence? Easy to collect, easy to understand, hard to avoid. The more you buy the more you pay so rich pays more then poor by definition. But then how would politicians be able to confuse you with it?

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Re: But what about muh socialism?

@nematoad

"Indeed you do unless you are a company or registered for VAT."

Are you sure about that? Company can deduct the VAT _they paid_ from their obligation created but their sales. So how it's not paying VAT? Just the fact you can deduct VAT you paid on some gas does not make it disappear as you need to sell your stuff first to be able to deduct it.

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Holmes

Re: Taxing rich companies that can afford it?

It is and we do it.

It just turns out that Amazon UK and Google UK aren't rich companies.

Probably the best route is to disallow royalty payments and management fees to be considered a cost by any corporation with a foreign controlling stake.

Is that a winged Vietnamese pot-belly?

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WTF?

@ David Hicks RE: Stemcor

Perhaps a more relevant question would be "how does a poorly paid MP manage to acquire £1,800,000 worth of shares in said company"???

Seems the obvious icon.

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Mushroom

Re: But what about muh socialism?

Those cheap parts you bought from your mates ... if HMRC found out then a tax evasion charge would be laid, but only once the amounts had totted up to an amount worth pursuing.

The little guy get's away with it because he's too small for HMRC to be bothered with (the cost of recovery will far exceed the amounts recovered), and the big guys get away with it because they can deploy all sorts of defences to increase the costs (and reduce the chances) of recovery to similarly prohibitive levels, from the HMRC point of view.

As usual, it's the guys in the middle that get skewered like stuck pigs in the whole situation. Big enough for the HMRC to be interested, not big enough for the HMRC to be scared.

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Mushroom

Re: But what about muh socialism? @Naughtyhorse

In constructing your argument for a fair amount of taxation on the actual profits, using the stated EBIT margin of the company, you seem to be wilfully ignoring the fact that it's only because of the sharp practices involved in re-structuring their income that results in the low EBIT margin in the first place !!

A UK tax payer who asks his employer to pay his salary as a service fee through a service company could then re-structure their drawings from that income in such a way that they avoid higher rate tax. In fact, up until the end of the 20th century, this was very common.

It was also entirely legal. I mention this for all those complaining that Amazon et al aren't doing anything illegal and using this is the argument for leaving them alone.

Because once HMRC realised that the taxation arrangements designed to ensure fairness for people genuinely engaged as service providers, was also being used by what amounted to "employees" as a way for both companies and those employees to reduce their tax liabilities, they CHANGED the law. What we got was IR35, a complete balls up that tried to go too far and thus ended up more or less toothless.

But the principle was sound.... people should pay their fair share.

The trick is to define "fair" in a way that is both fair and enforceable. Beyond that you have to expect that people - whether employees or corporate financial controllers - will do whatever they legally can in their own best interests.

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WTF?

Re: But what about muh socialism?

Look up "double dutch" and "Irish whip" tax dodges and you'll see why we here in the states hate them as much as your MPs, basically they are paying jack and squat on their profits (FYI Apple set records for profits while paying less than 2% in taxes) by simply bouncing the money between tax havens and giving itself high interest loans which its pays...itself.

For those that say we shouldn't tax corps then fine, allow regular folks to do the same tricks and see how quickly the government debt becomes unsustainable. As always these tax dodgers have to be made up somehow and the way is usually higher regressive taxes on the poorest workers. Meanwhile these corp CEOs live like Gods and enjoy all the benefits without paying a bit of the cost. look up what the fortune 50 paid in taxes last year but don't do it right after you have eaten, as its liable to make you ill.

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Re: But what about muh socialism? @Jolyon Smith

"In constructing your argument for a fair amount of taxation on the actual profits, using the stated EBIT margin of the company, you seem to be wilfully ignoring the fact that it's only because of the sharp practices involved in re-structuring their income that results in the low EBIT margin in the first place !!

You are wrong. The tax a company pays is not based on the reported accounts of a company, it is derived from the computation returned to the HMRC, and that is based upon the thousands of pages of tax law, not GAAP (which is the basis of the audited report and published accounts).

The EBIT number is generally far more accurate measure of a company's underlying operating profitability than "the comp". I used the EBIT number as a credible proxy for what their taxable profits ought to be, and that works because the GAAP profit feeds into their cash flow statement where you can trace it through to dividends paid, which is where the money starts to become real for anybody outside the company.

So your starting presumption that GAAP accounts are fiddled to get the tax down is nonsense.

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Re: Taxing rich companies that can afford it?

"Personally I'd deny them access to the vital infrastructure which they aren't contributing to. Roads, rail, electricity grid, gas supplies and so on."

They pay the national grid connection charge at their datacenters. Data also does not use road, rail, gas supplies or "so ons".

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Mushroom

@GotThumbs Re: But what about muh socialism?

"It's the local citizens who should be responsible for caring for their needy."

Common Sense at last! Right everyone, we can pack up and go home, GotThumbs's cracked it! David Cameron can get his wallet out to support the poor of Chipping Norton (some of the poor blighters only have one land rover, I hear) and the better-off denizens of Sighthill (those who treat themselves to plywood over their windows instead of chipboard) can pay to hose down the folk sleeping in their wheelie-bins and give them a bowl of soup. Sorted!

Yes, these corps sink money into local economies, but they funnel a fuck of a lot more back out; orders of magnitude more. And the fact that you can refer to "smart investors", then proceed to call any other group scum, tells me as much as I care to about where you're coming from (as if the Obama quip weren't enough).

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Where do the politicos think this "extra" tax will come from?

In the end, any higher cost of business will be passed on to the customers (hint: in the country where costs have risen).

So ultimately any additional tax that these companies volunteer, for PR reasons, will simply be passed on to the consumer. What will happen then is the fiscal equivalent of a rising tide lifts all boats". Since these are the DOMINANT players in their market segment, when they increase their prices all the other retailers will follow suit. So not only will a Starbucks coffee go up in price, since they set the benchmark, but every other outfit will follow. Add in the chance of an opportunistic (non-tax related) price rise hidden in there too, and all that's happened is that consumers will be paying extra for these companies to pass on a portion of the price hike to the government.

Net result: we all pay a little more tax. The "good" companies get to increase their prices/profits and inflation eases up a notch. Here come the unintended consequences.

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Holmes

Re: Where do the politicos think this "extra" tax will come from?

> So not only will a Starbucks coffee go up in price

Possibly. But on the other hand:

“The idea that the increased cost will be passed on to the consumer by the employer is an illustration of perhaps the single most widespread fallacy on taxation: that businessmen can simply shift their higher costs forward onto the consumers in the form of higher prices. All the economic theory expounded in this book [Rothbard's "Power and Market"] shows the error of this doctrine. For the price of a given product is set by the demand schedules of the consumers. There is nothing in higher costs or higher taxes which, per se, increases these sched­ules; hence, any change in selling prices, whether higher or lower, will decrease the revenues of the business involved. For each business, on the market, tends to be, at all times, at its “maximum profit point” in relation to the consumers. Prices are already at their point of maximum return for the business; therefore, higher taxes or other costs imposed on the firm will reduce their net incomes rather than be smoothly and easily passed on to con­sumers. We thus arrive at this significant conclusion: no tax (not just an income tax) can ever be shifted forward."

One _could_ use this argument to argue for "same tax level for all" so that local sellers have the same chance against the lawyer-rich multinationals. The morality now hinges on whether the "same tax" should be high or low.

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Re: Where do the politicos think this "extra" tax will come from?

"In the end, any higher cost of business will be passed on to the customers (hint: in the country where costs have risen)."

I very much doubt that, because for it to be true these companies would have had to have passed the savings on to you in the first pace. I think you'll find that the laughable ease of dodging certain UK taxes isn't gifted to you in any shape or form, but in fact just becomes a lower foreign tax charge for Starbucks shareholders.

Starbucks charge what they think the local market will sustain - and so do Costa, who aren't in the same basket of big time international tax avoiders. In the case of Starbucks, despite their tax avoidance, their coffee is generally more expensive than both Costa and independants:

http://www.londontoolkit.com/blog/investigates/coffee-shop-chains-in-london/

Your argument that Starbcks is the dominant player isn't really relevant - businesses charge based on a combination of their own costs and what they think the local market will bear, and if they do price based on competitor pricing, then they are guilty of price fixing,even if they haven't sat in the obligatory smoke filled room. That attracts fines that make corporation tax look small beer (even for those who pay it).

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@Pete 2

*unintended* consequences ?

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Re: @Pete 2

> *unintended* consequences ?

Yes. ISTM the government "plan" is that every company (not just Starbucks, but that's as good an example as any other) should pay HMRC more tax, but that the tax should come out of their "profits". The govt. then trousers the cash and spends it as a windfall on some schemes that weren't in their manifesto and that nobody voted for.

What I expect to happen is that all these companies will class the extra UK tax bill as a local cost of business expense and recoup that cost through increased prices. I further expect that they will use this as an opportunity to get some good PR - as being "ethical" businesses :). I would also expect that, far from just increasing their prices by the few pennies needed to cover the cost, they'll round them up and hide a price rise in the general increase. They may even have the balls to blame the increase on rising commodity prices.

After that, I would expect all the other businesses in the same sectors to make comparable price increases, even though their costs weren't affected. After all, if the dominant player in a market ups their prices, that's a good excuse for everyone else to do the same.

So what we're left with is higher prices to consumers, increased tax take to the government, a little extra profit to the newly "ethical" tax-paying companies and a larger one for all the others. In due course, those prices rises will feed through to increased inflation, slightly higher interest rates and a small, probably imperceptible rise in unemployment. Those would be the unintended consequences.

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Re: Where do the politicos think this "extra" tax will come from?

cobblers

the 'extra' tax comes out of company profits (the ones they are trying to hide)

because for the last 100+ years you and idiots like you have gone to great lengths to point out that THE MARKET fixes prices not THE COMPANY.

the market price for a cup of coffee is NOT determined by starbucks, if they have to start paying UK corporation tax then they will have to suck it up and find the money, or rick having costa + world +(barisata)dog ( AFAIK tax paying) rip the guts out of them.

and at the next shareholders AGM with starfucks reporting zillion dollar losses (genuine) the shareholders get to ask 'so hows that market dominance think working out for us these days?'

if this is the kind or arguement we get from a 'finger on the pulse, red blooded, free market, Im alright jack - fuck you' kinda capitalist, it's no wonder the world economy is in the shitter.

CLUE.... get one!

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Re: @Pete 2

Ok, so Starbucks decide that if they have to pay this tax then they are simply going to pass the cost straight on to the customer, and whack whatever % on top of their current prices.

Costa, who already pay all their tax and still turn a profit don't increase their prices and so are now undercutting Starbucks by whatever %

Given Costa are already making a profit they are happy with why would then increase their prices to match Starbucks?

Yes, in the pursuit of pure profits this may seem an easy thing to do, but they'd have to be retarded to bump the prices in line with Starbucks in this situation as it's just another way of showing themselves to be better than Starbucks, thus driving more people into their stores, leading to more profit anyway.

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Stop

Re: Where do the politicos think this "extra" tax will come from?

Hold on just one damn sec...

So because someone else said that no tax can ever be shifted forward and it's quoted we have to take it as red?

So....when petrol prices went up, along with the associated tax levels, and companies all around shoved their prices up bemoaning the extra costs involved, and then petrol prices went down and companies all kept their prices at the same point or raised them even further...this was not a passing on of costs and then subsequently screwing the consumer?

I don't believe it.

Oh, and by the way - taken from the comments section of your link:

http://stefanmikarlsson.blogspot.co.uk/2008/09/consumption-taxes-vs-production-taxes.html

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Black Helicopters

Re: @Pete 2 Unintended consequences

"So what we're left with is higher prices to consumers, increased tax take to the government, a little extra profit to the newly "ethical" tax-paying companies and a larger one for all the others. In due course, those prices rises will feed through to increased inflation, slightly higher interest rates and a small, probably imperceptible rise in unemployment. Those would be the unintended consequences."

I say again: You believe that would be unintended ?

In a related topic, about the HomeSec snooping laws, it's being suggested that if they were to become law then more people (plus the baddies, natch) would use VPNs and drop off the grid, as if that's some unintended consequence. I would say that is *exactly* the intended outcome. Because then we'll have the government saying "it's dreadful, bad people are doing bad things. We need MORE powers".

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Anonymous Coward

Re: Where do the politicos think this "extra" tax will come from?

@Atonnis: I would assume its a move of common sense not to drop the prices back. When the price of fuel falls it is for a very limited time before it is taxed back up. Customers complain when prices go up, but dont really notice when prices fall. How many news articles talk of prices going up and how many talk of them going down? Its not news to reduce prices.

That alone excludes outside factors on the products which can also affect pricing.

Which companies were the good ones leading into this recession? They were the ones who made as much profit as possible to survive when the last gov shafted the country as a recession hit. The surviving banks were the ones who didnt listen to the gov and didnt make stupid purchases while relying on bad loans (forget the lack of regulation issues for this comment).

The screwed customer has no job because the money to employ them is taxed from potential employers. If it wasnt then we wouldnt have money wasted on daft projects and it would hire those people. Tax is lost money. It is good money which could have a use but has been assigned to pocket liner. Why should people be fleeced more? Surely the expenses should be brought down?

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Big Brother

Look over there - someone else is nicking all the money!!!!

So these MPs - would they be the same MPs that keep approving the tax code in the UK? That lawyers and accountants wet dream of complex and opaque regulations?

At first glance these rules appear to have been written specifically to permit people and corporations with lots of lawyers and accountants to bypass the need to pay taxes but that surely could not be the case.

I am sure that these MPs have a perfectly reasonable explanation as to why they keep on passing these ridiculously flawed regulations and that it has nothing to do with directorships.

So - go on Margeret Hodge et al - let's hear it then.

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Re: Look over there - someone else is nicking all the money!!!!

"So - go on Margeret Hodge et al - let's hear it then."

This'll be what you're looking for:

http://www.telegraph.co.uk/finance/businesslatestnews/9668396/Margaret-Hodges-family-company-pays-just-0.01pc-tax-on-2.1bn-of-business-generated-in-the-UK.html

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Re: Look over there - someone else is nicking all the money!!!!

Wow - the timing couldn't be better.

I bet she's starting to warm towards state control of the press a measured degree of press regulation.

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Coat

Re: Look over there - someone else is nicking all the money!!!!

Exactly! The politicians *deliberately*, *over many years*, crafted tax law specifically to allow the people they Represent* to escape any of the inconveniences suffered by the people they Manage*!

1)

Represent: Politicians Themselves, Corporate Interests, Paying Contributors and Random Cronies.

2)

Manage: Everyone Else, Especially the Electorate who, even though they are dumber than piss, just eventually might realize that they are being royally screwed over and decide to rock the boat.

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Silver badge

I wonder if some economist...

out there would care to comment on how this affects the balance of payments, about which I've seen next to nothing in the press for the last 10-15 years, but which dominated the headlines during the 60s, 70s and 80s?

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Re: I wonder if some economist...

Normally referred to these days as the trade deficit. Which more accurately reflects the situation, since we long ago abandoned any attempt at acheiving a balance.

Put very simply, we now import goods and services costing about £25bn a year more than our exports. In that context, the tax dodging merely inflates the deficit by a trivial amount because they are classing UK economic activity as an import, in order to get the beneficial tax treatment.

The real impact of this is the impact on the public sector's budget deficit, since the overall scale of tax ourism is around £5bn a year, and that's money the government then has to borrow.

But before everybody gets too heavy on the companies involved, they should consider that the UK is the fifth largest trading nation in the world, and we benefit from taxing repatriated profits for major global corporations who are domiciled here. Whilst it does seem reasonable to require some of the more enthusiastic tax avoiders to pay up, MP's and the public should be very careful what they wish for, particularly given that they constructed the current mess.

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FAIL

They seem to have finally realized

That under the current system, what these companies do is perfectly legal, and that they must change the law if they want things to change.

Of course, they would not go out and say it that way. They will claim that "companies do not report their tax practices transparently", when in fact those tax practices are completely transparent, it is just that they do not approve of these practices. They will even accuse the HMRC of not doing their job of "policing the tax system", when in fact the HMRC can only apply the laws that have been given to them.

However, I assume that the law was written the way it is for a reason, and that this reason will crop up when they attempt to rewrite the law to make it impossible to do what the companies are currently doing…

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