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back to article Google's teeny UK tax bill 'just not right', thunders senior MP

Top Labour MP Margaret Hodge has told The Register that it's "just not right" for Google to get away with paying so little corporation tax in the UK. Hodge, who heads up Parliament's influential Public Accounts Select Committee, rejected the advertising giant's executive chairman Eric Schmidt's defence of his company's tax …

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Holmes

Is not the legal first duty of a company to its shareholders?

Whether HMRC like it or not. Whether it results in ethical behaviour or not.

Don't like they way they use your rules? Then change them.

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Re: Is not the legal first duty of a company to its shareholders?

Having a responsibililty to work in the shareholders best interest does not mean it has to maximise profit at all costs.

For example

1) Company shafts customers with corner cutting and poor service (e.g. Tesco's)

2) Customers get annoyed and boycott the company or the government changes

The company's net profit margin is higher until Step 2, at which point turnover drops, profit margins drop etc.

In the short term the directors were working to the idea of first duty to the shareholders, but those business decisions are not working towards the interests of the shareholders once step 2 is reached.

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Holmes

Re: Is not the legal first duty of a company to its shareholders?

Yeah but if they were being fluffy and behaving like a charidee and paying taxes as uk.gov would like then how long would it be before a shareholder, who happened to be an offshore accounty type, put his hand up and said

'Why aren't you moving your tax burden to the Dominican Republic/wherever, thereby retaining an extra 1.2 Billion in profit?'

And then the other shareholders would start rumbling, eyeballs would spin with dollar signs and then they'd end up doing it.

I'd actually rather Google spent the money saved on building the University of Google (or something useful) in the UK as a real technology-oriented academic institution than just handed the damned cash over to the idiot politicians to evaporate away on anything _but_ the benefit of the electorate as per usual.

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Re: Is not the legal first duty of a company to its shareholders?

I don't think you'll ever be able to write water-tight laws to prevent tax evasion, so I can see why they haven't tried.

But - I have to say I'm impressed with the government. What better tactic to use against popular companies, then actually making them unpopular.

I hear Starbucks has actually had a real down turn in their profits - and with hundreds of coffee shops per city, and this stupid name-your-cup thing, it's quite easy to avoid them.

It's tricky to make Google unpopular, Amazon too.

But this "immoral" onslaught is probably the only way something may change.

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Devil

Re: Is not the legal first duty of a company to its shareholders?

I think that it is a lot easier done than said really.

The government should pass a law stating that all money earned within the country is taxable at 25%. If you try to move the money out of the country, then you have to pay a standard monetary exportation fee of 50%.

Unless you are buying goods from the recipient and then we will tax you at the same rate as normal but will charge you a 25% tariff on the goods you are purchasing from the other company. If you are buying the goods from your parent company, then the tariff is 50%

However, the first thing that the government should do is write a law banning lobby groups. But thats where it all falls down because I dont think that any self respecting politician is going to write into being a law that will cut into their chances of getting employed by one of the companies that the lobby group represents.

And as for making Google and Amazon unpopular... just start spreading the rumours that the benefit reductions are all because Google and Amazon wont pay their fair wack of tax...

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Anonymous Coward

benefit reductions

Some of us think the benefit reductions and caps are long overdue.

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cs94njw @ 20130423 15:31z

AVOIDANCE is what the thieving hypocrites are complaining about; something that is not only legal but specificaly encouraged by the very people who wrote the laws - people like hodges

EVASION is ILLEGAL

$deity's sake you have fallen straight into the socialist trap; of getting the basics WRONG.

Avoidance is not only legal - it is your moral duty to your family/shareholders.

If you have ever bought something (taxable) as cheap as you can then you are also guilty of tax AVOIDANCE (cheaper selling price means less VTA which means you just avoided paying soem VAT) - do you feel guilty now ? If not why not ?

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Anonymous Coward

Re: Is not the legal first duty of a company to its shareholders? @g e

100 internets to you sir.

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Alert

Re: Is not the legal first duty of a company to its shareholders?

That's the fundamental problem with the law. The existence of corporations is a privilege, not a right, and their charters should be issued for limited times and renewable only if it's in the public interest to do so.

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Re: Is not the legal first duty of a company to its shareholders?

I don't think you'll ever be able to write water-tight laws to prevent tax evasion, so I can see why they haven't tried.

Actually it's quite easy and many countries have it. It's known as "principle of payment" legislation. This basically says; "Yes, there may be loopholes in tax law as it's ruddy complicated. However, the tax rate is the tax rate. Apart from specifically stated exemptions that you are entitled to, that you may use to reduce your bill, anything else is evasion.". Or, in other words; "We tell you what you do not have to pay, rather than you telling us.".

Every time it's brought up it gets shelved, as included in the group that would get royally shafted by this happen to be a large number of MPs and most of the more generous lobbyists.

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Can we check one thing?

When MPs start criticising others, or companies, for dubious tax affairs - or claiming things they shouldn't ought to it's always worth looking back to inspect their records of honesty, apropos expense claims.

Maybe she's not the best person to cast the first stone

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Re: Can we check one thing?

Bit right-wing and screamy, but the facts seem sound:

http://order-order.com/tag/hodge

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Ru
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Re: Can we check one thing?

Maybe she's not the best person to cast the first stone

You feel that hypocrisy is the worst of all possible offenses, and to have engaged in it in the past makes someone ineligible from ever pointing out the deficiencies of another? That's an interesting point of view.

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Re: Can we check one thing? @Ru

Ongoing hypocrisy (not past) does render her arguments invalid, especially given that in this case she is saying that someone should do something voluntary, ie not required by law, which she is not willing to do herself.

I find "practise what you preach" and "one law for all" are pretty good rules to work by.

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Re: Can we check one thing?

The Telegraph have already had to apologise to Margaret Hodge over this story:

An item posted on the Telegraph website last night said: ‘Margaret Hodge MP – Contrary to our report “Hodge faces challenge over family firm’s taxes” (Nov 20), Stemcor, in which Ms Hodge has a small shareholding, has not abused transfer pricing to avoid tax. We accept that there is no inconsistency or hypocrisy in Ms Hodge criticising other companies for tax avoidance and apologise to her for any contrary impression.’

http://www.taxjournal.com/tj/articles/telegraph-apologises-margaret-hodge-over-stemcor%E2%80%99s-tax-affairs-13122012

I wouldn't expect a little thing like facts to get in the way of Paul Staines attacking someone.

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Re: Can we check one thing?

> You feel that hypocrisy is the worst of all possible offenses, and to have engaged in it in the past makes someone ineligible from ever pointing out the deficiencies of another?

I don't think hypocrisy is like having the flu. You get it for a week or two and after that you're cured: a "moment of madness" if you will. I believe it is more an intrinsic part of one's personality (or not). Now, I can accept that people can and occasionally do, change - but acts of contrition after being caught don't cut it - they just reinforce the initial impression.

It might not even be a bad attribute for a politician, if used properly. For example in negotiating with other governments it would be nice if our politicians were better liars, frauds and con-artists than the other guy's were. It's just when they do it (and so badly) to the people who pay them, that it annoys me.

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Re:Ongoing hypocrisy (not past) does render her arguments invalid

Nonsense. A valid argument is a valid argument whether its presented by Mother Theresa or Attila the Hun.

However if you are evaluating whether an argument is valid or not then certainly the past record of the person making it is something to consider very carefully.

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Re: Re:Ongoing hypocrisy (not past) does render her arguments invalid

Your logic is a bit warped here. On the one hand, you say a valid argument is a valid argument regardless of who presents it. In the next sentence, you say you determine if it's valid partially by looking at the past record of the presenter. That's contrary to your first point, as you're taking the presenter into account to determine if it's valid!!

In reality, people rarely change their character. If someones been a hypocrit once in the past, maybe that's allowance, but when they've done it consistently, that's not. Unless they've had a religious conversion of course.

Unfortunately, the very characteristics that make someone want to be a MP and the methods you have to use to become one, especially if you rise into the cabinet etc., rather make you the kind of person who shouldn't comment.

Now, I'm not defending Google on this. Just that MPs in general, especially those of ministerial rank (or have been), generally speaking have a pretty poor history of acts and therefore are not the best people to point it out. It may be right or not, but having one bad person slag off another bad person (or company) is never as effective as having a good person do it.

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Meh

Re: Can we check one thing?

Lucky she's in the UK, in other countries she'd be lucky to have hands to throw anything, the amount of thievery politicians get up to.

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Re: Can we check one thing?

Yes, let's check one thing.

Stemcor does not indulge in transfer pricing. Excellent.

It is still true that Mrs. Hodges shares are in a trust for the benefit of her children and grandchildren. Thus avoiding the messy business of inheritance tax.

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Re: Can we check one thing?

Trust fund to avoid inheritance tax?

Isn't that standard practice now?

My wife and I are in the process of doing the same, we refuse to let any government profit from our death as they have from our life.

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Anonymous Coward

Re: Can we check one thing? @Tim Worstal

Good idea of hers, I think inheritance tax is a farce designed to cash in on the deaths of rich people, the money they have is already taxed, so the government has no moral right to the money, although I guess the right to something doesn't stop the government from clawing for it...

Can you imagine being a child who lives with their parents, and your parents just died, they have minimal assets but a fairly nice home they worked all their lives for, and then suddenly you owe a shed load of money on this home you inherited, full of memories and you have to get rid of it??

I think every politician who thinks inheritance tax is a good idea should be stripped of 40% of their assets now in advance of their death...

There is no way I will allow this government to get 40% of my assets above £325k upon my death...

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Anonymous Coward

Re: Can we check one thing? @Tim Worstal

You could always do what was suggested in the Metro a few weeks back, and marry one of your kids (same sex marriage). Then, when you die, they inherit as a partner (no tax) rather than as a child.

I am not suggesting the marriage be consummated though :-)

Personally I hate inheritance tax and think it should be abolished - failing that the 'family home' should not be included in calculations (I accept that this will lead to loop-holes, but as I hate the tax anyway then the more loop-holes the better).

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Re: Can we check one thing? @Tim Worstal

But the tax is not really a tax on the dead person, it is effectively a tax on the people benefiting from the estate. By your logic any salary paid to you by your employer should be exempt from tax because your employer has already paid corporation tax.

And as you do mention in the last paragraph it's 40% on sums above £325K so if a house valued at £330K (let's call it a third of a million pound) is inherited your inheritance tax liability is actually £200 pounds? Are you really going to sell a third of a million pound house to pay a £2000 pound bill? I think you might be able to get a new mortgage to cover that bill even these days.

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Re: Can we check one thing?

> It is still true that Mrs. Hodges shares are in a trust for the benefit of her children and grandchildren. Thus avoiding the messy business of inheritance tax.

What a bitch.

She should pay her fair share of tax like everyone else! </sarcasm>

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Anonymous Coward

same sex marriage to offspring

That is just brilliant!

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Stop

Re: Can we check one thing? @Tim Worstal

> By your logic any salary paid to you by your employer should be exempt from tax because your employer has already paid corporation tax.

Businesses deduct salaries as operating expenses from their taxable income, so the money they pay in salaries isn't subject to corporation tax. Dividends however are subject to corporation tax.

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Re: Can we check one thing? @TimWorstal

Yep, #HodgeTheDodge. Mrs Hodge is one of the most egregious of tax avoiders. You get the feeling that she is making a point of shouting "tax avoider" at everyone to try and avoid the finger being pointed at herself.

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Re: Re:Ongoing hypocrisy (not past) does render her arguments invalid

> Your logic is a bit warped here. On the one hand, you say a valid argument is a valid argument ...

> ...That's contrary to your first point, as you're taking the presenter into account to determine if

> it's valid!!

Sure. 2 + 2 = 4 (given an appropriate set of conditions), no matter who says it, and when the VAT rate was 17.5% then £13,572 +VAT was £15,947.10 no matter who said it.

However if I'd sung out across the shop "what's 13,572 + VAT", then I'd probably have got more than one figure, and there were some people whose answers I'd have more confidence in than others...

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Re: Can we check one thing?

The expense claims scandal is a very good point.

One of the side effects of that was that many MPs ended up paying rather less tax than they should have, as legitimate parliamentary expenses incurred are offsettable against tax.

One common and very seedy trick adopted, by those caught with their fingers in the till, was to make a very high profile point of sending a fat cheque to HMRC for the tax they should have paid. The seedy bit is that, without resubmitting their previous bent tax claims along with that, said cheque would be taken as a payment against current tax and returned as an overpayment at the end of the tax year, or "once the heat's off" as I like to think of it. Of course, if they had done the right thing and resubmitted, thus voluntarily reopening that year's tax return, HMRC would then be able to bring charges for any evasion that had occurred and rather more of the bastards would have gone to jail.

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WTF?

"A functioning transparent system"

Did she mean transport ? In which case she's wrong.

Oh, and if she didn't, she's still wrong.

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Holmes

Well said

Margaret Hodge is a bit of a rent-a-gob. Pops up left, right and centre with media friendly quotes but no real solutions to the "problems" she's highlighting. She's a politician, in other words.

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Anonymous Coward

Re: Well said

Mmm. Hodge might well be a hypocritcal rent-a-gob, but do her public statements advance your views on taxing google more (or not?)

For example, if you happened to believe Google should pay more UK tax, it would perhaps seem odd behaviour to attack the person (Hodge) whose views agree with yours - but, in contrast, actually manage to get widely reported.

Expecting politicians to be extraordinarily saintly is a bit hopeful, really. In the absence of such saintlyness, I prefer to make decisions based on what they do and how it affects what I'd like them to achieve.

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Anonymous Coward

Re: Well said

How does a politician know what is moral and what isn't? I have yet to establish if they have a moral compass?

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Anonymous Coward

Remind me again what the MPs said about their expenses ..

"We did nothing wrong. It's how the system works"

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Re: Remind me again what the MPs said about their expenses ..

Indeed so. How many MPs hid behind the 'we did nothing illegal' defense even thought their acts were immoral. And now, they're trying to have a go at others who have also done nothing illegal, but have arguably been immoral.

Anyway, it's in MPs power to change things. I wonder how long it will take MPs to realise that over complex tax laws is one of the prime causes of these loopholes existing (and therefore their use by companies). As they can change tax law, why don't they simplify the law massively and therefore remove most of these loopholes. They're complaining about something they created and they have the power to change.

Simpler tax laws would also be useful to us poor non-accountant types who have to deal with HMRC. Most of the time, I find myself 'educating' them on how the tax system works and what the rules are!!

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Unhappy

Re: Remind me again what the MPs said about their expenses ..

quote: "Anyway, it's in MPs power to change things. I wonder how long it will take MPs to realise that over complex tax laws is one of the prime causes of these loopholes existing (and therefore their use by companies). As they can change tax law, why don't they simplify the law massively and therefore remove most of these loopholes. They're complaining about something they created and they have the power to change."

a) politicians know that complex laws can be used to hide loopholes

b) politicians know that companies use these loopholes

c) in many cases politicians use the same loopholes themselves

d) the initial act of creating the loopholes has yet to be proven an accident

e) if it was an accident it really should have been rectified by now

Given the above, I would put it to you that the creation of these loopholes was a wilful act, intended to benefit politicians directly (campaign funding from pleased backers) and indirectly (companies awarding shares and/or retirement board positions to those selfsame politicians as a reward). The fact that these loopholes have existed through a few changes of government does not speak well for the intent of any political party to actually close them.

I would absolutely love for them to prove me wrong by simplifying tax laws and closing the loopholes. I'm not holding my breath, though.

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Anonymous Coward

Why should they?

I'd prefer companies to pay more tax, but if the laws of the land don't require them to then why should they?

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LPF

Re: Why should they?

When its your baby girl waiting 4 hours for treatment becuase there is no A&E bed available , due to staff cuts, think about this post again...... dimwit!

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Re: Why should they? @LPF

Do you voluntarily pay extra tax? No? Why not?

Should corporations pay more tax? Quite possibly ... but then Parliament needs to write the law and HMRC needs to get off their fat arse and make it happen. You can't fault someone for obeying the law.

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Re: Why should they? @LPF

Your argument is false - I personally don't pay more tax than I have to, I have premium bonds and isas, these are government sponsored tax avoidance schemes. I don't, however pay less than I should do, I am proud to be a higher rate tax payer, I am privileged so I can help society as a whole. I need the guy who runs the corner shop, I need to roads, I need the bin men, the hospitals and all the things that make society hang together. I don't go out of my way to use accounting methods to make me "tax efficient", no funnling money off-shore for me. This goes for the vast majority of people I know.

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Re: Why should they? @LPF

You're making several very fundamental errors here. Firstly, you're assuming that if Google paid more tax, this wait wouldn't happen? Evidence points otherwise. The NHS hasn't got any better the more money is spent on it. So, the reason you're baby girl is waiting 4 hours for treatment is far more likely to be poor organisation, spending money on the wrong things, poor priorities etc.

Anyone who still believes pouring more money into the NHS (after the huge increases under Labour) will somehow magically fix it is the dimwit. It's about organisation and spending the money right, not about the total. Asking for more money is the easy and ultimately wrong way of fixing it. Don't spend more, spend more cleverly.

Also, you might as well criticise all the people who get boob jobs, or weight reduction surgery or whatever. After all, they're lifestyle choices as well and therefore ultimately 'optional'.

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WTF?

Re: Why should they?

> When its your baby girl waiting 4 hours for treatment becuase there is no A&E bed available , due to staff cuts, think about this post again...... dimwit!

When you can present a coherent argument without resorting to hyperbole, and unrelated hyperbole at that, then please call us. F*ckwit.

BTW the word you're looking for is "it's".

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LPF 20130423 11:46z

because the only reason you can't aford to go private is the hypocrites have stolen 40% (or more likly 55%) of your income; and then wasted it on crap; and because they 'protect' the management of the NHS (some of the most useless examples of phb going) the money needed to provision said service has been used to pay off some other phb who was going to tell the world just how appaling the NHS management really is

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She's worse than dumb

The primary reason companies like Google pay so little tax is that in the EU, companies only need to incorporate once, and it can be whereever in the EU it wants.

Has she says she wants to change this? No? Then shut up, you cowardly troll!

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Anonymous Coward

> "Instead companies like Google are creating artificial structures and abusing current tax legislation to move profits offshore in order to avoid tax. That is just not right,”

Did she manage to keep a straight face when spouting that?

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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Black Helicopters

and there you have it.

Why nothing will be done.

A scary thought is how much Google have on public officials. How many emails pass through Google servers, how much dirt can an internal-to-Google search throw up ?

Imagine the power Google have to skew search results to sway public opinion ... search for "David Cameron" and you get pages of results detailing every negative story from the past 10 years. Search for "Ed Miliband" and you get pages of stories with him kissing babies and posing with puppies .....

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Anonymous Coward

as Merchman said :

The Telegraph have already had to apologise to Margaret Hodge over this story:

An item posted on the Telegraph website last night said: ‘Margaret Hodge MP – Contrary to our report “Hodge faces challenge over family firm’s taxes” (Nov 20), Stemcor, in which Ms Hodge has a small shareholding, has not abused transfer pricing to avoid tax. We accept that there is no inconsistency or hypocrisy in Ms Hodge criticising other companies for tax avoidance and apologise to her for any contrary impression.’

http://www.taxjournal.com/tj/articles/telegraph-apologises-margaret-hodge-over-stemcor%E2%80%99s-tax-affairs-13122012

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Anonymous Coward

Re: as Merchman said :

> The Telegraph have already had to apologise to Margaret Hodge over this story:

The Telegraph article accused her of hypocrisy for denouncing dodgy tax avoidance schemes whilst being a shareholder of a company that pays bugger all UK tax. They apologised because Stemcor's tiny UK tax contributions are all perfectly legal and above board; they did nothing wrong as far as HMRC are concerned.

The problem is that Google's risible contributions are also perfectly legal and above board. If she's decrying Google as immoral for doing exactly the same as Stemcor then what exactly does that make her?

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