Lead by example, Dave.
UK Prime Minister David Cameron has told a quarterly meeting of the government's business advisory group that in return for lower taxes, companies should really pay the tax they do owe, while business leaders have accused the government of "political point-scoring". A government source whispered to Reuters that Cameron had …
By paying his corporation tax? Or by going back in time and changing his father's tax planning?
No doubt you have full copies of his tax records to indicate he is not a person but a corporation paying VAT in Luxembourg?
Whoa, whoa, whoa.
Take it easy there.
Dave can't see you trying to suck off- I mean up to him.
"...rules needed to be fixed internationally and business needed to be consulted on those rules..."
Well it would certainly help if they were internationally agrteed: but there's always a weakling / vested interest who'll rock the boat, so if you wait for that, you'll be waiting forever. Establish rules for the magority and trade restrict the rest. Yes it will make all sorts of things harder. But the current system suits only the mega rich and there's no point in sticking with what is extremely broken.
As for business being consulted. Sod that for a lark. That's a governments task. Stop shirking and do your bloomin' job.
Asking big business about tax policy does rather sound like the gamekeeper asking the poacher how to stop people stealing his salmon, you're right about that much.
As for what Cameron's said... laughable. The only tax rate big business will be happy with is 0%. Which, given it's more or less where most of them are, means they're hardly likely to back anything other than the status quo, are they?
>> the gamekeeper asking the poacher how to stop people stealing his salmon
If you're really lucky he might tell you how to stop *other* people stealing your salmon...
Absolutely. From what I've read of the senate hearing into Apple's Tax Avoidance scheme, is that they have come up with the incredibly complex and cunning plan of locating their European business in Ireland where the tax rules designed to encourage inward investment are that they don't have to pay corporation tax on overseas trade earnings *even when declared in Ireland*, and the rules for the US are that they don't have to pay corporation tax on oversease trade declared overseas ("incredibly cunning and complex" was sarcasm by the way).
Excuse me, but that is hardly accurate to call it a tax loophole. It's a deliberate tax "black hole of Calcutta," created by Ireland after their economy went *phoof* during the banking crisis. They knew full well it would allow businesses located there to reduce their corporation tax liability to near zero. That's why they did it.
Let me ask everyone in this forum a question. Let us suppose it turns out unbeknown to you, you had a rich aunt and you have found out about her because she has died and lawyers have contacted you to inform you she has left you a fortune. Let's say this rich aunt has dual nationality (not British). Let's say due to a some simple uncoordinated international tax rules and due to obscurity over her place of residence you have, within the rules, a choice as to the jurisdiction applied for inheritance tax on your aunt's estate. On the one hand you can choose the jurisdiction where you would pay 40% or on the other hand you can pay 5%. What rate are you going to choose ? Especially considering you have no particular allegiance to one or other jurisdiction (Apple is a US company, not British or Irish). Pretty much anyone who says "I would choose to pay 40% because it is the moral thing to do" is a liar. Moral in relation to your responsibility to pay inheritance tax where?
"On the one hand you can choose the jurisdiction where you would pay 40% or on the other hand you can pay 5%. What rate are you going to choose ? Especially considering you have no particular allegiance to one or other jurisdiction (Apple is a US company, not British or Irish)."
Who does have allegiance to any jurisdiction? In the UK we have people slagging off whatever gov gets in (and sometimes it is warranted) while demanding they pay for everything we want. At the same time we dont want and cant afford them continuing to rip us off with excessive tax. And the worst part is that while we consume the most of the public services we dont even contribute that much to it. Instead it is the rich and the businesses who pay for our NHS, education and everything else while providing us jobs.
You are absolutely right that people will choose what is best for them and so they should. We have a very interesting and very funny situation right now showing a collective back stabbing between the unthinking masses, businesses and the gov-
The people want stuff now now now but dont want to pay for it and cant even afford it. They want jobs but dont want the big businesses to make money or they are taking from the people (how dare they). If the businesses get off their backsides and figure out how to legally avoid tax they are set on by the unthinking mob. The unthinking mob cant be bothered trying to find ways around paying more and so are happy the gov hands it to them in the form of an ISA. Disliking any gov who makes a decision (because someone wont like it) and disliking any gov that does nothing these people also distrust business who they know want to make as much money out of them as possible.
The businesses want money. They need it to survive. They need investment, workers and of course for a thinking gov who wont cripple them out of sheer stupidity. Businesses employ people while paying for their services yet know these cretins will turn on them and sell them out for a few pieces of silver. The worst part is that govs who want a working economy will 'invite' companies with acceptable tax rates but the gov will bend and break to the population who will vote in their own interests above the interests of companies. Regardless of the law or what people think the end begins to justify the means and getting what you can before it all implodes becomes the plan.
The gov want power. Yet when they get power they dont want to let it go and so need to pander to the voter. To do this they must bribe with as many gifts as possible because that is what they respond to. Kinda like dogs with treats they will flock to the provider of whatever bite-sized treats they want. However the problem is the people want to keep the first gift and want more (without paying for it obviously). So gifts grow in size (NHS) but you cant take it away without the child crying. To pay for it you turn to the rich and businesses who have money (because they earned it selling to the people). So the gov must charge more to pay for gifts for the people. But if you charge more then these businesses and the rich will go somewhere less thieving so the gov must offer ways out to the big innovators and infrastructure businesses who dont want to be robbed.
How many ways can anyone see this falling apart? 3 parties disliking and distrusting each other while relying on each other. And if any party fail in keeping the status quo then the economy descends into squabble. But the status quo is an unaffordable situation which will skint us all. So we need the whole lot to grow up and be more honest. But with honesty comes an acceptance of past mistakes. Does that sound like the voter? The politician? Or the head of a company?
in return for lower taxes, companies should really pay the tax they do owe
Hmm Dave, if they are not paying the tax they owe shouldn't you be prosecuting them? Isn't that what the laws you made are for?
Also if your taxes are so low why do international companies choose to pay taxes in Ireland or Luxembourg or where ever instead of here?
We've all seen The Corporation, right?
Stakeholder responsibility and social awareness are not allowed to come into the tax-decision making of a publicly listed company: they are mandated to do whatever makes the most money for the shareholders. If they didn't use all available tax loopholes, they'd get sued.
So GoogAmazApple are right to tell Parliament / Congress that if they have to change the rules if they want to stop loopholes getting exploited. Trouble is, then their mates at the banks can't use the loopholes either, so it's unlikely to happen.
"they are mandated to do whatever makes the most money for the shareholders"
Seems to exclude bonuses, pension pots , arrival bonuses and all failure penalties.
Right said Fred.
it's really simple .. just write a new law that states if you want to do business in the uk .. you must have an office here and pay tax on all sales .. and income ..
There already is a tax on all sales - it's called VAT and you, the end consumer, are paying it. Why do you want to pay more?
> There already is a tax on all sales - it's called VAT and you, the end consumer, are paying it. Why do you want to pay more?
Not only that, it's 20 friggin' percent at the moment. That is not a small tax for fsck sake.
Sir Roger Carr
Any relation to Jimmy?
It sounds as if the guvmint has a business plan of sorts in place to deal with tax havens?
(Often referred to as British Overseas Territories)
Look out Apple - all that tax avoidance money overseas might end up going to the UK Treasury if it has its own way?
Make obvious accounting tricks illegal such as charging yourselves a fortune to use the company name, simple penalty for that sort of thing: Work out a reasonable and rational rate for the service charged and then tax the difference at 100%
The penalties for obvious tax avoidance should be hugely punitive so that it really is not worth a companies while.
They should also backdate by several years first giving all companies the opportunity to come clean and pay the tax they've previously avoided.
If corporations are going to enjoy the legal status of individuals then they should have the legal responsibilities of individuals as well.
Re: Cunning Stunts
"...Work out a reasonable and rational rate for the service charged and then tax the difference at 100%"
The lawyers will have a field day arguing what is reasonable, and Big Business can afford lawyers. A hard and fast rule would quash legitimate businesses or make the situation even more exploitable. I'm not apologist for business. I would advocate taxing them for every penny. But I don't see how to fix these shenanigans. (Although I would start by raising corporation tax - the Americans have it at 35% FFS)
Re: Cunning Stunts
@ Brewster's Angle Grinder:
There are still possibilities, though:
How about implementing a maximum amount that can be claimed as a cost by a UK PLC as an "asset use charge" for IP such as names etc and set it at some low percentage of total revenue, then disregard any additional costs submitted by the company when calculating tax liability? Better yet, set that maximum amount as a % of profits declared in the UK? Ie if you want to be able to funnel out £5M as a cost, you have to have declared a profit of £50M (and paid tax on it).
Or placing an onerous burden of proof re: competitive tendering process for supplier choice (to be reviewed by independent auditors) when eg Starbucks claim they have to use Starbucks beans bought at a 5 Gajillion% markup compared to every other suppier, and where such proof is lacking only accept a cost declaration set by the average cost of said supplies from eg the top 5 suppliers per volume, and ignore any additional costs when calculating tax liability. It doesn't eliminate the problem, but it makes it cost them more to do it, and eventually the cost-benefit analysis will tip the other way.
For product-based companies in particular like Starbucks and Apple, the claim that they have to pay themselves for use of said assets is clearly bollocks. There's no actual business requirement for it, it's an accounting convenience. So limit the accounting benefit from letting them do it. No actual business model will operate in such a way that all possible profit margin is eaten by a cost to an exclusive supplier; if there's no *actual* profit, there's no reason to continue operating.
Alternatively, pass legislation whereby leaking corporate tax arrangements is permissible under law - and so is eg tasering company executives for approving such measures. (Just kidding, though it strikes me that a BOFH-like solution would be more effective in achieving changed behaviour...)
> Meanwhile, Google could be facing a new investigation from tax officials at HMRC after the whistleblower revelations that led to the firm being called in front of the PAC for the second time last week.
1) If this whistle blower is real and what they allege is true, why then aren't Google UK in court?
2) IANAL but surely all this public grandstanding about this whistle blower is tarnishing any evidence that they may give in a legal court?
Hodge, if she believes Google are committing a crime/tax evasion should simply pass the file to HMRC Commissioners and wait for the bang.
Instead she likes to showboat, have a mindless argument, throw some insults from a protected position, potentially expose a whistleblower and bask in the publicity.
If Google is doing a naughty then the evidence is what it is, her disclosing early it won't change anything. What it would give an opportunity to is for Google to lose some troublesome documents if any exist.
I'd be worried if I were the whistleblower; the Google exec seemed keen to see who it was so he could "clarify" what was happening, as in he asked to see the documents a couple of times during the grilling. Whenever I've seen this before all the execs start asking "who was it?" (the answer "Henry, the mild mannered janitor" never raises a smile for some reason) and spend more time trying to work that out than dealing with the problem in hand.
Someone once commented that when guvmints want to be seen to be doing something then a drama is acted out in the media.
When guvmints want to do something about something usually they send in the armed forces.
There ain't no inbetweenies.
Economic Lesson 1 - The Model
The tax authority tries to collect the tax from the corps as defined by the politicos.
The politicos try not to penalise the corps as they overtly want the corps to invest in the country so the
people have jobs, and pay taxes, but covertly want nice jobs after they get booted from power,
so they wont want to change the status quo, this annoys the tax authority who can do nothing
as the corps are working within the rules, determined by the politicos, this is a Catch 22.
The corps will go to the best tax regime to maximise their profits and minimise the tax.
The politicos are scared of the corps.
The politicos slag the corps, but they are only pretending to be nasty, as the politicos have most to loose.
(the people can choose not to buy, go elsewhere, etc etc, the corps can go elsewhere,
the politicos are stuffed because they are politicos and their influence is a rapidly depreciating commodity.)
The b(w)ankers are in the model somewhere, and are probably laughing all the way to the bank.
Homework, constructive comments on this model, down votes will be ignored, as down voters
clearly do not understand the model.
I'm so tired of all this.
Yeah, yeah, firms use tax law to minimise how much tax they pay, and that is all evil, and what not. Lets hang them, the evil tax efficient gits.
Well....Unless you are making Star Wars films, that is.
Then you get offered government arranged tax avoidance, sorry, "tax breaks", , or was it "favourable tax conditions", to come to the UK to make them. And that is desirable. And that is desirable because because it brings jobs, and those people are then employed and pay tax. We wouldn't fault that would we? I certainly wouldn't.
Yeah, you see it too, right?
Just like Starbucks etc. All those tax paying jobs in all those crappy coffee shops. But Star Wars is cool, where as Starbucks is over priced crappy coffee, so, er, lets leave that one.
From the article: "As politicians pursue fairness [...]"
Sir Carr owes me a new keyboard.
Just incidentally, how many politicians choose to pay more tax than the absolute mimimum they're legally required to? Oh that's right, we're not talking about that are we. I wonder if they've ever heard the story about people in glass houses.
Just suppose ...
... all of this goes ahead and some corporations have to pay tax on stuff going back some years.
But how many years?
1? 5? 10?
Or maybe sufficiently many years to invoke embarrassing actions against senior politicians, civil servants, .... ?
Here in the UK we have some wealthy families that allegedly used and maybe still use illegal and/or legal tax evasion/avoidance.
So, on the assumption that some assets are seized by one government or another how far back in history do those parameters extend? And what dirt might be dug up on political/publicly funded politicos?
... frame the argument over corporate taxes as a political sop for the masses suffering under austerity, rather than a legitimate desire for overarching change.
And we have a winner.