Google executive chairman Eric Schmidt has dismissed criticism over how little corporation tax his company pays, saying it's just capitalism. Schmidt is "very proud" of the corporate structure Google set up to divert profits made in European countries, such as the UK, to its firms in the low-tax havens of Ireland and The …
The answer is for every country to have the same corporate taxation figures. Of course, that will never happen. So perhaps the UK could apply a "Corporate VAT" e.g. 5% CV on every purchase a company makes. Thus all of this rubbish about "Startbucks UK buying its coffee from Starbucks Elsewhere and thus not making any profit" would be removed. Google and Amazon would likewise be picked up. And as it would apply to any business trade done by a company operating in the UK (irrespective of where it's based) all companies get hit the same and no one gains an advantage / disadvantage from it.
Or they could just say "companies can only claim back 15% VAT rather than the full 20%".
Massive lack of morality
... But what else should Google do? They are operating according to the laws of the lands they are in and that's it. Capitalism doesn't have a conscience else nobody would be fired just to give the CEO a better Christmas bonus.
This is an interesting admission here though; Gogle is saying that what it does, it does because it makes sense in a capitalist framework. Does that mean then that the causes it supports are done so purely for the capitalistic benefit of the company? Of course. Google's motto is "don't be evil". What Google's motto isn't is "Be Good". So, supporting social groups that can pay show their gratitude through traffic and use of Google services is great while helping governments pay the bills which support services and support for the poor is not great.
That's why Google isn't going to pay this, but Starbucks now is. Nobody thinks that Starbucks has had a change of heart do they? They're losing out because of the bad press which is why they have tried to do what they have. Not paying the taxes in the UK was immoral, but the paying of the money they have promised is no more moral, they're doiing it because it makes business sense, not because it's the right thing to do.
Google is practically unboycottable, so they can say "up yours" to whoever complains.
Essentially, what I'm trying to say in these disjointed paragraphs is that morality is subject to capitalism in our brave new world and it counts for nothing. If there's no money in it, then there's no point to it.
Which now apparently means dodging your social responsibilities.
Re: Go Capitalism!
Which is why it isn't called socialism...
Re: Go Capitalism!
It's got nothing to do with socialism, it's about contributing to the vital infrastructure that your business relies upon to function.
Transport, electric and gas, health care, local services.
By contributing bugger all to these in the countries they are based upon they are leaving the bill for everyone else.
Re: Go Capitalism!
I suspect that Google pay for the following:
Train tickets, road tax, petrol duty.
Their electricity and gas bills.
Private health care for their employees.
Wages for said employees that are then taxed with Employees National Insurance, Employers National Insurance, Income Tax.
The employees then pay council tax for their "local services" and VAT on virtually everything they buy.
This all probably amounts to slightly more than bugger all.
" Google was lambasted by MPs for its tax chicanery, which is not illegal but has been described as "immoral". "
Well who's fault is that?! If the slimy MPs hadn't set the whole system up to benefit them and their kind they'd have a point to argue. Much as it pains me what Google is doing, it's their business and if the UK Gov doesn't like it they'll have to change rules, you can't have your cake and eat it!
"and if the UK Gov doesn't like it they'll have to change rules"
I'd go further than that. Out of the umpty million people who live in the UK, the few hundred sitting in the House of Commons are the only ones who can *not* complain about the current legal framework precisely because they are the only ones who *can* change it.
And claiming expenses wrongly isn't?
I don't really see how MPs have a leg to stand on here. They create the laws and these companies are obeying said laws. Yes, it's immoral, but perfectly legal. With MPs; they set up the expenses scheme (rules, same as the law in theory) and still couldn't keep to it. So, not only were they immoral, but also illegal!! How can a group that sets the rules, then fall foul of them!! Just shows how incompetent they are..........
Google = Moronic geeks.
They should go out into the real world once in a while.
Google's profits and revenues
Amazon and Starbucks sell things from locations in the UK to people in the UK (as well as elsewhere in the world, of course) - I'm sure the majority of us have bought something from them in the last 12 months. They charge a bit more than they pay their suppliers, so they make a profit in the UK. If our tax laws were more straightforward (instead of being written by tax lawyers for tax lawyers), they would have to pay their share of corporation tax.
But Google are very different. I use Google products (Android phone, Chrome browser, plus the ubiquitous search engine), but I've never paid them anything directly (although I'm sure Google will have made some money by selling ad space that I've viewed). So it's far from clear (to me, anyway) where their profits have arisen.
so who next?
Once our "betters" get their morality tax from google who next? Do you use an ISA? if so, why? I'm guessing because it avoids tax. Then you are immoral for hiding the governments money and must be punished.
Re: so who next?
an ISA is a government ponsored means to encourage saving rather than spending of your money which will then be available indirectly for investment by British business. It's deliberately limited in scope with an upper limit.
Re: so who next?
Its also a legal way to avoid paying tax. It is legitimate in the eyes of the law to stash money in an ISA and avoid paying tax on it. Just as googles actions (and the other 'immoral' companies) was just as legal.
You are immoral. If not prove me wrong and I will likely prove you wrong, because morals are a personal opinion and certainly not constant. This is why we have laws. If you want to be ruled by morals then who's morals would you like to use. I guarantee I would prefer to use mine and everyone else would like to use theirs.
So an ISA is just as bad as google following the rules.
Be careful what you wish for
MPs = Hypocrites
>>"Tax is something that is a legal obligation that you should pay. <<
This is true; but no-one is under any legal or moral obligation to arrange their tax affairs for the benefit of the taxman or to pay one penny more than the law requires.
The tax laws are an omnishambles; they have become so complex that most people (including MPs) simply cannot be aware of every single possible scenario. In fact, most MPs now emply specialist advisors who tell them how to avoid paying more tax than the law requires. In particular, most of those on the committee are themselves taking advantage of some of the particular arrangements used by these large businesses to reduce their own tax bill.
Pot = kettle?
Do no evil
The difficulty here is that international tax legislation was designed to be fair. So if I made money in Germany and paid my taxes, it wouldn't be taxed again in the UK. All the schemes devised by whizzo accountants are technically legal but essentially are trying to circumvent the spirit of the rules that were created. Part of the reason tax codes are so complex is that they keep having to create new rules to block the accountants who are essentially trying to fiddle the system.
The net effect of this is not actually bolstering Capitalism as Schmidt claims, it's undermining it by reinforcing large players who might otherwise be replaced by smaller players who don't have the scale to play (or pay for) the tax dodges.
"Do no evil" was a pragmatic statement that allows for a bit of interpretation - i.e. rather than working to a set of proscribed standards we'll go with the spirit of what's right. However, playing the tax shuffle has proved that essentially that standard is hollow (and some of the privacy breakdowns have as well). Much as I love Google, having used it when most people were still on Altavista, I think they have lost the way from their early origins, and are in danger of becoming another Microsoft.
At least Schmidt's been kicked upstairs to chairman. Sooner Larry and Sergey get rid of him the better.
Re: Do no evil
"The difficulty here is that international tax legislation was designed to be fair".
I must say you have made my day! The idea of politicians earnestly striving to be "fair" is the funniest thing I have heard for ages.
What international tax legislation IS designed to do is to lure big profitable companies to specific countries and keep them there. They mostly hire masses of people, pay them, administer their benefits, rent premises and equipment, buy masses of stuff that has to be produced by other companies, etc. etc. And, with luck, they pay masses of tax.
In order to lure them to Blighty, our lords and masters saw fit to create a 10,000-page tax code riddled with loopholes, precisely so that corporations would come here rather than the USA, Ireland, Germany, Russia, India, Brazil... It's a very big world out there, and it's very tough to be (and stay) top bidder in that kind of auction.
Then, of course, it leaks out that Google doesn't pay much tax. Suddenly our lords and masters are seized with shock and horror! "How did this come about???" they shriek, before demanding someone's head on a pole.
Well, I know whose head I think it should be.
Re: Do no evil
"...proscribed standards...". That word, I do not think it means what you think it means.
OK, what's wrong with this?
Why not just tax multinational companies doing business in the UK, according to the larger of
(a) declared UK profit; or
(b) worldwide profit * (UK turnover / worldwide turnover) ?
You can hide profit made in one country by creating an artificial overhead, but that profit will still show up somewhere in the world -- and the cost you created will contribute to your turnover in the UK.
However, I suspect the law is unlikely to change precisely because it benefits the rich.
Re: OK, what's wrong with this?
That sounds brilliant.
Which makes me think there is a problem I haven't thought of.
Re: OK, what's wrong with this?
Why tax corporations at all?
If corporations didn't pay taxes they wouldn't have to use tax havens, use loopholes, pay tax lawyers, spend energy on overhead.
If corporations didn't pay tax, there would have been more left for employees and shareholders.
Corporations aren't people.
Re: OK, what's wrong with this?
Google "Bermuda holdings company" and be enlightened.
Re: OK, what's wrong with this?
Why tax corporations at all? For the same reason why we tax individuals: they obtain certain benefits from the civilised society in which they exist, therefore they ought to make a contribution to it.
Anyway, if corporations didn't pay tax, goods and services might get cheaper, if they passed on the savings to customers; but individuals would end up having to pay more tax, to make up the shortfall.
What about Microsoft?
I find it strange particularly on the BBC how little is Mentioned about Microsoft's (and Intel for that matter) tax arrangements which are similar to those name and shamed, I wonder why?
I am getting a bit fed up with these stories now.
It's similar to the Jimmy Carr situation. The only tax bill I care about is my own. If someone told me that I could reduce the amount I pay significantly due to some legal loophole, then I'd damn well look into it and assuming it was legitimate then why the hell not? Just another witch hunt in my opinion.
Re: Bored now
If somebody told you that you could get a discount on your council tax if you didn't have your rubbish collected but just chucked it over your fence into your neighbour's garden - that would be a good deal.
Of course they would be doing the same - but that's OK because for only 10x as mush as the council tax saving you can get a private company to come around and clean it up.
There is a reason we live in societies, not warring bands of individuals - it's not because we are nice - it's because ti works.
Re: Bored now
Bullshit, if you and your neighbours got together and organized a private company to pick up your rubbish you could probably do it for half the cost the council charges on aggregate. You however probably think it's cheap because the council charges someone else 10 times as much (because they have a bigger house, regardless of how much rubbish they generate) so they can subsidize you to get the votes to get re-elected to keep their snouts in the trough.
You don't need taxes to councils to be a society, it's a state of mind, not the mind of the state !
We could have a witch hunt tax. Maybe call it applying the bullying laws but on a larger scale. So when an entity acting legally is publicly abused like these 'immoral' companies then these companies can take the whole sodding witch hunt of bullies to court for damaging their name for doing nothing wrong.
We may disagree with them paying so little money, so we are disagreeing with the tax law. And if people think the tax law is wrong it may be changed. But the sick mob against these companies for being legal and correct is highly immoral and I would love to see the lot taken to court for bullying.
Morality doesnt exist and in someones eyes we are all immoral. This is why laws run the country not morals. If it was left to morals we could still hunt witches and bow to stupidity. I hope the mob go through an age of enlightenment at some point soon otherwise this country will only get worse as you are all immoral.
I do however offer the challenge to anyone who thinks they are moral to explain why they believe they are. But that will put your morals on show for others to debate.
Re: How about
Congratulations, you meet all the definitions of a sociopath.
Re: How about
Couple of points short actually but well spotted. I also spotted you didnt explain how you were moral which was the invite I left to those who thought google was acting immoral.
Care to take the challenge?
Good for them.
I'm all for this.
The less money those 650 idiots in Parliament have to spend on bribing the electorate, the better.
Love or hate Google...
I'm sure we can mostly agree that Schmidt is a dick.
Re: Love or hate Google...
Meh. Compared to Zuckerberg?
Stated another way, but pretty much the same as most people here:
1) You can't blame companies for minimising tax. That's legal. You do the same, unless you deliberately don't fill in deductables when you do a tax return, or you donate more tax out of your net income.
2) If you say some companies should pay more tax, based on a feeling in your gut, that means nothing.
3) Therefore if you say some companies should pay more tax, how should we define how much? You will get to something as complicated as tax law, eventually.
4) The problem with tax law is that it creates a lot of drag on companies, with serious, boring people getting paid lots of money to find boring loopholes in laws some other people wrote.
5) Therefore if you genuinely do find a way to tax more simply, start an open source government website, let anyone implement your suggestion, and we can wave goodbye to all the drag placed on companies by beancounters (or at least some of them).
6) Please do the same with law. The sooner we automate away the expensive paper pushers, the better.
You have two scenarios: -
* If you follow the tax rules and pay what you are legally obliged to pay you get politicians whining at you for doing so when they should have had the competence to setup decent tax laws in the first place, end result, some bad PR but nothing extremely bad happens, it's perfectly legal after all.
* If you pay more tax than your legally obliged to pay (what idiot would do that) then the CEO/CFO is then seen as incompetent and will more than likely face a palace coup and/or face the wrath and possible court cases of shareholders, end result, big pile of the brown stuff and no paddle.
I wonder which one a CEO would pick?
Believe me I'm no fan of complete unrestricted capitalism, but politicians whining, moaning and bitching at companies when they should be getting off their respective derriere's and making sure this is not possible in future would appear to be the order of the day.
Our politicians need to stop grandstanding and moaning and actually start fixing our bloody economy instead of trying to raise their media profiles and wondering how to get their backside onto X Factor or that bloody awful Jungle reality television series thing.
They can call it what they like, I call it a Tax Dodge and they are crooks.
Looking at the votes, that seems to be a matter of opinion
And I call you a thief, a crook, and a sponger. Fair's fair.
Starbucks was embarrassed into paying more tax by the government. Google won't be, because a verbal tongue-lashing in a select committee and a bit of embarrassment for Schmidt and co. isn't worth the hundreds of millions it'd cost to concede.
Personally I think the government should make a few regular public service announcements on TV summarising the offensive tax arrangements of the worst multinationals - the fall in share price and brand integrity might convince them to rethink their schemes.
It is Profit Laundering
Acceptable for some businesses eg Google but not for others drug dealers
It's economic warfare by Ireland, the Netherlands, and Bermuda against US and UK...
So counter it with real warfare. Since there's probably more Irish in the US than Ireland, the US can conquer Ireland, and the UK can take the Netherlands and Bermuda.
Schmidt thinks offshore tax havens are capitalism. How can he possibly object to the response of nations protecting their wealth by hostile takeovers of those havens?
Re: It's economic warfare by Ireland, the Netherlands, and Bermuda against US and UK...
Bermuda is a British Overseas Territory. Has been since 1707.
Other such places are the British Virgin Islands, Cayman Islands and Gibraltar. All rather famous for favourable tax regimes and all have informal representation at the UK parliament through the All-Party Parliamentary Group.
Why 'take' them when we already have them?
Move along, nothing to see here
Maybe I've missed something, but it's not like the laws changed much on tax in the last 20 years and no one was bothered before... I say it's all just diversionary tactics to hide the fact the Government's fiscally done for. So their only solution is to direct everyone's attention towards "greedy" companies to avoid the public asking difficult questions about how we got into this financial mess in the first place - read borrowing FAR too much in a boom period... thanks for that Gordon, you so called economist!
Re: Move along, nothing to see here
Exactly - it's all smoke and mirrors.
Makes you wonder what's REALLY going on.
So, about corporate rates
In North America (and I assume in Europe it's the same) corporations and corporation-friendly government keep pushing for lower or zero taxes for themselves as this will somehow magically create jobs and improve local economy... yes, I know the line, if the corporations have a couple extra billions saved they may invest some of that back... the problem with that line is the "MAY"... they may choose to pocket the extra, there is no guarantee.
Looking at this article, they mention Ireland as a tax haven... how is that working for them when it comes to unemployment? apparently not that great at 14%
Re: So, about corporate rates
They had a huge boom and an equally huge bust. Everyone was flocking to Ireland but the property got massively pricey and now there's ghost towns of new houses that nobody wants.
You want proper commitment to a country by a global company and you just don't get that, especially when they're not paying any taxes in that country.
Globalisation is just evil in so many ways. It's a cancer we could do without.
Re: So, about corporate rates
Yes, Ireland the Tax Haven...
Our position is entirely logical - instead of having a massively complex corporation tax code with a headline rate of, say 35%, but loopholes that mean you actually pay 6% (like France, who at one point had this on the front page of their foreign investment agency site), we decided that we would charge 12.5%, with far fewer loopholes, and those would be time limited and aimed at specific sectors that we wanted to encourage investment in. You know what, it worked! Companies found that it was cheaper to deal with the lower tax rate than to work out how to use all the loopholes.
The problem is that we allow the movement of money to other EU countries in line with EU rules without a whole pile of oversight. Including the Netherlands. Who have their own idosyncracy that they allow transfer of money to the Carribean (probably for historical reasons). So you get the situation where by billions ends up in Bermuda.
The building boom fueled by cheap credit suddenly ending so that government income dropped over 20% in one period, going from a surplus to an €18 billion deficit is an entirely different story.
Do mo' evil...
Fixed it for ya there, Google!
Of course., the real problem is not the companies who are graded by shareholders based on their cash flow and earnings, but its the politicians who design the tax codes and let themselves be lobbied by corporations that are (naturally) trying to improve or sustain the above-mentioned grades. Yes, Google, Amazon, Starbucks and probably a lot more companies should be paying more, but the problem goes deeper than a few thousand corporate execs and a few hundred thousand corporate tax professionals.
As always, it's the common citizen who has to pick up the bill for bad governance by the pols and opportunistic accounting by big business.
"We did it based on the incentives that the governments offered us to operate. It’s called capitalism."
Doing things based on government incentive? Sounds more like socialism.
Would it be against international rules to let companies pay the lower tax in Bermuda or wherever but then claim the difference between their tax rate and ours.
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