Google Oz slips A$600 million through tax loophole The Sydney Morning Herald has popped another installment in its long-running game of pinging Google’s Australian tax liability as revealed in its financial statements. In spite of Australian revenues estimated by experts like Frost & Sullivan to be more than A$700 million, the Chocolate Factory’s performance in Australia looks …
There is no simple fix that will just "sort everything out". If there were, it would already be in place. This tax fiddle is performed by shifting numbers around and reclassifying them in ways that avoid the provisions of the letter of the tax law. If you change to a tax on income, those highly-paid, highly-intelligent accountants employed by Google and other big companies will simply shift the numbers around and reclassify them in a different way, so that they no longer look like income. Whichever bottom line you decide to target in your simple tax solution, there will be clever and probably-legal scheme to migrate the numbers away from it.
I guess what you meant is tax on revenue. Income is WAGES and Salaries + Interest + Profit. Yes PROFIT is INCOME.
And if you meant tax should be levied on REVENUE instead of profit.. this still would not solve the problem... in fact it may create more problems than it solves . . .
If the service is provided by Google Ireland and people pay Google Ireland (which they do) while Google Australia acts as local intermediary (or payment processor), then everything is perfectly legit.
Has nothing to do with political donations. That's how international commerce works. Or do you expect Amazon UK to pay taxes on services that Amazon USA provides to you as a local? They don't.
One of the reasons taxes are so high is that there is little competition: you can't easily change your government (democracy is slow, and democratic choices involves many other factors). Indeed, for most of us, to change our 'supplier of taxation services' means moving abroad - which is expensive, inconvenient, and may well involve learning a foreign language*.
Companies, on the other hand, can be in more than one place at a time, and can choose who should be their 'supplier of taxation services'. I don't see that flexibility as a problem, as competition generally leads to efficiency, and, so long as the tax laws are the same for all companies (not just those who exercise their international muscles) all corporate taxes should be lowered.
Governments who think they can leech off companies whenever they have spent too much deserve to lose that income stream completely.
Now, imagine if each county** (county, not country) could set its own personal and corporate tax rates. I guarantee you overall taxation would fall, and goverment efficiency would rise. A lot.
* It's interesting to note how UK Government policy doesn't really encourage fluency in foreign languages - I suspect that's the main reason why many people haven't already moved to continental Europe.
** I'm writing this from a UK perspective, as that's where I am, but the same principle will apply elsewhere.
> Be wary of the race to the bottom that may also occur - Ireland being a case in point.
Mobility of the population is the moderator that prevents things getting out of hand - and with taxes set by smaller territories (counties, for example, rather than countries) that mobility is greatly increased. The mere threat that a segment of the population would move to the country next door will keep the local government efficient.
Ireland is a good example in one way: because some many Irish speak English, there has been a mini-migration to the UK. Without that opportunity, the tax burden on Irish individuals would have been much greater.
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