The Mail has reported this morning that:
Giant corporations such as Google will ‘inevitably' pay less tax than ordinary firms, one of Britain's top Revenue officials admitted yesterday.
Jim Harra, head of tax at HM Revenue and Customs, triggered outrage when he suggested it was unrealistic to expect multinational firms to pay as much as other businesses.
It is an interesting claim because it is, of course, wrong. The claim made is only be a true if you decide to use a tax system where the existence of groups of companies is largely ignored, individual group member companies are taxed individually, and where the rules on whether a company is present in a location or not, and so taxable there, were created in the era of the steamship. That, of course, is the system we have. And it is, as Jim Harra says, inevitable that large multinational companies will win in it.
But if that is inevitable it has to follow that any government that seeks to perpetuate that system knowing the inevitability of that outcome is either unaware of alternatives or, knowing of them, has consciously chosen to maintain the status quo and the inevitable bias in it.
As it happens the Guardian reports this morning that:
One of the most powerful opponents of Google's controversial tax structures, European tax commissioner Pierre Moscovici, is expected on Thursday to call on Britain and Ireland to drop their objections to radical tax reform across the EU.
Moscovici, who has previously advocated a Europe-wide “digital tax” on companies such as Google, now wants to tackle aggressive tax avoidance among multinationals by requiring them to file a single European tax return.
He believes this reform — known as the common consolidated corporate tax base(CCCTB) — would remove the temptation for international firms to artificially divert income from one country to another. Member states, would still be free to set their own corporate tax rates.
Britain, however, is among a small band of countries fiercely opposed to the European commission's plans, believing they would weaken the UK's ability to tailor its tax system to attract jobs and investment from international businesses.
“The CCCTB [proposal] has been around a very long time,” Treasury minister David Gauke said last year. “It is a proposal still looking for a justification.”
I apologise to the Guardian for the length of the quote: I justify it because of the importance of what they have written to my argument and the conclusion that it inevitably leads to, which is that the UK is not only choosing the hopelessly biased outcome of the current position, but is going out of its way to support it, and that despite the fact that they know that unitary taxation (which is the theory that underpins the CCCTB) could deliver a much more equitable outcome.
So let's have no more bleating about inevitability, please. Let's have a lot more talk about choice. Because the UK is going out of its way to support the tax system that lets Google abuse UK small business.
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That’s an absurd statement from HMRC. Talk about waving the white flag. There is little hope of reform of laws if that is the attitude of tax authorities. They’ve just accepted defeat.
It will good to see all publicly funded politicians follow the example of John McDonnell and publish their income and tax returns so we can have complete transparency on what these people are really doing versus what they are saying.
Followed by all publicly quoted corporations, banks and their senior executives, for a starter of seeing some corporate transparency. I can think of lots more to follow this, but that’s a nice starter for now!
http://www.independent.co.uk/news/uk/politics/google-tax-deal-john-mcdonnell-tax-return-osborne-a6844671.html
According to channel 4 News last night, this lax approach to tax collection from multi-nationals started in the Blair administration. Evidence of Mandelson’s mantra about New Labour being ‘intensely relaxed about people getting rich’ perhaps?
The Tory boy being interviewed launched into a reminder to the viewer about the need to cut costs because we could not afford ‘expanding welfare budgets’ and that Labour had ‘left us bankrupt’. He was just about to go onto mention that the Tories had collected more tax than Labour when – frustrated by the fact that Matt Frei did not challenge any of this crap – I turned it off.
Said Tory boy was nothing but a Lynton Crosby robot – pre-programmed at every opportunity to reinforce the lies being put out about Labour and social security as soon as they are given the opportunity to open their gobs.
This sort of behaviour will only serve to soak up air time and throw people off the scent of the real issue (as you say – that Government attitude to tax is a deliberate self-serving choice).
I think that we can just about forget about mainstream media contributing to people’s awareness and depth of understanding about these issues.
You were right to be frustrated
There is an integrity issue on taxation during the Blair/Brown governments which the current Labour leadership need to acknowledge, consider and respond to truthfully. Otherwise the Tories will keep poking the knife in and twisting on this.
As I recall Mandelson’s often quoted remarks to business people, multinationals in particular, was that they were welcome to make as much money in the UK as they could “as long as they paid their taxes”.
So which bit of multinational tax laws did the Labour grandees not understand? Did they think that multinationals would pay the same rate as domestic business out of the generosity of their hearts? Did they not understand how easy it was to avoid tax?
Or was this a New Labour compromise with the City and the multinationals, to turn a blind eye to the loopholes in return for some political support and funding?
Whatever it was, it would be better for Corbyn’s Labour to get it out in the open and distance itself from it. The Tories cannot keep blaming the past for the problems that they have had 5 years already to fix if they really wanted to.
Time to turn this Tory tax rhetoric back on themselves with truth and logic.
Labour did mistakes
But there was no real awareness of this issue beyond a few campaigners until late in its day. We have to be realistic about that
And then they did grasp it
They also did DOTAS in 2004
You mean no real public awareness of tax avoidance until you and others helped to bring it out of the shadows. I can agree with you on that.
But it’s not so believable that those in the upper echelons of the Labour party, as with all senior politicians, were not fully aware of the extent of tax avoidance – after all it was just as rife throughout the 20th century and probably ever since there has been tax. Many senior politicians (agreed more likely to be wealthy Tories, but no doubt some wealthy Labour backers too) would have been benefiting personally from such arrangements.
I can believe there was an attitude of no need to rock the boat – until 2008 when the public really started to ask themselves what was going on in our financial system.
Interesting article I read today from Richard Wolff about the 2 party systems in most countries supporting the status quo, until the public stops allowing them to.
http://www.rdwolff.com/content/how-two-party-political-systems-bolster-capitalism
“But it’s not so believable that those in the upper echelons of the Labour party, as with all senior politicians, were not fully aware of the extent of tax avoidance”. Indeed, KeithF. I’ve been reading about this stuff, probably in the Guardian, since the 70s. I worked for an international company then who were opening bank accounts in the Channel Islands, where they had no business, for obvious reasons to me. My poorly-schooled in-laws were equally informed.
“frustrated by the fact that Matt Frei did not challenge any of this crap”
First I gave up on the BBC then Chanell 4. Now I’m left with Afshin Ritansi of RT and Mehdi Hassan of Al Jazeera for anything approaching challenging questioning of these mendacious creeps.
Worth watching Ritansi trying to get a response from Theresa May re Camaron’s illiterate ‘bunch of migrants’ phrase. See:http://www.mo4ch.com/camerons-bunch-of-migrants-slur-against-calais-refugees-branded-shameful/
We need to harry/hassle/harass these cheapskates and its about time we had more journalists worthy of the name-Ritansi left the BBC and has mentioned that his freedom to ask difficult questions was hindered by them
Thanks for head’s up – off to AJ/RT I will go!!
Having said that I just caught Mariana Mazzucato on Channel 4 despite the rather rude (shame on him) Jon Snow interrupting her all of the time.
Mazzucato was excellent – what a gal! I mean – WHAT A GAL! She got her points across – very focussed – but kept her cool – but very assertive.
If she is on the shadow chancellor’s advisory team then this is good news.
Mazzucato also mentioned the ‘n’ word: narrative – an alternative story to the Tory ‘we were bankrupted by Labour’ rhubarb as to how we got where we are and where this is leading to.
Good stuff.
Mariana us great
I am a big fan
The CCCTB will result in Brussels setting tax policy for the whole of the EU. I think you would struggle to sell that loss of sovereignty to the British public, particularly when Brexit is a live issue.
This is a massive gain for UK tax sovereignty: we can set our own rates with impunity knowing the tax base is secure
That is exactly what the British public want
And being unable/incapable/unwilling (take your pick) to enforce sovereignty by ensuring multinationals pay their correct contribution levels in taxes congruent with their economical activity within our so called sovereign borders does not count as loss of sovereignty?
Why is it that so many people are utterly incapable of thinking from themselves and need to have everything put in Janet and John terms for them? It’s not as if it’s hard and takes any amount of effort to figure it out. If a half wit like me can suss it anyone should be able to.
Please elaborate on why the UK government/tax authorities knows that unitary taxation is a more equitable system? Is there any evidence of?
Lets face it, if it were the panacea for all the perceived tax ills, many countries would have adopted it – the OECD member countries have expressly rejected it, the UN tax committee has also rejected it.
In fact, which countries have adopted UT or formulary apportionment for taxation of intentional transactions and MNCs.
See blog just published