Ignorant tossers on tax

At The Observer of course.

The examples are everywhere. In 2011, Google paid just £6m in corporation tax on revenues of £2.5bn in the UK. Its chairman rightly said that they \”comply with the law\”. The problem is that our law has not found a way of adequately taxing companies such as Google. In the meantime, such firms use every conceivable mechanism to avoid paying tax. They then offer a risible justification, such as Schmidt did when he said that Google employs 2,000 people in Britain.

Not good enough. Google employs people – try making money without doing that — and makes billions in the process, but puts practically nothing back into the country from which it harvests £2.5bn annually. Nothing to help finance the education of the next 2,000 employees from this country. Nothing to help maintain the physical infrastructure of a country where it does business. Nothing to help subsidise the cultural riches that make this country an attractive place to live and work. Nothing to help pay for the judicial, legal and police institutions that make the country a safe and civil place to do business.

We as a society – and that includes business behemoths such as Google – have responsibilities to deal fairly with communities with whom we trade. The pioneers of benevolent capitalism recognised their obligations to help build a decent society from which they profited.

They\’re measuring the benefit a company provides by the amount of tax that it pays. Which really is being an ignorant tosser. The value a company provides is in the products that the company provides.

Which would you prefer? No Google and no tax or Google and no tax? Sure, there\’s also Google and tax: but the answer to the first binary choice will tell us that the existence of Google, being able to use it in the UK, whether as a search engine or as an advertising medium, has value.

And that value is substantial: which is why so many people use it.

We can make this simpler: Amazon produces very little tax revenue because Amazon makes, deliberately, very little in the way of profits. The money coming in is reinvested on making the company serve our (perceived) needs in an even better manner. So whatever the tax laws we\’re not going to get any tax revenue out of Amazon, simply because there are no global profits to go demand a slice of.

Excellent: now, what would you prefer? Amazon and no tax or no Amazon and no tax?

Quite, the value to us all of Amazon\’s existence is rather larger than whatever tax is or is not paid.

And we can make this even simpler again. The NHS provides absolutely no corporation tax revenue at all. Yet all would argue that there\’s a value in having the NHS. Thus value to the society must come from something other than the corporation tax paid by that activity.

QED.

This whole idea that we should measure contribution to society purely through tax revenue is people being ignorant tossers.

10 comments on “Ignorant tossers on tax

  1. Does Google really generate £2.5bn of revenue in the UK?

    Tim adds: It wouldn’t surprise me if that’s the amount that UK based people and companies pay to Google, no. But they pay that to Google Ireland. So whether that’s revenue generated in the UK or not is an interesting question.

  2. I’ve been on that thread trying to point out some places where people are wrong, or muddle-headed. Its all gone quiet there now.

    In the end though I think the grandstanding by Margaret Hodge in committee has mis-informed a lot of people.

    Do we expect Rolls Royce to pay taxes on profits in all the countries where they sell jet engines? If not, why should we expect an Irish company (Google), a Luxembourg company (Amazon) or a Swiss/Dutch company (Starbucks) to pay tax on profits made in the UK?

  3. Mr Osborne likes the Banks to pay big bonuses so that he gets the tax, this is despite the fact that they do not pay much corporation tax when they have lost money.

  4. Exactly. How much time was saved by me googling for a technical question today and someone having the answer, and a bit of pre-built code to do the job?

    We spend around

  5. Exactly. How much time was saved by me googling for a technical question today and someone having the answer, and a bit of pre-built code to do the job?

    We spend around 1bn on libraries, most of which are used for people reading Catherine Cookson novels (at an average cost over 3 quid/loan). Anyone in a job, or for school homework ever use one rather than t’internet?

    Then we could consider how much we spend on culture each year, none of which has as much cultural impact as a podgy Korean bloke or Inception Cat do on YouTube.

  6. “This whole idea that we should measure contribution to society purely through tax revenue is people being ignorant tossers.”

    Yes, but it is being logically consistent. If they believe that the State knows how to spend money and the people do not, then State spending will be the only effective contribution to society.

  7. >Does Google really generate £2.5bn of revenue in the UK?

    Probably much more than that.

    2012 Q2 from advertising alone in the UK Was

  8. Nothing boils my blood more than politicians (and others) using the word “economy” when they mean “government”. This is a subset of that nonsense. I often hear politicans saying the UK economy is too expensive to run, hence we need lots of government cuts. When what they really mean is that the UK government is too expensive for the economy to pay for, hence they need to make cuts.

    The economy is something completely seperate from the government and you will find that it is often doing quite fine even when the government is not. Greece is a good example. I suspect people there are still buying food and living thier lives (albeit not as well as they otherwise might) but the economy (grey, black etc) is still functioning. It is the government which is bankrupt.

    This bullshit about measuring the contribution to the “economy” in terms of tax is a subset of this muddled thinking. As tim points out the contribution to the UK economy by google and amazon is substantial. The contribution to the exchequer is a seperate issue and if they want to increase that then the answer it to change the Law.

    Oh thats right they cant it is an EU/tax treaty thingy. Well there is an answer to that as well, I am sure Nigel Farage can point it out to them.

    Fucking muppets the lot of them.

    Sorry but I seem to have run out of my non-angry pills.

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