Polly on Tax Avoidance

You\’ve really got to stop listening to Richard Murphy you know, he\’s making you look very foolish.

"Check out the recent report The Missing Billions from tax expert Richard Murphy, for the TUC, who identified £25bn of tax lost from the exchequer. He lists major companies whose tax payments don\’t begin to reflect the size of business and profits they seem to command in Britain. Note the tiny tax paid by BSkyB, Hanson, and Legal & General. It may be legal but that\’s not the point: profitable companies shouldn\’t be able to shuffle assets to pay less tax. Where is the public shame at "socially responsible" companies avoiding the spirit of the law? British stamp-duty payers may gnash their teeth over British Land Plc paying little tax, quite legally, when land values soared. What of easyJet\’s Stelios Haji-Ioannou, who said: "I have no UK income to be taxed in the UK"?

Since Tesco has murmured to other newspapers that it may sue the Guardian, to warn others against following our story – though no writ has arrived – let\’s stress that these low-tax paying habits are all very, very legal, all arranged by highly paid lawyers from highly respected world-beating City law firms. They set the seal on avoidance not just as OK, but as a good or even as a necessary business practice. (Incidentally, humbler Morrisons pays proportionately much more tax than Tesco). Vince Cable, the Liberal Democrat shadow chancellor, looking down this list of underpaying companies, is now asking why. "

Tesco\’s effective tax rate last year was 20% when the headline tax rate is 30%. This is what is used as clear evidence that tax avoidance is going on.

The Guardian Media Group\’s effective tax rate last year (please, go and look up your own accounts to check this) was 16% calculated the same way.

So who are the tax avoiding spivs now?

This is the problem with using Murphy\’s figures: he starts from such wildly unrealistic assumptions that by the time we get to his conclusions, you, the guardians of all that is left liberal and holy, are, well, to use your own words, Murphy is

"branding us spivs, swindlers, cheats and cads."

I can\’t help thinking that this is something of an own goal really.

8 thoughts on “Polly on Tax Avoidance”

  1. Really she shouldn’t worry her dear little head about it. Numbers aren’t really the sort of mumsy thing that one can expect a girl to get right, are they? Especially when she’s a daft amd malevolent old bat.

  2. If you pay money to the government, that is called ‘tax’. According to the Grauniad’s world view, if you pay less than profits x 30% that’s avoidance.

    But there is such a thing as ‘negative tax’, call it subsidies, tax breaks, corporate welfare, whatever.

    I wonder, how would the G’s true tax bill look if you were to minus off all the hundreds of millions it gets for advertising these crappy state sector jobs? Probably negative. So they are the biggest tax avoiders of all, really.

  3. I knew she’d weigh in on this eventually…

    Like I said before, you’d think that just one sub, editor, or legal would have thought, “you know, maybe we should just have a tiny, little look at our own accounts before putting this to press…”

    Here’s another fun statistic for you:

    Tescos retained profit 2007: £1.9bn
    Total director’s pay: £19.6m
    Dir’s pay as % of profit – 1%

    Guardian Group profit 2007: £64m
    Total dir’s pay: £5.4m
    Dir’s pay as % of profit: 8.4%

    See – statistics are FUN!

  4. “Incidentally, humbler Morrisons pays proportionately much more tax than Tesco”

    I trust Morrisons’ shareholders are now calling their CFO and asking WTF is going on? He is clearly incomptenet if he is paying more tax than he needs to.

  5. I trust Morrisons’ shareholders are now calling their CFO and asking WTF is going on? He is clearly incomptenet if he is paying more tax than he needs to.

    According to Murphy’s Law that makes Morrisons and their accountants ethical.

  6. Having had a run-in with Herr Murphy he’s taken to removing things that discomfit him. For the blog record:

    “So, eventually you just give up and delete commentary you find difficult to answer.

    I suppose we can hardly expect you to believe in the free exchange of views when you so clearly believe in confiscatory taxation.”

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