Tax avoidance by multinational companies such as Google, Starbucks and Amazon has sparked a public outcry. Now we can add Thames Water to the list. A recent poll commissioned by ActionAid found that 80% of people want the government to take tougher action. People are furious that while they are working hard and paying their fair share, big corporations are cheating the system to avoid paying theirs.
In 2012 Amazon paid just £2.4m of UK corporation tax on UK sales of £4.2bn – less than the £2.5m it received in government grants. Thames Water paid no corporation tax and pocketed a £5m credit from the Treasury. In an age of austerity, maximising government income is essential. Every pound lost through tax avoidance could have been spent on protecting public services – yet last year HM Revenue & Customs wrote off £5bn in tax as uncollectable. It estimates the overall \”tax gap\” at £32bn, while many tax experts believe the true figure is twice that.
Amazon didn\’t actually make a global profit in hte year under discussion. Companies are not taxed on their turnover but their profits. Starbucks was making a loss even after you add back in the royalties and the coffee beans. The £5 billion in tax uncollectable is people and companies going bankrupt. You know, just not having any money to pay their debts?
So the list of complaints isn\’t all that impressive. And here\’s the solutions:
There are a number of things the UK government could and should do now: name and shame companies and individuals, and open up the books of FTSE 100 companies to scrutiny; police the tax system more aggressively, by ensuring that HMRC has the right staff with the right skills to investigate and challenge the tax arrangements of multinational companies; simplify the tax code; deny public sector contracts to companies engaged in aggressive tax avoidance; draw up a new code of conduct to prevent big accountancy firms helping to government devise tax law and then advising clients how to get round it. These are just a few ideas to start with on the domestic front.
None of which would make even 1 pence of difference to the complaints being made.
I dunno about you but I would prefer that our legislators, even the ones I disagree with, would be able to come up with something that actually works on the problems that they perceive. But maybe I\’m just picky that way.
By the way, something interesting about Margaret, Lady Hodge\’s, trust for shares in the family company, Stemcor. Apparently it\’s not about dodging tax at all: for shares in a family company are not subject to inheritance tax. Although, to be honest, I\’m pretty sure they were back in the 80s when the trust was set up. But no matter.
In completely unrelated matters, do you recall what happened to Shirley Porter and her inherited money?