Corbyn doesn’t understand how difficult this is going to be

Mr Corbyn indicated plans for the tax rise as he attacked UK companies including Boots over alleged tax avoidance. Boots immediately rejected Mr Corbyn’s accusations.
“They are cutting corporation tax from 20 to 18 per cent, doing very little about companies that offshore their head offices – Boots and others – to Switzerland and other places to pay lower tax,” he said. “Where’s the narrative of this Government in trying to protect corporation tax levels all across Europe.
“We have to start with that. Do we then chase down tax havens and chase down tax evasion? Yes we do. If a company is operating in Britain – as is Boots and many others – making good business, making a lot of money in Britain, they should pay tax on what they earn in Britain. Not by some piece of sophistry move it to Switzerland, Lichtenstein or Luxembourg.”

That’s simply not the way that corporation tax works nor has it ever worked that way. And more importantly, EU rules (which apply to EEA) mean that you can’t make it work that way either.

Not that that is actually the problem with Boots anyway. It’s the effect of a leveraged buyout that lowered their tax bills, not their domicile so much.

Corbyn’s suffering here from the Murphaloon’s ignorance of that wider picture. See! SEE! Tax being avoided, stop it! Without understanding all of the stuff that surrounds the issue.

16 thoughts on “Corbyn doesn’t understand how difficult this is going to be”

  1. A $12 billion takeover by KKR and a merger with a US group is a “piece of sophistry”? Now, I’ve heard it all.

    Facts are, that prior to the acquisition and later merger, merger, Boots Alliance was a UK headquartered group with operations in 27 countries, headquartered in the UK, so that all the offshore income was eventually taed in the UK. After the merger, it is a US headquartered group (not using offshore inversion to avoid US tax), with the non U.S. operations held by a Swiss holding company and not the former UK parent. Al the offshore income eventually flows to the US. Corbyn wants to tax that? Strewth!

  2. I despair. I tend to ask people who spout this sort of cr*p what they think the “Single European Market” means.

    It then tends to go very quiet.

    Another minor detail is that they seem to forget that if this rule applied, we would get nothing from UK companies operating abroad, as no country is going to sign a heads-I-win tails-you-lose tax treaty

  3. “Another minor detail is that they seem to forget that if this rule applied, we would get nothing from UK companies operating abroad, as no country is going to sign a heads-I-win tails-you-lose tax treaty”

    Reciprocity can be a bitch. Be careful what you wish for.

    Funny how all these supposed internationalists are so inward-looking and focussed on the UK – it’s chauvanistic and selfish, even.

  4. I wish I could understand why the Left are so obsessed with Corporation tax and why they are unable to understand how it operates. Boots in the UK pays, inter alia, business rates on all its premises, VAT, PAYE for its employees plus national insurance contributions, all of which dwarf its corporation tax bill. And, of course, it pays corporation tax on the profits it makes through trading in the UK. The Left seems to want to claim the taxes due to other jurisdictions, which seems digustingly imperialistic to me.

  5. @diogenes,

    I think they are unaware how little corp tax is paid compared to others (which they would then probably see as a failure).

    Possibly they also view it as a “sin tax” cos businesses are eeeeevil profiteers or something.

  6. It would appear my initial intellingence on Murphy was correct but that he has turned the job down in Mcdonnell’s team.

    http://www.telegraph.co.uk/finance/economics/11895902/Architect-of-Jeremy-Corbyns-economic-policies-turns-down-top-Labour-job.html

    Could this mean:

    A/ He doesn’t think democracy is the way to go within the existing system – if you look at existing Courageous States (Zimbabwe, North Korea and Venezuela) violent overthrow of the existing order would seem to be the best bet.

    B/ He hasn’t been offered enough money given that his taking the job would contravene the terms of his ’employment’ by the various charities who have replaced the Joseph Rowntree Trust as his main source of income?

    Theories please on a postcard to ‘The Right honorable Lord Murphy’

    As to the post in question – well you can’t expect someone being advised by Murphy, who has now been holed below the waterline in effect by the revelation he can’t even count, to have the first clue about tax. The ‘Joy of Tax’ arrival on Thursday really is likely to be an epoch-shattering display of total ignorance.

  7. V_P

    “He said that were Mr McDonnell to become Chancellor, the top 1pc of earners would be the focus for greater taxes.
    The “glut of savings is concentrated in the top 1pc”, he said, emphasising that any tax raid would not be concentrated on middle income workers and savers. “Wwhat we do need is sensible protection of pension rights,” he added.”

    From which we can gather that Murphy is in the top 2% of earner, but not the top 1%, and has a nice pension.

  8. Van-patten – the answer is B. I predicted this a few days ago. Ritchie makes about £100-120k from academia, grants, and lobbying for unions and fake charities, and there is no way Labour could come close to that. I suspect he might have agreed to a pay cut in exchange for a peerage (i.e. with generous expenses paid for by the taxpayer) but that hasn’t happened. He’ll now be pitching for roles under a future Labour government.

  9. Bloke in North Dorset

    Diogenes,

    “I wish I could understand why the Left are so obsessed with Corporation tax and why they are unable to understand how it operates. Boots in the UK pays, inter alia, business rates on all its premises, VAT, PAYE for its employees plus national insurance contributions, all of which dwarf its corporation tax bill. ”

    Indeed. Tick has a post up with a very good graph that shows just how little Corporation taxes (and taxes on the highest earners) raises in comparison to other taxes:https://flipchartfairytales.wordpress.com/2015/09/28/labour-and-the-fiscal-charter/

    The link on there to this post is worth a read as well: https://colinrtalbot.wordpress.com/2015/08/17/playing-fantasy-fiscal-policy-jeremy-corbyns-tax-policy/

  10. BiND

    Good links, but look at the comments on Rick’s site…one Florence demonstrates the inability of the Left to comprehend data or analysis that offends their presuppositions about the world, despite the evidence carefuly compiled for her:

    Florence says:
    28 September, 2015 at 10:00 am

    The only taxation discussed here is personal taxation, and individual tax dodgers. How about corporate taxation, curently the lowest in the western economies, and corporate tax dodging? These are sources for large sums. Plus there is no recognition of the Tobin Rax. This again raises many small amounts. The insistence on considering personal taxation is proof that the neocon ideology has penetrated deep,deep, into the economist thinking patterns

    Just which is the stupid party?

  11. The simplest way to stop tax-payers avoiding tax is to increase the tax rates. I avoid paying tax on 80% of my income purely and simply due to obeying the law. Increase the tax rates and there will be less tax that I avoid. Force me to take up smoking (ok, just buying smokes) and I’ll cease to avoid tobacco taxes. Force me to buy loads of booze and I’ll cease to avoid alcohol taxes as well.

  12. “I’d rather be back in my garden shed thinking big thoughts about the big issues facing the economy.”

    That reads to me that he’s afraid his critics might be right. Prefers to pontificate rather than put up.

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