Yes, Prem Sikka is an idiot

Sikka, who is undertaking a review of HMRC for Labour, added that he believed the deal raised “more questions than answers”. He said: “We need to know how they came to this figure of £130m. The UK corporation tax rate in 2005 was 30% and is now 20%.

“We could do lots of averages but let us be generous and assume that the average rate for the period is 25%. That would mean that on its estimated £7.2bn UK profit Google should have paid corporation tax of £1.8bn. At best, it paid about £200m. That is an estimated shortfall of £1.6bn – lots of nurses and teachers, and probably bigger than the yield from the bedroom tax.

But Google didn’t have a £7.2 billion UK profit. That’s actually the point.

Google Eire did.

14 thoughts on “Yes, Prem Sikka is an idiot”

  1. How many people paid the bedroom tax? As far as I recall it is people receiving less money in benefits rather than paying HMRC.

  2. “How many people paid the bedroom tax? As far as I recall it is people receiving less money in benefits rather than paying HMRC.”

    Spot on: Housing benefit decreases, and the tenant pays the difference to the landlord.

  3. I wonder which course would be more useless.

    An accounting degree taught by Prof Sikka or an economics degree taught by Prof Murphy.

  4. The bedroom tax was basically a lie from the start. The government didn’t change anything much, the councils did. It only affects people negatively in areas with ample housing stock where the councils are buggering around, putting higher-than-market rents on properties that are supposed to be subsidised.

  5. @dave
    “The bedroom tax was basically a lie from the start. The government didn’t change anything much, the councils did.”

    Well, the government cut housing benefit to underoccupied properties, leaving the shortfall to be made up by the tenant. It left the option to LA’s to set up a hardship fund for those tenants for which under occupation ( by the gvts standard) was a necessity.

    ” It only affects people negatively in areas with ample housing stock where the councils are buggering around, putting higher-than-market rents on properties that are supposed to be subsidised.”

    There’s a few issues at play here: the rent charged (social, affordable or market), the stock levels and availability and who the landlord is.

    The spare room subsidy only applies to social housing. HA’s and LA’s both treat it in a similar way though- if you have extra rooms that were bedrooms that aren’t used, any benefits you receive towards housing are scared back. Anecdote suggests that some LA’s ameliorate that loss of benefits by grants easier than others.

    Rents charged in social housing are either social (which is calculated by government mandated standards), affordable (usually 80% of market rent) or market (which is an estimate, compared to other similar properties. None are/should be over market rents. Sometimes a service charge is applied for cleaning of communal areas of gardening, which may push the total bill over, but tbh, that’s usually only possible in market rented propertirs, and there’s very few of those in the housing stock.

    As to stock levels- I can’t think of anywhere in England where there’s a surplus of social housing. By any measure, social housing, like most goods being sold below market prices, are in high demand. And the supply is fixed (at least in the short term- a 10k unit HA tends to develop somewhere between 200 and 500 new homes a year)

    So, in short: I’m not sure what you are getting at.

  6. Oh- I suppose you could be talking about shared ownership, but there the point is to offer people a share In the capital of the property and charge rent on the balance. I suppose that could be more than a social rent, but the purpose of that product is to let a tenant participate in capital growth, not to provide low cost housing.

  7. Bloke in Costa Rica

    “We could do lots of averages but let us be generous and assume that the average rate for the period is 25%”

    No. Fuck off. Let’s not do some bloke-in-a-pub, stands-to-reason, back-of-a-fag-packet guesstimate. Let’s let the people who write the law, the people who interpret the law, and the people who apply the law come to an agreement as to whether the correct amount of tax has been paid. Is that too much to ask, Sikka, you demagogic little leech?

  8. John square

    “So, in short: I’m not sure what you are getting at.”

    Usually, with Dave, it’s the jooz.

  9. Has anyone like Big Dick done any calculations as to the tax that would be lost by the adoption of these rules?

    Y’know, the profits that UK companies pay tax on but are earned overseas?

    No, thought not.

    But the Rest of the World may just be a bit of a bigger market than the UK for lots of UK companies, shurely?

  10. As a UK resident, if I buy advertising space in the Irish Times, the Irish Times must pay UK corporation tax. Otherwise, they’re leaching off the UK taxpayer! foam froth gibber!!

    Google Eire is an, well duh, Irish company. As in, incorporated in Ireland. As in, it has its legal existance in Ireland. As in, if it was a human person, it would be an Irish resident. Consequently, I expect it to pay corporation taxes in Ireland. I can’t see how this is so difficult to understand.

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