So, I asked yesterday what was the thing being done wrong by the Fair Tax Mark:
– Silicon Six insist press focus on tax *provision* reported in P&L accounts.
– We say: hang on, let's focus on *cash* tax paid in cashflow statements.
– This isn't a semantic. The difference is $100 billion less over decade to date!!! https://t.co/S7r7McWgVe
— Fair Tax Mark (@FairTaxMark) December 2, 2019
You cannot – usefully at least – compare cash taxes paid with expected taxation because corporation tax is due in arrears. The amount of tax for the financial year 2016 is actually due in the financial year 2017 and so on. When companies are growing fast, something we’d agree the SV Six tend to do, this means that there always will be a low tax rate for we’d be comparing tax paid for 2016 with tax due for 2017, that latter being a much larger sum. It’s even possible to test this. When the profits stutter – as has happened to at least one of the companies – then the tax rate rises substantially as the tax payment for the earlier, more profitable, year is handed over in one where the tax due at headline rates falls.
Of course, their report isn’t available as yet so it’s not possible to quote them getting this wrong. But then sending the press release days before anyone can check the claims is proof perfect of flatulent tosspottery going on anyway, isn’t it?