Monday, 26 November 2012

Tax avoidance ...

My most recent article for the Cornish Guardian focused on the tax avoidance presently being practiced by large companies. It was as follows:

There is an understandable and widespread anger because a range of large global companies are paying little or no corporation tax on profits made in the United Kingdom.

According to an investigation by the news agency Reuters, US coffee giant Starbucks generated sales of £398 million in the UK last year but paid no corporation tax on their profits at all.

The study found that the company had reported losses in each of the last five years and therefore could justify paying no corporation tax. But their executives have also described their UK business as both "successful" and “profitable.”

The reality is that they have ensured they made “no profits" through payments to offshore companies also owned by Starbucks.

Reuters meanwhile found that Google managed sales of $4 billion in the UK but, despite having a profit margin of 33%, paid tax of just £3.4 million. Google avoids UK tax by steering sales through an Irish accounting unit.

Likewise, Amazon managed sales of over $5 billion but paid less than £1 million in tax. It avoids tax through an arrangement with an office based in Luxembourg.

I am pleased that company executives from Starbucks, Google and Amazon were recently dragged in front of the Public Accounts Committee to give evidence to MPs.

But at this session, and throughout the media, there has been one continuing refrain. Company after company has justified its actions by stating that what they were doing was "unquestionably legal.”

Maybe so, but I prefer to agree with the Chair of the Public Accounts Committee. She said she was “not accusing” the companies of acting illegally, but did accuse them of being “immoral.”

I welcome the fact that MPs are finally waking up to the fact that they need to "beef up action against tax avoidance” and to tackle the "systematic abuse" of the system by certain large firms.

But I also feel extremely angry that the Coalition has, in the recent past, found time to agree a tax cut for millionaires and to push the ridiculous notion of a “Pasty Tax,” but has so far done very little to tackle widespread tax avoidance by some large multinationals.

This Government does need to take action and to work with other European partners to change laws relating to taxation.

It is wrong that the “tax avoidance industry” can continue to limit revenues to the Treasury, reducing what can be spent on vital public services, while giving multinational companies an unfair advantage over smaller firms and businesses.

All companies should make a fair and proportionate contribution in terms of tax.

1 comment:

Lance said...

Have to watch Panorama this evening -