Tax Avoidance

[shane]

Seems to be a lot of people pressuring politicians to release their tax returns. Maybe I've got it wrong but whats the point? Surely that just shows us what taxes they pay rather than those they (alledgedly) don't...?

 

[Pyeman]

Would they though? Vodafone were among the companies that had been exposed for avoiding tax. They're not going to up sticks and leave if they're brought to heel because the markets they operate in here are profitable, even after paying their tax properly.

I don't entirely disagree with you. I'm sure many organisations would still choose to operate here even if there was a significant crack down on tax loopholes.

However my point was that there's a risk some companies would either remove their business from Britain altogether, or far more likely scale back their activity here if they feel Britain is no longer as competitive or profitable.

I have to admit, my knowledge of economics isn't sufficient to be able to predict a) how likely this is to happen and b) what effect it would have on our economy.

 

[JimJams]

Why would we give a shit though if they're not paying anything in? Job losses?

 

[Dave-Vale]

This is all linked to 788-790 Finchley Road. Dodgy as fuck.

Saw that Skinner was kicked out of Parliament because he called Cameron dodgy and refused to take the statement back.

 

[Alty]

This is all linked to 788-790 Finchley Road. Dodgy as fuck.

Saw that Skinner was kicked out of Parliament because he called Cameron dodgy and revised to take the statement back.

Skinner is a gobshite who'd rather give himself a buzz from one of his stupid rants than seek to achieve anything. Useless bastard.

 

[Tilbury]

I think he has said what most of us want to say.

 

[Techno Natch]

This is all linked to 788-790 Finchley Road. Dodgy as fuck.

Saw that Skinner was kicked out of Parliament because he called Cameron dodgy and refused to take the statement back.

Yet accusing someone that they sympathise with people that blow themselves up and commit mass murder is fine apparently.

 

[Aber gas]

Skinner is a gobshite who'd rather give himself a buzz from one of his stupid rants than seek to achieve anything. Useless bastard.

Skinner has been a MP for 46 years. During this time he has rarely missed a session, campaigned tirelessly on a number of issues normally focussed on equality and poverty. He's also been a welcome antidote to the conceited, pompous , casual corruption of successive governments.
He has an abrasive style which perhaps comes from not always being a politician but he's far from just a "gobshite" or a " stupid bastard "

 

[Martino Knockavelli]

That's as maybe, but that wasn't an antidote, was it, it was Punch to their Judy (or vice versa, I suppose, depending on your proclivities). A bad, vaudevillian three-hander, hams knowing and playing their appointed roles, the Mother of Parliaments™ as enervating spectacle...

 

[The Paranoid Pineapple]

Oh, I know I'm QUITE DREADFUL but I remain quite attached to the idea of parliament as ABSURD THEATRE (ok, shit pantomime in clapped-out seaside resort). If an unreconstructed Old Labour octogenarian started imbuing his Tory-bashing performance with nuance or sublety I would be quite AGHAST. There are just too few certainties in this life.

 

[Pyeman]

Why would we give a shit though if they're not paying anything in? Job losses?

My understanding, which admittedly is limited, is that they do contribute some tax, but not as much as they should.

I'm the first to admit that I don't have an in depth understanding of the economics of this situation, but it seems logical that if you insist companies pay more tax, and therefore make less profit, they might move some of their business to a location where they can make more profit.

 

[Dave-Vale]

http://m.huffpost.com/uk/entry/sir-...ax-row_uk_570bd729e4b0ae22c1e0307b?edition=uk

Fuck off, Alan Duncan you massive cockwomble.

Don't you fucking dare suggest that I do not care about providing for my family when I work 80 hour weeks plus overtime.

 

[Tilbury]

My understanding, which admittedly is limited, is that they do contribute some tax, but not as much as they should.

I'm the first to admit that I don't have an in depth understanding of the economics of this situation, but it seems logical that if you insist companies pay more tax, and therefore make less profit, they might move some of their business to a location where they can make more profit.

But they can't chose where the market is for them to sell their product. On anything they sell in this country, they should pay tax on here, under the laws which we set. Operating or basing themselves abroad should not change that or allow them to dilute it one bit.

 

[blade1889]

Think the lines between corporation tax v income tax have been blurred a bit here. To the best of my knowledge the Panama papers are about income tax as opposed to corporation tax.

Companies such as Starbucks have found legal loopholes to get around paying corporation tax and I agree with Tilbury that we should be enforcing tax charges on profits they make in the UK...if we enforce those they aren't going to pull out of the UK leaving their profitable coffee shops empty.

Taking Starbucks as a case study I think they were charging the UK stores a certain amount for coffee from a different Starbucks 'arm' in another country (with cheaper tax laws) that essentially meant they made no UK profits to pay tax on (in the accounts the profit making 'arm' of this adventure is the arm selling the coffee to the UK stores-presumably at absurd prices). How you stop something like that I'm not entirely sure as the law is clearly in place for valid reasons (it wouldn't be right to completely ignore what you pay for imported products when calculating profits for e.g. as it would annihilate plenty of 'good' businesses) but is obviously exploitable in its current form. So I'm not entirely sure of how you 'fix' corporation tax laws, especially cos I ain't no financial expert or lawyer!

For corporation tax my understanding is that it doesn't matter where you're based, if I had a company based in Israel and I lived in Hungary but my stores were in the UK I'd pay UK corporation tax on UK profits but my income tax would be paid in Hungary...so a company upping sticks to be based in another country shouldn't affect the corporation tax they should pay to the UK for their UK stores is my understanding.*

If Hungary suddenly had less favourable income tax laws than Canada so i moved there then i'd stop paying Hungarian income tax and start paying Canadian.

*happy to be proven wrong cos I certainly ain't no expert

 

[sl1k]

We have indeed veered off to big businesses but it's just as important a conversation to be had. Every government that's come into power has been aware of the massive holes in the tax system and have all been complicit in maintaining the status quo that loses the economy billions in revenue every year. It really is one rule for us and another for them. It's quite incredible how it's always been kept pretty much under the radar while the media are headlining 'benefit scroungers', immigrants etc so the working/middle class attention, suspicions and anger are diverted in every other direction but the elite at a time of 'tightening belts'.

 

[johnnytodd]

taxi drivers across this very country fiddle tax every day of the week

hang them all

 

[Tilbury]

For me big business is much clearer to see committing tax avoidance than individuals and I think the solution is easier to attain.
A plan today announced by the European Commission (it was in the pipe works pre-Panama papers) would allow us to publicly see where the biggest multinationals are making their money and where they are declaring the profits, on a country by country basis.
It almost definitely doesn't go far enough but I think it's a step in the right direction. A European wide response, as the biggest market in the world, could really force these companies to change the way in which they operate. But at the same time we can't leave it to government alone to bring these changes, as consumers we must all start to make more responsible choices.

 

[blade1889]

We have indeed veered off to big businesses but it's just as important a conversation to be had. Every government that's come into power has been aware of the massive holes in the tax system and have all been complicit in maintaining the status quo that loses the economy billions in revenue every year. It really is one rule for us and another for them. It's quite incredible how it's always been kept pretty much under the radar while the media are headlining 'benefit scroungers', immigrants etc so the working/middle class attention, suspicions and anger are diverted in every other direction but the elite at a time of 'tightening belts'.

Yeah I'm not disagreeing its not important...just seemed like the two were being confused somewhat but both are obviously very different.

I still wonder what the possible answer to stop them doing it is though. It will be interesting if/when what Tilbury mentions above happens...will the places the big multinationals declare tax have appropriate laws we can copy? Or will they just be the cheapest for tax because laws are impossible to enforce without messing it up for the smaller companies the laws were designed to protect?

I think the last point on consumers making responsible choices is probably the way I see working best...shame the companies that avoid paying tax here and watch as they squirm to want to keep their customers here happy, hopefully going down the route Starbucks now have and agreeing to pay tax here.

 

[AFCB_Mark]

I think the last point on consumers making responsible choices is probably the way I see working best...shame the companies that avoid paying tax here and watch as they squirm to want to keep their customers here happy, hopefully going down the route Starbucks now have and agreeing to pay tax here.

This is the crucial bit IMHO anyway. Because for however much effort you put into writing tax law...
a) Somebody cleverer than you is going to create a scheme that specifically dances around the wording of your law.
b) In today's world they can just bugger off and setup elsewhere as a last resort. Even if you somehow setup one global tax system Amazon's Jeff Bezos would probably register them on the Moon or something.

Customers have the power, even more so than governments. It'd keep the newspaper industry in business as well...

 

[The Paranoid Pineapple]

I don't think consumers have an awful lot of power when all the multinationals are at it. There's an awful, awful lot more that those in power could be doing to clamp down on corporate tax avoidance. Let's not let them off the hook.

 

[blade1889]

I don't think consumers have an awful lot of power when all the multinationals are at it. There's an awful, awful lot more that those in power could be doing to clamp down on corporate tax avoidance. Let's not let them off the hook.

Its easy to say they could do an awful lot more without knowing the ins and outs though. If the EC thing comes off we'll learn a lot more, not least in how other countries fair relative to ours and what laws they (potentially) have that we should.

Consumers, at least for some companies, do hold a lot of power. Starbucks paid 8mill in tax last year which I think was equal to the combined total of the previous 14 years...to my knowledge there was no law change involved, just bad publicity. From what I can tell the EC ruled part of their tax structures unlawful but the UK change was voluntary.

 

[Tilbury]

This is the crucial bit IMHO anyway. Because for however much effort you put into writing tax law...
a) Somebody cleverer than you is going to create a scheme that specifically dances around the wording of your law.
b) In today's world they can just bugger off and setup elsewhere as a last resort. Even if you somehow setup one global tax system Amazon's Jeff Bezos would probably register them on the Moon or something.

Customers have the power, even more so than governments. It'd keep the newspaper industry in business as well...

I agree it would be impossible to legislate for all potential future tax avoidance schemes, so make it simple. A law which makes it illegal to not pay full corporation tax on profits made in the UK.

 

[blade1889]

I agree it would be impossible to legislate for all potential future tax avoidance schemes, so make it simple. A law which makes it illegal to not pay full corporation tax on profits made in the UK.

So you make sure your profits aren't in the UK..which I think is the current get-around for Starbucks, amazon etc.!?

 

[Pyeman]

But they can't chose where the market is for them to sell their product. On anything they sell in this country, they should pay tax on here, under the laws which we set. Operating or basing themselves abroad should not change that or allow them to dilute it one bit.

I certainly agree with you in principle. I wasn't necessarily advocating letting companies get away with tax avoidance, merely asking a question about the potential consequences if we do tighten the relevant laws.

Based on what you've said, am I right in thinking there's no real economic risk to forcing corporations to pay more tax?

 

[Aber gas]

So you make sure your profits aren't in the UK..which I think is the current get-around for Starbucks, amazon etc.!?

So you outlaw profit shifting ( not sure that's the correct term) and make sure profits made in the uk are taxed correctly .

 

[SALTIRE]

Anyone know about this. A friend of mine has an accountant who has managed to get him on a lower tax band despite him being in the higher tax bracket. Perhaps I should report him if its illegal, he is a bit of a cocky dick!

 

[blade1889]

So you outlaw profit shifting ( not sure that's the correct term) and make sure profits made in the uk are taxed correctly .

But the 'profit shifting' is not exactly easy to legislate against, so far as I can tell. My arguments on corporation tax aren't that we should let the avoidance happen, I'm just not sure its feasible, let alone as easy as 'outlaw x/y/z'.

Starbucks sell the UK company coffee at a price, meaning they make no UK profit, from a separate 'arm' in another country that is essentially its own company. So it's far more subtle than them just saying 'im shifting profits to pay tax here instead', although that's what they are essentially doing. Furthermore how do you prevent that without messing-up 'fair' companies?

If I'm a small, independent business, that imports my goods I'd potentially be put out of business if the price of my imported goods weren't taken into account when calculating the profits I should pay tax on...which is the same thing Starbucks exploited. And I'm not sure how we can make a law to allow for one and not the other.

Potentially we could set-up a separate government office that looks into companies that make less than 10% profit on their turnover. And a discretionary body looks into each individual case and decides whether it is 'fair' or not? Starbucks (for e.g.) cant shift their turnover around between countries so that could, potentially, work Imo. The argument then becomes if setting up this new system and enforcing it each year (along with the likely appeals that would happen), is actually worth it-do you make enough in tax to pay for it?

 

[JimJams]

Just make import duty and tax on coffee in line with whatever they're not paying. Currently it's at 0% so they're just taking advantage of that. Take that away and they're fucked. That only screws Starbucks though from shafting the tax system and would also then screw some genuine tax paying companies who import coffee. But maybe then figure into it a way of levelling it out for genuine businesses who aren't trying to fuck the country.

 

[blade1889]

Just make import duty and tax on coffee in line with whatever they're not paying. Currently it's at 0% so they're just taking advantage of that. Take that away and they're fucked. That only screws Starbucks though from shafting the tax system and would also then screw some genuine tax paying companies who import coffee. But maybe then figure into it a way of levelling it out for genuine businesses who aren't trying to fuck the country.

That's essentially my point, there may well be ways to stop Starbucks screwing the system but not without screwing over the genuine companies. It ain't an easy job, eh!?

 

[Aber gas]

But the 'profit shifting' is not exactly easy to legislate against, so far as I can tell. My arguments on corporation tax aren't that we should let the avoidance happen, I'm just not sure its feasible, let alone as easy as 'outlaw x/y/z'.

Starbucks sell the UK company coffee at a price, meaning they make no UK profit, from a separate 'arm' in another country that is essentially its own company. So it's far more subtle than them just saying 'im shifting profits to pay tax here instead', although that's what they are essentially doing. Furthermore how do you prevent that without messing-up 'fair' companies?

If I'm a small, independent business, that imports my goods I'd potentially be put out of business if the price of my imported goods weren't taken into account when calculating the profits I should pay tax on...which is the same thing Starbucks exploited. And I'm not sure how we can make a law to allow for one and not the other.

Potentially we could set-up a separate government office that looks into companies that make less than 10% profit on their turnover. And a discretionary body looks into each individual case and decides whether it is 'fair' or not? Starbucks (for e.g.) cant shift their turnover around between countries so that could, potentially, work Imo. The argument then becomes if setting up this new system and enforcing it each year (along with the likely appeals that would happen), is actually worth it-do you make enough in tax to pay for it?

I think this is a sensible way forward. By closely looking into the way corporations use base erosion and profit shifting especially the use of "paper" or " shelf " departments the government could get a better understanding of the evasion( fraud) involved. It won't be easy and it would require a great deal of cooperation between governments but I'd much prefer that to just giving up and letting them get away with it.