Cash rich internet search engine Google, the American big tech global organisation with fingers in many pies these days, is under the cosh as being a major UK tax avoider, who doesn’t pay their fair whack on corporation tax (levied on profits, but with a law that has become a ‘piece of elastic’). However that is a fact that has been widely known about for many years, hasn’t it? You might ask then why it has suddenly surfaced now at such a public level, and filling the newspapers, television, and radio with controversy?
What has happened, is that Tory Chancellor George Osborne has screwed-up things for Google, hasn’t he? Their reputation has taken a tumble. Instead of keeping stum, he had to boast last week, as a major success and a ‘victory’ for the taxpayer (after a six year investigation and audit indeed), about an extraordinarily dubious deal that had been struck with Google over tax, didn’t he? He has kicked over a hornets’ nest with this one, which will embarrass No 10 and his party. Apart from facing a barrage of criticism of the deal, which Osborne has been dodging scrutiny of in the Commons, he isn’t out of the woods that easy, as he will probably be facing a number of political inquiries over this, and not least one by the EU’s competition commissioner, who is expected to include past deals as well as those currently being negotiating with other multinational companies – good luck George, eh?
The unbelievable sweetheart deal, involves Goole paying, for them, a pocket change derisory £130m in back tax covering a full decade (probably at least a tenth or more of the right sum) – a deal has also been set for them paying future tax indeed. The Government is currently flatly refusing though to divulge what is the real percentage rate tax (or how it has been calculated) this multinational is paying for the past bill (analysts calculate it to be a dreadfully low three percent), nor will it say what rate will be paid in the future (again analysts say it is going to be also similarly extremely low). The ‘excuse’ for such non-transparency is citing taxpayer ‘confidentiality’, but pull the other one – what right to secrecy is there if a company hasn’t been paying their rightful taxes, eh?
It is known that they have offices in some forty places, so other countries like France are also on Google’s case (and they are likely to get a hit of threefold the British payment there, while employing thousands of less people and getting substantially less revenue – similarly Italy are after a billion pounds, to boot). For whatever reason, nobody here has ever questioned Google’s assertion that it does not have a permanent establishment in this Country. Google employ well over two thousand staff in the UK, and in Buckingham Palace Road London, they have a state of the art Head Office to die for, as well as ‘at least’ two other offices in Central London and one in Manchester, They are apparently planning to build a new massive, billion pound, HQ in Kings Cross, to house double the staff. Would YOU call that not having an enduring base in the UK then, eh?
On TV, Google’s VP Head of Communications indeed squirmed a bit (and wouldn’t disclose the UK profit – he couldn’t recall you see?), but defended the company against accusations of not paying due taxes by countering that they simply obey the UK rules. There is no reason to doubt him. Anyone in charge of a major company if told by their clever expensive accountants and lawyers that the tax legislation does not ‘require’ them to pay tax would they voluntarily donate large sums to the taxman? Google transfers its profits via the Republic of Ireland to be squirreled away the Bahamas tax haven. You might wonder why the money doesn’t go home to the United States? Because back in America they would be charged forty percent tax, no less (our rate is only half that).
The real problem here surely is the complicated, outdated, inadequate, tax rules that have so many holes that means it leaks like a sieve, allowing the savvy to find loophole after loophole to exploit (to the tune of some five BILLION pounds?). The accountable tax authorities HMRC are charged with enforcing the law – but do they do it though, or just try to ignore it when problems are reported to them? Why doesn’t the Government Treasury also employ clever accountants who can simplify our tax legislation, let us get paid, and recognise a flaw when they see one, so that it is dealt with long before it can be exploited? But they won’t, and simply moan incessantly about things and surreptitiously rubbish firms, who avoid paying unnecessary tax, don’t they?
Google is not the only well known company by a long chalk using the deficiencies of the tax regime, is it? No, they are just the tip of the iceberg, with countless other multinational corporations liable for only a fraction of what ought to accrue, and in fact one in four of our top companies, while some even get tax credits, are paying no corporation tax whatsoever, do they? Companies like Netflix with some five million UK subscribers generating two hundred million pounds of revenue, all being booked overseas, of course, then there is the massive might and ever increasing shopping sales of Amazon, or ‘never makes a profit’ coffee chain Starbucks, or successful internet market place seller eBay paying very little on eight hundred million of UK sales, or worldwide second biggest (behind China) mobile phone giant Vodafone, apparently not liable to pay corporation tax at all, when it is said have owed six BILLION pounds in taxes (well disputed) on German generated money parked and temporally stashed away in Luxembourg half a dozen years ago, getting away with coming up with only a fifth of that for CFC to be paid in ‘installments’ (though the only thing certain is that they didn’t pay their tax due voluntarily), or ‘kill you with cancer’ British American Tobacco paying absolutely zero on five billion pound profit, or another one paying nothing, sweet as sugar Tate & Lyle making nearly four million, or little known mining giant Vedanta not paying anything on over a billion pounds of profits (which is paid in India), or one of the money grabbers energy companies npower contributing nothing for some three years in the recent past, to name a few. Companies are announcing many BILLIONS in profits yet are being allowing by the system, to pay a few millions in tax- how do they still get away with it, eh? Do you say good luck to them?
Further UK anti-tax avoidance proposals are sadly inadequate to dam the torrent of multinational corporations failing to pay their taxes The money we are losing in tax revenue could be usefully ploughed into the cash strapped failing NHS, and collapsing sectors like steel making, coalmining, and the like (or even help clear our massive national debt?). Not only that, but the tax authorities have a cosy extraordinary relationship with both the huge culprit accountancy firms we should be at war with, as well as the biggest multinationals themselves [including Google, within twenty months before their deal, with at least twenty-four meetings with Tory government ministers (seventeen of them including Chancellor, Paymaster General, Civil Society, Policy, Cabinet Office, Business, Skills, Culture, Business Manager, Party Chairman, Communities, Foreign Office, Home Secretary, Trade, International Development, Work & Pensions, Health, some more than once – what was that all about then?), or others with officials] – is it any wonder that we lose tax revenue, eh?
[No point in our feeling disappointment about the current unbelievable level of tax evasion, just disappointment about the Governments inaction to create effective tax regulation and its ability to enforce it, eh?]