Thursday, 11 October 2012

Killing off the debate

An article in student rag the Independent has convinced me that any sensible debate about personal and company taxation is over:
Facebook was accused last night of "disingenuous and immoral" tax avoidance after a new analysis of its UK business suggested the social networking giant paid just £238,000 in corporation tax in Britain last year.
Sound familiar? Well here we go again...
Although industry experts estimate the company made £175m in revenue from its UK businesses last year, Facebook is able to avoid paying millions in corporation tax by diverting most of its sales via Ireland.
Annual accounts published yesterday at Companies House showed Facebook UK Limited declared turnover of £20.4m using the entirely legal scheme. Yet Enders Analysis, an independent research firm, has estimated Facebook's likely UK sales at £175m last year as the world's biggest social networking website has continued to attract advertisers.
So here we have the EU Single Market in action, you know, free movement of goods, people, capital and services. It isn't a scheme, it isn't tax avoidance, the company is complying with tax law exactly as the UK and EU parliaments intended.
Labour MP John Mann, who sits on the Treasury Committee, criticised the willingness of web based companies to avoid paying UK tax. "It's disingenuous and immoral for these hugely profitable companies not to be paying tax in the countries where they are based and make a profit," he said. 
Now Mann really is a fucking idiot and this would be funny if he wasn't in a position of power and influence. Facebook's Europe HQ is based in Ireland as is Google's. Amazon's is based in Luxembourg. That is where the sales are made, where the majority of profits will be, and where they will pay the majority of their corporation tax assuming that any is due.
Mr Mann has suggested implementing a "traffic fee" which would charge companies that are predominantly internet based from being able to use and profit from British infrastructure.
 Mann clearly doesn't understand the internet either, the bellend.

What's killed off the debate then? Well tax can be pretty dry but scandal generally isn't, indeed it makes good story so a headline of "Corporate giant dodges £6B tax" sells more papers than "Long running tax dispute settled favourably to the taxpayer". Hence we now see fairly frequent articles like the one above, not just in the left-leaning papers but in the Telegraph and Mail too. You can lay the blame for this with the UK Uncuts and Richard Murphys of this world propagating the myths that the richest people and big business don't pay the tax they believe due and that there is a tax gap roughly equaling the deficit of around £125B that HMRC have been slack in collecting. That companies are now being attacked for complying with the law and not even trying to bend it is their fault. HMRC have recently tried to explain away tax settlements, their calculation of the tax gap, and taxation on multinational companies but as mentioned above, it's not news and few are listening. Until that changes then expect more articles like the one in the Indy today and worse, the likes of John Mann basing policy decisions on this misinformation, as starting from an incorrect position will probably mean you end up with the wrong result...

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