Sunday, 19 May 2013

Finally, policies from Ed Miliband

And tax-related as well:
But, in a major policy announcement, Miliband says a Labour government would engender a more responsible capitalism in the UK by changing those rules with or without international agreement. Miliband would: 
■ Pursue a new global system where multinationals must publish their revenues, profits and other key corporate information useful to revenue authorities in each country in which they operate. 
■ Force multinationals to publish such information in the UK even if international agreement cannot be found on the issue, as they do in Denmark. 
■ Make it a legal requirement for multinationals operating in the UK to disclose details of any tax avoidance schemes they are using globally. 
■ Seek reforms to "transfer pricing" rules to stop companies from shuffling money to other parts of their firm based in tax havens in return for spurious services. 
■ Open up the ownership of companies sited in Britain's tax havens to the UK revenue authorities, but also seek to allow developing countries access to such information.
That's all well and good, but this is about transparency rather than trying to raise revenues to plug a black hole in the budget. Transfer pricing transactions can already be challenged by HMRC, so unless Labour plan to erect trade barriers or somehow disadvantage intragroup transactions over those between unrelated parties, then no change here.

What none of this does is deal with the likes of Amazon, long complained about by the likes of bricks and mortar retailers, UK Uncut hippies, and Margaret Hodge at the PAC, for their tax arrangements. As a brief reminder, Amazon trades with the rest of Europe from Luxembourg, with orders fulfilled from local warehouses. It can do that because of the EU Single Market and a long-standing (in the UK at least) double taxation agreement that excludes warehouses as creating permanent establishment.

Now there is plenty of talk from Miliband, Cameron, and others about fairness and morality in taxation, and how big business must pay its way; this is all a distraction, and Eric Schmidt, Google Chairman, when interviewed in the Observer today summed it up nicely as:
"Politicians – not companies – set the rules."
For the politicians, the big business bashing has been useful in diverting blame from themselves. UK Uncut, probably unwittingly, do them massive favours by haranguing Vodafone shop staff rather than standing outside of George Osbourne's house demanding that he change the law. They are useful idiots and are tolerated, perhaps even welcomed.

If the finger of blame starts shifting away from the companies in question and pointing towards the politicians, then there will be calls for them to do something. Unfortunately for them, they can't and it's not for technical reasons...

The Tories are squabbling over referendums on our continued membership of the EU, and losing votes to Ukip. Risking going against public opinion but rather more united on the matter, Labour and the Lib-Dems both see a bright future with the EU and could do without making a hard sell even more difficult. There's evidence out there that they've also lost votes to Ukip. To then come out and say that the reason they can't tax the likes of Amazon or Google, is because of Single Market, a key tenet of the whole EU project, will only drive an already Eurosceptic public further in that direction.

The message to the voters would be simple; we can't do anything because of the EU, and at the moment, it's a vote loser and therefore a political impossibility to come out with such a statement.

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