The following press release comes from Christian Aid but is worth sharing in full:
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More than four in five (85 per cent) British adults say tax avoidance by large companies is morally wrong even if it's legal, according to a new ComRes poll for Christian Aid and ActionAid.
The poll is published ahead of the government's Autumn Statement, which is expected to include new measures against tax avoidance, including a ‘Google tax'.
The poll found that four in five Britons (80 per cent) agree that large companies in the UK can avoid tax too easily.
People are also worried about tax avoidance in the world's poorer countries. Four out of five British adults (78 per cent) say it's important to them that large companies pay their fair share of tax in developing countries and three-quarters (73 per cent) say the next UK government should legislate to discourage UK companies from avoiding tax in these countries.
The poll was conducted in November by the research agency ComRes. It found that just one in five people (20 per cent) believe political parties have gone far enough in their promises to tackle tax avoidance by large companies.
Anger about tax avoidance was shared across supporters of all parties. Of people who expressed a voting intention, 85 per cent of LibDem and UKIP supporters, 88 per cent of Labour supporters and 90 per cent of Conservative supporters all agreeing that tax avoidance is morally wrong even if it is legal.
Toby Quantrill, Principal Economic Justice Adviser at Christian Aid, said:“This poll clearly shows mass public opposition to tax avoidance by large companies, both in the UK and in developing countries. It doesn't matter which political party people support — they all are saying the same thing: that politicians of all parties are still not doing enough to stop tax dodging.”
He added: “There is much more the UK could do to reduce the problem of tax dodging by multinationals. It should make good on commitments to create a public registry of company owners and ensure that the UK-controlled tax havens (the Overseas Territories and Crown Dependencies) follow this lead. We can also get ahead of the game globally by ensuring that UK companies are required to report separately on their economic activities in every country in which they operate, so as to reveal any artificial operations that may be used to reduce their global tax bills.”
ActionAid Tax Policy Adviser Diarmid O'Sullivan said: “It is not just the UK that is affected by tax avoidance. The world's poorest countries lose billions of dollars a year to tax dodging. This is money that could otherwise be used to pay for schools, hospitals and other essential public services.
“That's why we are encouraging politicians of all parties to move past halfway measures and promise strong and comprehensive action, ahead of the next election to put an end to tax dodging.”
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The Guardian has more on this here.
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I think it would be helpful to the cause of raising public disapproval of tax avoidance if we understood more clearly what happens to the revenue that should have been collected. Personally I only have the vaguest awareness of Tax Haven activity – but what do the avoiders actually do with cash, not just sit on it surely?
Management pay
And cash piles
Plus, maybe, increased dividends
Yes, sorry to raise a cycnical point, but I wonder how many of the 85% pay their builders cash in hand. And buy clothes which are made in sweatshops in Asia. And invest in UK companies (“what they do is morally wrong, but that share price is going up and I’m not missing out!”). A few of them I would hazard to guess.
Graham –
You’re absolutely right. People do adopt habits which support morally abhorrent practices, often because there’s no alternative. Clothes have to be bought, homes have to be repaired… I’m sorta lost on the investment issue, but you get the idea.
Now we’ve established that you’re correct, what exactly is your point? Because if it’s something as crass and stupid as “Well, most people deal with tax avoiders, so we shouldn’t blame or pursue large companies who actually avoid tax”, well…
There are simply too many logical fallacies, let alone moral questions, attached to that position to debate.
I’ll limit my response to simply saying this – “you are wrong”.
So maybe 15% of adults actually understand that in a competitive marketplace tax ultimately ends up on prices – so more tax for companies is more tax for the individual.
Except there is no evidence to support that claim – which contravenes all market theory unless you assume universal monopolistic pricing, in itself, an interesting assumption.
Amazon are currently making about 0.5% margin – if you take 1% of their turnover in tax they are not going to be making a -0.5% margin – they are going to add 1% to prices to keep their 0.5% margin (or else cut costs elsewhere, and it sure as hell won’t be from the executives making the decisions pay packet).
This does not contravene economic theory. Anecdotally this is exactly what my company did when a new tax was recently introduced by an eastern European government, we introduced what we call ‘domain pricing’ as in the likes of ‘.pl’ or ‘.lt’ are charged a different price to ‘co.uk’ in order prevent us making a loss in that market (the prices also include other costs such as payment processing and legal fees associated with complying with Government regulation) – factoring all costs into price is very basic economic theory.
One case dies not prove a law
And Amazon are playing a monopolists game
Factoring all costs into price is still very basic economic theory.
Tax is not a cost
It is a distribution
Tax is certainly a cost – are we now arguing semantics over logic?
Look at this http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11269523/Autumn-Statement-Help-for-High-Street-shopping-in-fight-with-online-retailers.html
And note the third paragraph:
“Any changes to the 400-year-old business rates system raise the prospect of prices in the shops falling as firms face less punishing charges.”
Less tax will lead to falling prices (^^ common sense journalistic ‘evidence to support that claim’) – putting more tax on consumer goods means higher prices for the consumer. The poorest in society push more of their wages towards consumables than the rich – therefore taxes on businesses like these in super competitive marketplaces most adversely affect the poor. You’re only possible argument against this is that the marketplace isn’t competitive, which it demonstrably is with Amazon’s tiny margins. If we are looking for egalitarianism there are plenty of other taxes which haven’t failed like the Corporation tax that we could consider to get around this (for instance progressive VAT on luxury goods) which would affect the rich rather than the poorest.
Respectfully, the whole raison d’etre of this blog (outside of self promotion) is redundant without the bogeyman of Corporation Tax avoidance which is why you refuse to concede it’s a red herring (too late to back track without losing face now). There are more efficient alternatives which would actually generate revenue for the state if someone had the foresight to change the rules of the system rather than constantly lecture on the morals of its subjects.
I await a 3 word reply which ignores every one of my points – or this post disappearing forever (you’ve already threatened someone else in this thread with censorship).
Business rates are not called business tax for a reason: they are a charge for services
I was referring to corporation tax and you referred to a different issue
That is called clutching at straws
Geearkay…I’m certainly not endorsing that. Just an observation about how absurd these polls are…it’s basically saying “Honest and moral Joe Public has spoken (and there’s not a hint of hypocrisy in his moralising)”. Although I know most people on this site will be violently opposed to this, my view is as follows: morality has no part to play in taxation (and specifically how much tax people or companies pay), none whatsoever. It is, and should be, rules based – rules have to govern how much you have to pay to the state. Continually warbling on about morality is intellectually feeble because you simply cannot define fairness, “the right amount” or any of these other vague concepts attached to the morality tax debate. This poll indicates the reality – companies are acting within the rules and so they are paying tax due under the rules. If you don’t like it, the answer is not to harp on about morality, it is to change the rules. So no, I am not saying that just because Joe Public has double standards that companies should be let off. But they are not being let off, they are opearting within the reules, it’s just that you don’t like the rules. So change the rules rather than cogitating about the philosophy of morality and ethics in taxation.
If they were operating in the rules there would be no need for the IECD BEPS project. Stop talking nonsense.
They have arbitraged round the rules and only fools pretend otherwise
Can you identify for me which ‘rule’ Amazon (for example) have broken?
Isn’t the BEPS project (as well as being a home for well paid tax professionals) an attempt to re-define the rules?
Abuse of the concept of permanent establishment in ways never envisaged when it was created
They gaven’t broken it
They have wilfully used it in unintended ways
The world has changed – that is why there is the BEPS project.
The treaty governs the relationship between UL and Lux in this regard. The OECD isn’t a policeman.
The fact that the rules are being examined in this manner shows, unqualified, that Amazon are operating within the current framework.
Stop pretending otherwise.
I am not pretending anything
I am saying companies are working outside the framework because the ways they can now work did not anticipate current business methods
It is ludicrous to pretend otherwise
Graham –
The relevance of the poll is not based upon how much tax a company pays, it’s about public perception of the morality of it. Your position dismisses that opinion. Bold move, if I may say so.
In other words, you say morality has no place in this argument. 85% of those polled disagree with you.
As for changing the rules, I believe we’re trying. Richard mentioned BEPS… CbyC is another tool for defeating arbitrage… you’re right, the system isn’t perfect, but there’s why change the law if you don’t have a reason to? We are trying to change the laws, so what is the reason?In this case, it’s that the current legislation makes it too easily possible to achieve a result which is morally repugnant to the majority. So, yes… morality not only has a place in determining how much tax a company or individual pays, it’s the sole driver behind it.
Think about it. The only reason we have any law is to throw the moral views of a society into sharp relief. You simply can’t have laws without ethics.
I respectfully submit that your legislative cart is before your moral horse on this one. Please reconsider.
My experience of all of this is that it is rife with hypocricy. Companies (who are made of people) and people working individually all try to get out of paying tax when they can or if they know how (especially the latter). I find that this happens in the mostly more affluent middle class whose services and assets invite this sort of thing. I know someone for example who disappears for 6 months of the year to get his non-dom tax break. I mean what a stupid rule – someone who can get a lifetime’s benefit from his or her taxable assets or income but just because they ‘interrupt’ their residence here they can claim that they are not enjoying any perceived or real benefits. Codswallop. So yes the rule should be changed or tightened up because it is being reinterpreted in a way that it was never envisaged to do.
I think (and agree) with Richard though – the morality of it has to be discussed because increasingly, the same people who do this sort of thing are also the same people who will complain about the ‘state of the country’ at dinner parties and make no connection with their own behaviour around tax and their perceptions that things are falling apart.
This points to a decoupling by such people from the concept and the benefits that an effective taxation system brings to all of us. I lay responsibility for this at the feet of neo-lib politicians who have somehow convinced people that they can have low taxes (no taxes) and still expect to have ‘world class’ public infrastructure. For example, to hear your average Tory speak, you’d think that roads, rail and sewage systems magically appeared out of nature or by the Seventh day. The point is, without tax, there would be no infrastructure at all or at least very little.
These are the same people who think there is no such thing as society and then moan about anti-social behaviour
“And Amazon are playing a monopolists game”
Richard, you’ve previoulsy exhibited a rather poor knowledge of the internet and internet businesses and I’m afraid you are doing it again.
Amazon are nowhere near a monopoly. Virtually every large business now operates on-line (Dixons, Argos, Tesco, John lewis etc etc etc) and there are any number of B2B and B2C internet rivals to Amazon, not least Ali Baba and Blinkbox.
And what is a monopolists’ game? Almost certainly to increase prices to take advantage of its position and yet Amazon’s stated policy is to operate at virtually a break-even price structure.
So Amazon isn’t a monopoly and isn’t abusing its market position by inflating prices.
“One case dies not prove a law”
Typing error aside, will you remember that the next time you use a single example of what you claim to be wrong doing as ‘proof’ that the whole tax system is flawed?
As someone who created a dot.com I know something about net business
And I can identify monopolistic activity
And I can also spot an astro-turfer
We’re in the era of permanent low margins – Amazon can not just monopolise, then increase their margins now because every other company has already adjusted to fight them at these margins. If they try to abuse the market like Tesco did with spurious promotions (money off this – extra hidden margin on this) then it won’t take long for a LIDL to appear.
Ultimately the consumer is the winner here – I was living in eastern Europe for a few years and we had no big multinationals – Amazon wouldn’t deliver. The prices from the local shops were 30% higher than I seen online. I used to take a flight to London before Christmas and fill a suitcase full stuff for the kids – all while the middle class local shop owners lived in big houses whilst selling at inflated prices. Believe me I had no moral qualms passing these guys over and going straight to a low-margin corporation.
Respectfully, that is your fantasy
Richard
‘Abuse of the concept of permanent establishment in ways never envisaged when it was created’
But there is a treaty between the UK and Luxembourg which specifically state that ‘a warehouse does not a permanent establishment make’ – signed in 1965, but never altered, repealed etc. Plus the Single Market says more or less the same thing.
So what was envisaged in these treaties?
A warehouse
Not a distance selling operation via the net
As you well know
You are wasting my time – and will be blocked
Some of the comments above ignore certain facts about taxation. For instance the comment regarding companies passing on any additional taxation to customers neglects the reality that the current situation creates a very unlevel playing field, with small native companies who do not enjoy the luxury of six figure salary tax lawyers to fight their case left unable to compete. Given that these small businesses invest a far higher proportion of their capital receipts into local economies, this is doubly damaging. Also ignored is that the rampant consumerism that is the life-blood of the Internet giants is, from an environmental position, quite simply unsustainable.
I would also make a point regarding the comments about the suggested moral turpitude of ‘Joe Public ‘.
Growing up in the 1960’s the expression ‘moral authority’ was still in common parlance. It is a term which seems to have all but disappeared these days. Little wonder, though, when so many of our leaders and representatives have proven themselves to be self-serving and downright dishonest. (I would venture to suggest that while the MP’s expenses scandal angered many of us, very few were shocked by it. It simply confirmed what most people had believed for a long time). The moral tone of a nation is set from above and as long as we have a Parliament that is unwilling or unable to engage in a practical and moral discursive about taxation popular behaviour will not change. It certainly will not change if our rulers cannot demonstrate that taxation is a just principle justly applied. And therein, of course, lies the rub.
There is huge appetite in this country for tax justice which is ignored by our politicians, commentators and the media alike.
I, for one, would happily vote for the part that passes legislation to the effect that only companies that hold the ‘fair tax mark’ can tender for Government contracts. I think I am probably not alone.
Richard in an earlier reply you have argued that business rates are not taxes but rather charges for services. This is incorrect from the framework of National Accounts and Public Sector Finance measures both of which are governed from the principles within the European System of Accounts 2010 (ESA10).
There is a key distinction between taxes and charges for goods and services. ESA10 4.14 defines taxes on production and imports as follows;
” taxes on production and imports (D.2)consist of compulsory, unrequited payments, in cash or in kind, which are levied by general government,or by the institutions of the European Union, in respect of the production and importation of goods and services, the employment of labour, the ownership or use of land, buildings or other assets used in production. Such taxes are payable irrespective of profits made.”
Business rates clearly meet the definition of a tax on production as they are compulsory and unrequited. It is of course true to say that the tax funds many goods and services from which businesses benefit and without which they could not operate but these are not directly requited. There is no direct link between the charge and the use. Were they service charges it would also be possible to directly link the revenue to the provision of a specific service, in the same way that local government charging for entry to a lesiure centre can. This is clearly not the case with business rates which form a quasi local government consolidated fund.
In both the National Accounts and the Public Sector Finances business rates are classified as taxes on production. Were they classified as service charges or sales then they would actually directly contribute to GDP as market output. This would fail to reflect the economic reality of the situation.
Pedantry is always the resort of the right winger seeking to suppress debate
I have never disputed business rates are a cost
Next?
The issue was not whether business rates are a cost or not but whether they are a tax or a service charge. The dividing line between the two is incredibly important for many of the issues on which this blog and your research focuses.
In order to compile any metric in the tax system you must first define the boundary of what is taxation. I cannot believe that you truly think this is a pedantic issue.
The main point of my post was to say that business rates clearly are within the boundary of taxation. Something which I cannot believe you disagree with? From the perspective of the definition of a tax there is no difference between business rates and any of the other transactions explicitly called taxes (income, council, capital gains , inheritance). All are compulsory, unrequited payments. Again with the emphasis being that they are not directly requited, though all are of course indirectly requited.
I fail to see how you can conclude from anything I have said that I am a rightwinger or that I am seeking to supress debate. Though I shall remember the thought and smile to myself when I am next stood in the cold at an anti-austerity protest.
p.s Despite this disagreement your book is still on my Christmas list with the explicit instructions that Father Christmas does not source it from Amazon.
Business rates have always been treated as an occupant cost
I am not sure what the issue is as a result
Storms and teacups come to mind
Enjoy the book…..
Amazon would have everyone believe that all purchases from Amazon.co.uk (or the equivalent sites in other EU countries) are actually purchases from a company in Luxembourg.
The UK operations are just a fulfilment / logistics / warehousing operation.
Here’s the thing – where are the movements in prices due to exchange rate fluctuations you’d expect to see if this were the case? (I agree, these are not an issue in the Eurozone, before someone points this out) Goods on amazon.co.uk are priced in pounds, but has anyone noticed impacts from changes in the value of the pound over the period when Amazon has been structured in this way? I’d guess not (as when the pound devalued against the Euro, Amazon’s suppoesdly Luxembourg operation would have become suddenly much more expensive than its UK competitors, but it would be an interesting piece of work to investigate this.
I call bullshit on the idea that these goods are sold in Luxembourg – Amazon.co.uk is a UK based retailer, with UK operations, UK servers etc etc…
My two cents