The Daily Mail is a paper I usually read to see what the other side of the debate is thinking.
But then this week it shows a dimension that is surprising. It did a survey on student protests and found (if I recall correctly) that 76% of people supported the students.
This morning it goes a step further and publishes one of the lengthiest reviews of the causes for the UK Uncut tax protests in the major pres to date (although I suspect there will be a lot more this weekend if the number of interviews I am doing is anything to go by). And the analysis is good, as you would expect from anything written by Michael Gillard.
The headline is typical Mail:
To service Britain's terrifying debt, the middle classes are paying ever more tax. Yet a group of the country's biggest firms are moving offshore - and denying the UK exchequer hundreds of millions
I do, of course, disagree on the debt issue, but the message on tax is quite simply right. This is what is happening. The conclusion is also clear:
So the shameless strategy of tax avoidance continues in the world of big business, and the losers are the millions of hard-pressed taxpayers who are left to take up the slack.
Topshop and Vodafone will have repaired the shop windows that were smashed in the riots last week. Their reputations may take rather longer to mend.
This is also right: the tax avoidance is shameless, ordinary people are paying, UK Uncut is quite right to protest and their message will have impact.
This is the fastest developing alternative narrative there is to the cuts. I’m delighted it’s happening and I have no doubt it will continue. For those in doubt, these are the locations where protests are planned on Saturday:
That’s amazing for a new group with almost no infrastructure.
It shows the importance of the message — and the message here is right.
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In reality, is the situation of Boots, for example, no different from that of a foreign company trading within the UK? In that case, it will pay tax on domestic profits in the UK.
I don’t really see what the problem is with Boots, unless the Daily Mail wants to bar foreigners from trading in the UK.
The PSG is sometimes portrayed as the Uriah Heep of the Tax Research UK blog ingratiating itself to Mr. Murphy by agreeing with every word he prints/says.
But what’s not to like about …
* Putting an end to tax fraud and manipulation
* Putting an end to Offshore Tax Havens
* Helping to alleviate world poverty
Poverty is rapidly spreading across the Western world — including in your town! – and the PSG is proud to “ever so umbly” support Mr Murphy in achieving his objectives in 2011.
A very merry Christmas everyone!
@JayPee
The problem with Boots, as I understand it, is that the company was acquired by private equity , is mired with debt which I believe can still be set against profits and so will reduce its corporation tax liability.
@Teresa Harding
You are right
In essence the Uk is used to tax subsidies the cost of buying the company as if that were a trading expense
No doubt the interest is also then paid tax free to a tax haven – a double loss
Speaking of the Daily Mail, they had a surprising piece about the NHS reforms in the summer:
“His [Andrew Lansley]reported showpiece proposal is to hand control of budgets and commissioning to GPs, with power taken away from primary care trusts and strategic health authorities.”
“Oh dear. The last thing that’s needed right now is yet another massive reorganisation, which may well incur even greater costs.”
“It also surely runs the risk of fragmenting the service, since GPs will try to look after their own clinical patch rather than the general good.”
The author? Melanie Phillips.
http://www.dailymail.co.uk/debate/article-1293933/MELANIE-PHILLIPS-Radical-reform-Hardly-new-NHS-plans-plain-half-baked.html
Hi Richard,
I’ve been enjoying your blog recently even if I don’t necessarily agree with all of the politics aspects.
However, I do agree that it is a concern for the UK from the point of view of state revenue loss that companies are taking this kind of action.
I think that it’s a bit unfortunate that at the moment we see articles like that in the Mail describing the ‘shameless strategy of tax avoidance’, and also that there are public protests against good companies that are big employers in the UK.
I think we expect too much from companies. Companies are after all, simply artificial constructs that provide a convenient way of carrying out a particular type of business. Their job is to generate profits for their shareholders. They will try to minimise tax, within the laws of the countries they operate in. This is not ‘shameless’, rather it is perfectly rational behaviour, though directors must weigh up whether they are taking undue risks with their actions.
I don’t think there’s much mileage in trying to stop offshoring by protest and bad publicity. Instead we should understand the motivations of businesses and try and come up with ways of making UK taxation simpler to administer, ensure that loopholes aren’t left in legislation, ensure that legislation is crystal clear and not open to interpretation, and introduce an anti-avoidance rule.
We should not be trying to force other countries to amend their taxation rates simply because we feel that we need to tax businesses more than they do: that is their prerogative. Instead we can look at other ways of making sure that our tax regime doesn’t push businesses away.
Finally, just to touch on the point about debt: when businesses are purchased with external debt, this isn’t primarily about tax avoidance. Buyers are aiming to leverage the buying power of their capital. After all, the interest bill reduces their income returns in the short term. Also, the interest paid doesn’t magically disappear: it is paid to lenders, who will then be subject to taxation on that interest income.
I listened to the Today programme about the UKUNCUT protests. Steve Davis from the Institute of Economic Affairs appeared to be arguing that the tax system should be fairer so that everyone can legally avoid paying the tax they should. They must be rattled if that is the best defence they can muster