Big business paid 18% less corporation tax last year

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The FT reports the latest issue of PWC's adventure in Mickey Mouse accounting otherwise known as the Total Tax Contribution this morning. This is the exercise that PWC encourage where FTSE 100 companies add up everything they can possibly find that is paid to government, down to and including the TV licence, to suggest that they pay the maximum tax possible without consideration of any benefit that they might get for it.

But the headlines are interesting. Vanesa Houlder for the FT reports:

Britain’s biggest businesses paid more in rates and national insurance contributions than corporation tax last year, marking a historic shift in the way companies are taxed.

Reduced profitability in the oil, gas and retail sectors and a cut in the rate levied drove the corporation tax paid by the 100 Group of the largest UK businesses down by nearly 18 per cent to £4.3bn.

As the Tax Justice Network and I have long argued, this is not accident: this is design. Over the last fifteen years or so there has been relentless pressure on government to shift the burden of tax off companies and onto labour. The NIC increase is part of this, as are the corporation tax cuts, although I accept rates may not be: their impact depends on the state of the High Street. The consequence of the shift is, however, marked:

[Big business] corporate tax bills have more than halved during the past decade, while their payments of other taxes have more than doubled.

Back in 2005, every pound paid in corporation tax was matched by another paid in other taxes. Last year, for every pound of corporation tax, businesses paid £4.46 in other taxes.

The difficulty is that because that 'other tax' includes NIC, which is always effectively a cost to employees and not employers, this presentation is false. And in the light of that this comment is just farcical:

Andrew Bonfield, chairman of the 100 Group Tax Committee, said disclosing the full extent of companies’ tax contributions would help rebalance the debate on corporate tax. “There is a perception that British companies are not paying their fair share. That is a perception we are trying to correct.”

No, Andrew. What this survey says, whether you like it or not, is that you are getting away with paying far too little. There is no other interpretation. And what is more this is forecast to continue until 2020 at least. And nothing PWC can concoct is going to change that. The pressure will continue - because what you're admitting is that you're not paying your way. And some of us aren't happy about that.