Should we all pay our taxes?
It is well known that the UK has suffered over the last 5 years since the global financial crisis and that we continue to experience significant funding problems.
There is a big debate at the moment regarding the payment, or non-payment, of UK corporation tax by Google, Amazon, Starbucks and others.
The argument
There is a lot of rhetoric being spouted, but it’s my understanding that no laws have been broken.
We have a lot of politicians and journalists using this NON breaking of the law as a crusade against the big guys who, it is intimated, are making all the money and keeping the rest of us poor. It might be said that many of these politicians and newspapers have their names being kept in the limelight as the promoters of this particular crusade!
As no laws have been broken (we are told), it is a range of moral and ethical arguments that are being put forward. The arguments seem to be saying that if you are a successful business able to pay for very good tax advice and structure your model in such a way that minimises your tax burden you should be vilified because the rest of the country is finding it tough at the moment!
Is this right?
The advent of Social Media has allowed the little guy to make lots of protests about very valuable and relevant issues over the past few years that in the past would never have been able to generate enough momentum to get past page 7 of the Daily Bugle. Without this, the perpetrators of misdeeds and crimes such as MPs expenses, phone hacking, institutional child abuse, hospital performance et al would never have been brought to justice.
This tax issue is one too far for me.
It is a director’s duty to shareholders to maximise profits and minimse outgoings, including tax, in fulfilling their fiduciary duty – all of which has to be within the law!
Self-righteous commentary – or hypocrisy?
Now I would argue that many of the people who are trying to crucify the likes of Google, may have done one of the following:
- Paid a tradesman in cash and not asked for a receipt (VAT?)
- Been paid in cash for services rendered (PAYE and NIC?)
- Used company resources for their own benefit (Benefit in Kind?)
- Maybe not declared every last bit of income on their tax return (Tax)
- Had some income paid into an offshore account (Tax?)
- Stretched an expense claim further than they should (Stealing?)
- Had the benefit of some stationery from their workplace (Pilferage?)
Some of the people criticising Google may have done one of these. The difference is that all of these actions are breaking the law, and anyone who has ever done any of these knows that!
Summary
If it’s a moral issue, it’s like saying if you earn £100, but you only need £50, you should give the rest of it to a worthy cause.
If what Google is doing is unacceptable to us all let’s petition to change the law. We live in the ultimate democracy after all – to get this changed shouldn’t be too much of a problem. Should it?
Eric Schmidt, Google’s executive chairman, recently said, ‘I don’t think companies should decide what tax policies should be, governments should’. He went on to say ‘Multinational companies can not try to obey the spirit of the law when they operate in many jurisdictions and have a duty to their shareholders’.
Do we really want to force these large businesses out of the UK and lose all those jobs that have been created? They do after all pay NIC on each of their employees, who in turn pay their own PAYE and NIC and have increased cash available to spend in the economy.
He who casts the first stone……
As always, if you have any comments or views you would like to share on this subject, please contact me at john.thompson@transcapital.co.uk or on 0845 689 8750.
Image by: Chris Winfield