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When are we going to get serious about corporation tax?

The debate about tax avoidance has got to move on, and it will move on now that we’ve got a debate on it in the House on 7 January – and not in Westminster Hall, in the Chamber. There has been a huge swell of public anger against the Starbucks, the Googles, the Amazons, etc., who are paying less than 1%, or even less than 0.1%, of their gross profits made on sales in the UK – but nothing happens.

It bears a close similarity to the phone-hacking saga: the evidence of hacking was overhelming, the police were sitting on huge quantities of incriminating material, yet nothing happened because of the cosy relationship between Scotland Yard and News International. In the same way nothing happens over tax avoidance because the cosy relationship between the corporate multi-nationals and the Tory party. Of course we are told that the big companies are diligent in complying with the tax laws (though they go to enormouse effort and expense to circumvent them by whatever artificial contrivance they can), and of course we are told that the government is cracking down hard on tax avoidance which they say is ‘morally repugnant’ (though they are actually themselves opening up huge tax loopholes for multinationals in tax havens). The cant is breathtaking.

If the government were genuinely serious about tackling tax avoidance, it is obvious what needs to be done. In order to block transfer pricing which allows multinationals to be taxed in a low tax jurisdiction of their own choice, which costs the British treasury tens of billions every year, the government would require all multinational companies to report on their assets, sales and profits country by country so that they were taxed correctly in every country they operated.

It would require all nominee account holders in tax havens to be identified. It would require tax havens, at least those which are UK-controlled Overseas Territories or Crown Dependencies, to provide automatically to the relevant tax authorities in foreign countries details of accounts held by citizens of those countries so that they could be properly taxed, whether corporate of individual citizens.

Tax havens which refused to comply would be told that unless they did so, all transactions in future involving those tax havens would be treated as illegal.

In other words, the problem is not that nothing can be done (of course it can) or that everything possible is already being done (of course it isn’t). The real problem is that neither the government nor the corporates have the slightest intention of carrying through an iota of reform because the present situation suits both sides perfectly – the corporates retain their ill-earned profits and the government through ‘light touch’ regulation keeps their corporate donations to win the next election.


  1. Jon Williams says:

    The Government is scared multi-nationals will leave the UK, so will happily receive lower tax receipts, even none in one instance! It’s a question of who runs the UK: MPs or multi-nationals?

  2. You can get serious about corporation tax any time you like. However, that will require you and other campaigners to start telling the truth about it. For starters, the claim above about “paying less than 0.1% of their gross profits” is a nonsense. Corporation tax isn’t paid on gross profits; it’s paid on taxable profits. And even then it’s only paid on the profits of businesses that have a permanent establishment.

    You cannot demand a serious debate while your own claims remain so childish and divorced from reality. It’s of course your prerogative to suggest that the law be changed. But you demolish your own case by proving time and time again that you have no concept of what the law is *now*.

  3. SadButMadLad says:

    If Meacher is serious about the tax situation then he should do some research. Corp tax is taxable profits of companies permanently based here. It is NOT on gross profits.

    Also, if he so keen on getting companies to pay more tax then CHANGE THE LAW. He is a politician and that is his job. It is not his job to go around raising up a mob to go around forcing companies to oay more tax than thry legally have to.

  4. Tyreseal says:

    Thanks for taking the time to discuss this, I feel strongly about it and really like learning more on this matter. If possible, as you gain expertise, would you mind updating your blog with more details? It is extremely helpful for me.
    Tyreseal , Tyreseal Global Tyreseal

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