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Rather than chase internet tax-cheats, the Tories opt to abolish Social Fund for poor

Internet tax dodgersOn the same day that it’s announced that the Government is scrapping the £180m a year last resort for the down-and-out and destitute after sudden financial crisis, a new survey shows that the big US internet companies operating in Britain have increased their UK sales last year in the UK by 18%, but paid even less tax to the UK Treasury than the year before,. And the Government has done nothing to stop this:

  • Apple UK made £1bn this country in 2011, but paid only £15.7m in tax; this last year their UK turnover rose £1.2bn, but their tax payments vanished to almost nothing – £1.7m, or precisely 0.1% of turnover.
  • Facebook made £20m in the UK in 2011 and paid an almost invisible £200,000 in tax; last year its turnover nearly doubled to £35m, but their tax payments to the UK shrivelled to nothing at all.
  • Taking all the 7 companies together – Apple UK, Google, Microsoft, eBay, Yahoo UK, Facebook UK, and Amazon UK – their turnover in the UK last year was just under £3bn, but their tax payments totalled just £51m, or 1.7% of turnover.

The Social Fund which is being wound up by the Tories – something even Mrs. Thatcher refused to do – is the last helpline for the poorest families in extreme distress, often brought on by an unexpected financial crisis. There has always been a last resort lifebelt in place for the hardest hit families ever since 1948, and its removal may quite likely cause an explosion when families, often including children, are left literally destitute. The Tories will no doubt argue that it’s part of the drive to make savings to reduce the budget deficit.

That claim won’t pass muster for two reasons. First, the deficit last year was £111bn, so cutting £180m will save 0.16% – an enormously painful and destructive cut for an utterly miniscule saving. Second, tackling the corporate tax cheats would be far fairer and produce vastly more money.

So why doesn’t the government get serious about industrial scale tax avoidance? Partly because HMRC has been significantly scaled back (and it started under Blair-Brown) as a result of industrial lobbying. And even more so because the banks are the biggest tax crooks of all, but the Tories get half their annual income each year from the finance sector, so Cameron and Osborne aren’t going to touch them with a bargepole.

Of course the companies will come up with their usual plaintive mantra that they’re complying with the tax laws. What they mean is they devise the most artificial contrivances they can think of to circumvent the weak and inadequate tax regulations that exist, knowing perfectly well that their practices are aggressively anti-social and contravene the national interest, but as long as they don’t actually fall foul of the letter of the law they have no interest in Britain whatever and will go on stuffing their own nest (as well as of course that of the Tories).

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