Avoiding Tax Avoidance

Tax is a taxing subject and designing fair taxes is problematical. There is plenty of tax avoidance around, but what is tax avoidance? A person who gives a sum of money to his or her child will hope to avoid Inheritance tax, if they survive seven years. Opening an ISA account avoids some income tax. Donating to a charity avoids some income tax in many circumstances. Tax avoidance is simply arranging your affairs to minimise tax liability within the law. Some claim that a taxpayer should act within the spirit of the law, but I find it hard to understand the spirit of the law as a general principle. What seems to me to be obvious is that tax should be fair.

Ordinary people have little chance of lawfully avoiding tax, and any tax they may avoid does not really amount to more than the proverbial hill of beans. The big tax avoiders are the multinational corporations.

They use some ways of avoiding tax that sound morally questionable. For example, large companies often arrange their affairs so as to pay small amounts of tax in a low tax jurisdiction, like Luxembourg, (that stalwart of the European Union)even though they earn large amounts of revenue in many high tax jurisdictions. Digital companies, like Apple, Facebook and Google have great expertise in doing this. Trading companies like Amazon and Starbucks also have expertise. For example, Google will pay £49.3 million in Corporation Tax to the UK government this year on a profit of £200 million, even though the value of its UK sales was nearly £6 billion. Many regard this state of affairs as unfair, and if taxes are to be imposed all taxpayers must feel that the tax system is fair.

In the UK Amazon records profits of just £34.4 million and paid £11.9 million in tax. It seems that Amazon does not pay all of its UK staff a living wage. Many of these staff will have their income from Amazon supplement by benefits collected from taxes paid by UK taxpayers, who in effect are subsiding Amazon through the benefits system. That does not sound fair.

The solution is to avoid the tax avoidance on these large multinational companies by imposing a digital tax and a turnover tax. If the value of Google’s UK presence only shows a profit of £200 million then there must be something wrong in the way that profit is defined for tax purposes, and if the definition of profit cannot be redefined without causing all kinds of adverse consequences then it is the duty of the government to look for other ways of collecting revenue, and the most obvious way is by imposing a turnover tax and a digital tax. If the government cannot end tax avoidance it should impose different taxes which avoid tax avoidance.

Multinational Tax and Free Money for Multinationals

I was not astonished to learn that Amazon had only paid £2.4 million in corporation tax notwithstanding having effected sales to UK residents of more than £4.3 billion last year. Continue reading

Seven Curses That Inflict Humanity

We have blessings and we have curses. We should enjoy the blessings andf avoid the curses but some curses are impossible to swerve.

  1. Usury, or to call it by its modern name banking, impoverishes the poor and enriches the wealthy. It is necessary for people to be able to borrow, but there has to be some control on the rates charged for borrowing. All semblance of control has vanished and even though interest rates are low most people and businesses are having to pay obscenely high rates for borrowing
  2. Politics and politicians; they start with good intentions but we all know where the road leads that is paved with good intentions. They become so fixed upon themselves that they lose the plot.
  3. Passing the buck; governments often refuse to make decisions unless they can get an independent report to tell them what should be done.
  4. Corruption; all nations suffer from corruption to one degree or another. In the United Kingdom a great and insidious form of corruption is designating the great and the good to highly paid posts. It revolves not so much around the old school tie but the old university.
  5. Control by data collection; walking down the street I can be caught on many CCTV cameras and I see parking officials record the number plates of every car, to check whether the owner has paid to park. The data collected is so large that the Nazis would have been delighted to collect half the amount of data that is collected and recorded today. The scope for abuse is large.
  6. Multinationals; they are so large that they are outside the law (although they pay lip service to it) and outside democratic control. They are the modern gods who control many of our lives.
  7. An obsession with growth; we all want to grow better and stronger but we ignore that the pursuit of growth can lead to the cancerous growths that can kill us.