The current debate on whether corporates pay sufficient tax is providing the Prime Minister with a number of opportunities to make Churchillian and meaningless speeches. At the Davos gathering in January he said that tax-avoiding companies needed to “wake up and smell the coffee.”
Starbucks, to whom he was referring, is only one of a number of global companies who are being mentioned. Google, Apple, Microsoft, Accenture and Dell, according to a ‘Sunday Times’ report, paid less than 0.5% of their estimated £13 billion of revenues in UK tax.
In 2011 Google turned over £2.7 billion in this country and yet paid corporation tax of around £6 million. They achieved this by arguing that the sales were completed in another country which, in this case, was Ireland where the corporation tax rate is 12.5% (against the UK’s of 20% by 2015). There are some who question whether Google’s chairman Eric Schmidt should be on the PM’s panel of business advisers.
In the year to August 2011 Accenture (UK), a government contractor, which pays royalties to its headquarters in Ireland, generated UK revenues of £2 billion and paid UK corporation tax of £2.8 million.
The Labour MP Michael Meacher recently said that
“David Cameron’s promised crackdown on tax avoidance at the G8 is another initiative for the birds.”
He has sponsored a ‘General Anti-tax Avoidance Principle Bill’ which includes the following statement:
“A Gantip empowers HMRC, if it judged that an arrangement had no genuine economic substance, and its primary purpose was the avoidance of tax, to strike it down.”
The Bill ran out of Parliamentary time and has been lost.
Owen Jones, the social commentator and author of ‘Chavs: the demonization of the working class’ recently wrote that
“The truth is life becomes a lot cheaper when you are rich.”
It would seem that the Corporates have worked that one out.