Tax Dodgers
I'm sure it would really take more time and effort than just a single day to tackle all these multi-national firms who go out of their way to minimise their tax bills - in all kinds of devious and artificial ways.
But Hugo Rifkind makes such a good pitch that I think I'd give him the job - at least he'd approach the task with great zeal and enthusiasm - along with just the right amount of mockery to embarrass these giant companies to see the error of their ways.
As far as Amazon and Google are concerned they are operating within the UK's current laws and have done for years - but if so, then the law should be changed.
To reflect the fact that it doesn't make sense to make loads of operating dosh in the UK - only to pretend that all company's profits are repatriated abroad to a foreign HQ - masquerading as some beaten up 'portacabin' in Belgium.
Give me a day. I’ll sort out this tax avoidance
By Hugo Rifkind
David Cameron is right to highlight tax at the G8 – but if we’re going to sound tough about it we’ve got to mean it
I mean, for God’s sake. It’s only a cup of coffee. How hard can it be? You buy the thing in Britain, you pay VAT on it in Britain. The company that is selling it to you — probably at a vast mark-up, given that your coffee is 75 per cent foamy milk and at least 20 per cent loathsome urban affectation — pays corporation tax in Britain. This is how it ought to work. And if it doesn’t, somebody is cheating.
Put me in charge of Her Majesty’s Revenue & Customs. I could sort this stuff out in an afternoon. “What?” I’d say when they came into my office. “You license your coffee from Amsterdam? And that means what, exactly? Licence? Coffee? It’s not a bloody dog. Give me £40 million or I’m taking you to court. Next you’ll be telling me that you have a multibillion-pound leasing deal with Liechtenstein for those tiny little pencils that you use to write my name on my cup, as though I were a toddler or a moron. Oh, and it’s not ‘Ludo’, by the way. Seriously. Who the hell is called Ludo? Yeah, now I’m angry. Make it £45 million. Let me give you a loyalty card. Now get the f*** out.”
The internet guys, surely, wouldn’t be much harder. “But it’s so terribly difficult to explain where we’re based!” they’d whine. “I mean, yes, we have 7,000 employees who are corporeally in your country. But we also have a certificate from a voodoo shaman, which proves that their souls actually reside in bottles on the shelves of a shack on a Haitian beach!”
Not having it. If Margaret Hodge, of the Public Accounts Committee, is to be believed, Google has people in Britain selling adverts to be shown on British screens for British products sold in British pounds, yet still maintains that the whole process is happening in Ireland. No it isn’t. That’s not a loophole. That’s a lie.
It doesn’t take global reform to fix these problems. It takes HMRC and the Treasury manning up, and pursuing corporate tax avoidance with the same vigour and zest that they pursue your or my national insurance contributions and by pursuing the spirit of the law as well as the letter. And if that leads to expensive legal battles, simplify the law so that it doesn’t.
Campaigners against tax avoidance highlight a bevy of household names, from Boots to Topshop to almost every bank you can think of. Once you factor in all the coffee shops and internet firms, basically everybody does it except for John Lewis. But unless a company genuinely fears a public boycott, where is the impetus not to? Guilt? You expect guilt from people who’ll charge you £3.50 for putting a teabag in a cup of warmish water? From the people who redesigned the plugs on iPhones six weeks after you bought a Bose stereo dock? Call me a cynic, but I’m not sure that’s enough. When a government lacks the ability to tax those it governs, then it barely governs at all.
I can offer, therefore, a qualified hurrah for David Cameron’s decision to make tax avoidance (or, rather, the avoidance of tax avoidance) a centrepoint of this week’s G8 summit. Because in this country, at least with the household names, there’s a whole lot more he could be doing if he had the vision and the courage. There are some easy problems with global corporate taxation and some vast problems, but the distinction between them is muddied by the way that we’re so lousy at solving either.
Mr Cameron comes at all this, wisely, from the starting point of global corporate transparency. Or, to put it another way, it’s bad enough that your friendly smiling web giant can avoid tax by pretending its head office is a Wendy house in Vanuatu. But the same techniques allow far less friendly people to do things far worse.
Perhaps you’re the dictator of somewhere bleakish and distant, full of dust and oil and golden statues of you. Corporate opacity allows you to siphon off the riches of your country, or to avoid taxes altogether on the profits of the privatised national utility now run, ostensibly, by your brother-in-law. It allows terrible Central African generals to profiteer from blood diamonds and rare earth minerals, and allows all of these people ultimately to buy fairly horrible townhouses in Mayfair, probably from friends of Prince Andrew, and not even pay stamp duty.
In other words, it’s bad. In Britain the upshot of this twilight world is merely soaring debt, increased property prices and the growing likelihood of students with video cameras spending an afternoon sitting on the floor of Fortnum & Mason. In the developing world, though, it’s devastating. Without a tax system with teeth a country cannot invest or grow. All the national resources in the world don’t help you much if their proceeds end up in a numbered account half a world away.
Essentially, this is the question of why the countries with the world’s greatest resources so often end up having some of the world’s poorest people in them. Mr Cameron is right to bring it to the G8, and he’s right to consider it in the same breath, almost, as corporate tax avoidance. In a speech at Davos this year, intended as a sort of trailer for this week in Belfast, he made the point that this stuff is teetering on the edge of chaos. Revolutions in communication, he said, have made the global transfer of capital ever easier, but have also made its passage around the world far less transparent. When a business is owned by an anonymous shell company in a tax haven, whom do you tax and where? It gets harder and harder to follow the money.
A big part of dealing with this is his proposed creation of “registers of beneficial ownership”, which would show, possibly publicly, who owns which companies where. Yes, I know it’s dull; that’s why I started with the coffee stuff. And if it sounds authoritarian, it’s worth remembering that most of us, lacking the ability to send our money ricocheting around the globe, are in the situation already. This is about making sure that not only little people pay taxes.
You’ve got to mean it, though. That’s the thing. “I passionately believe”, says Mr Cameron, “that if you want open economies, low taxes and free enterprise then you need to lay down the rules of the game and you need to be prepared to enforce them.”
Are we? Is he? It’s all very well striking a blow for transparency and shouting loudly that no company is bigger than the law. But we’ve got to mean it. When the chains on our high streets pay less tax than our government would like; when internet giants invited into Downing Street do too, then it doesn’t really sound much like we mean it at all. The shadowy generals and oligarchs matter a lot, but fair taxation starts closer to home. It starts with a tall skinny latte, with your name on it. If that even is your name. Which it probably isn’t.
