Tony Garnett • Blog Posts

Google Tax

Jan 31 imminent. The day we own up to the tax man. But did you know MPs don’t even claim all their allowances? It’s immoral, apparently. Tax avoidance, joining illegal tax evasion, as unacceptable behaviour.

That’s what we’re supposed to deduce from the latest eruption of sanctimonious blarney from Westminster.

Yet tax avoidance is legal. It’s what everybody does. No-one likes paying tax, but most of us do it without complaint. It’s the law, even when we think it’s spent on barmy items like Trident. But we don’t offer more than we are legally asked to contribute. That would be masochism.

But no. If you hear MPs go on about Google, they think it should voluntarily pay more than the law demands.

What we do know is they create a tortuous tax system that only expert lawyers and accountants can understand and manipulate; they compete to turn the Uk into a tax haven for international corporations; then, when the public complains, they indulge in their well rehearsed pretence of ethical shock, saying these corporations should pay up, voluntarily, and be ashamed of themselves. These MPs really ought to join Equity and have done with it.

All the while they’re reassuring the same corporations that this is all PR. Not to worry about it. We’re not serious.  Though maybe a small voluntary donation might just take the sting out of it. You know how excitable the electorate can be.

But these corporations have an obligation to their shareholders to maximise profit within the law Therefore they avoid tax just like we all do. Just like every MP does. But mindful of the reputational risk, they occasionally think it prudent to make a small contribution.

The solution is to structure an international agreement, a level playing field, so that one country cannot be played off against another and tax haven countries are defeated. Why is that so difficult to achieve? Because the UK is trying to be like Ireland, the Netherlands and Bermuda, lowering its company tax rates to attract corporate business to the UK.

This is the nasty truth: business is so powerful national governments have become their servants and compete like whores to attract them.

It’s the system stupid, as Clinton did not say. The very system they tell us brings “freedom” and “democracy”.

I prefer to call it what it is. International capital: wealth roaming the planet seeking its best return. Your legal allowances become legal theft the wealthier you are.

If you are an international company it becomes robbery with menaces.

So maybe Ministers and other MPs should own up.

Not talk out of both sides of their mouths.