Great comment on Google's tax

PolarityMan

@heartfeltdawn I dont share the same position as you on tax but I have to say, especially as someone addicted to the convenience of Amazon, that it's nice to see someone actually go out of their way to take an action based on their position and not just mouth off on the internet and expect someone else to just fix everything from on high.

Heartfeltdawn

Fretwired said:

We agree on something. I don't use them either.

Fun having a civilised debate with you ... in fact this thread shows what can happen when people are allowed to post differing views without getting attacked personally. Always happy to proven wrong as well .. didn't know about Google's 'charitable tech' fund although the sceptic in me thinks there's something in it for them. Why not set up a Bill/Belinda Gates style foundation. There are a lot of Syrian refugees who could do with some help.

@fretwired and @PolarityMan I don't think our views on taxation are that different, they just come from different directions. How Google do things is legal. How Bono does his tax is legal. That is something that there is no argument from me about. The problem is how easy it is to create these spin-off companies that help to lower obligations, as Private Eye detailed in the last few years in various articles and the special investigation they did into shell companies. The investigations I did into the sell-off of student loans in the last few years, an issue affecting me directly, turned up a lot of information that wasn't forthcoming from the Department of Business for instance. 

A quote from George Osborne at the 2009 Conservative conference:

"Osborne vowed that a Conservative government would target tax evasion and offshore tax havens and he warned bankers: "I believe in the free market, not a free ride … If we find the money that should be going into stronger bank balance sheets is being unreasonably diverted into bigger pay and bonuses we reserve the right to take further action and that includes using the tax system."

Has that really been the case? 

Regarding Amazon, it's all down to personal choice. I can honestly say I've bought one thing from Amazon in the last five years (the deluxe edition of Giant Steps by the Boo Radleys, one of my desert islands discs, and I only bought from Amazon as Cherry Red Records were long out of stock and not liable to get more in). I've tried limiting visits to big supermarkets and buy a lot of fruit and veg from the local stores to me. I actually dislike the world of ultra-convenience, be it Amazon or ordering takeaway from a phone. I'm a bit stubborn like that. 

Heartfeltdawn

Fretwired said:

We agree on something. I don't use them either.

Fun having a civilised debate with you ... in fact this thread shows what can happen when people are allowed to post differing views without getting attacked personally. 

Of course. I think I said something similar in a debate in SC when someone mentioned Drew. He and I debate and throw stuff at one another but it doesn't get personal. It's the antithesis of how debate is conducted on Youtube or Twitter for instance. A debate like this isn't about personal standpoints, it's about facts. It is odd though on here for me because I get the impression that some folk think I'm this left-tilted flagwaver. People who know me in real life know me as someone who thinks child benefit is completely archaic, that the current social justice way of thinking is actually a process where people are depersonalized in order to fit into someone else's framework of thinking, and that the left has been a laughable joke since 2003. 

Cripes, I've just had a flashback. When I moved to Canada in January 2003, I remember talking to my mother in law, a Latina refugee to the land of the maple leaf. She was a smart cookie and we debated the Falklands. Like many Latin Americans, she called them the Malvinas and this turned into a running joke between us. I remember one debate in early March of 2003 just prior to the Iraq War breaking out and she asked me about Thatcher and what people thought about her in Britain. The monologue ended with me telling her that in my view Tony Blair would end up as a more loathed and controversial figure than Thatcher did. Everything that has happened since that day in 2003 has done nothing to change my mind. With Thatcher, you knew generally what her goals were and how she would achieve them. Blair was the master spiv, the man to say one thing whilst greasing palms backstage. 

And it is for this reason that I say comedy and satire isn't about ripping the right and praising the left. What there is now is this sceptical view of corporate culture, be it commercial or political. 

littlethoughts

I trust we are all declaring every transaction we make in the fretboard forum in our tax returns?

Heartfeltdawn

littlethoughts said:

I trust we are all declaring every transaction we make in the fretboard forum in our tax returns?

That's a point. I'm still waiting for a cheque from an architectural photographer covering my detective expenses. 

Heartfeltdawn

Away from Google, the situation in Malaysia is pretty incredible. Gifts from the Saudis?  Corruption and bribery? Swiss bank accounts? 

"Last week, Malaysia’s attorney general cleared Mr Najib himself of any criminal offences or corruption, declaring that £478m deposited into his personal bank account in early 2013, just before national elections, was a gift from Saudi Arabia’s royal family and that Mr Najib had returned £435m. The Malaysian  anti-corruption commission subsequently said it would seek a review of that decision."

He still kept £43 million! 

Nitefly

Yes, but did he pay any tax on it?   )

Chalky

If you look at my posts, my argument boils down to "Legal does not mean right". When the case has to be made to change tax laws, as with the case in any change of law, there has to be a moral imperative for the change. If you just accept "Legal means right" then you reduce the reason for any future change in law to whimsy.

chrispy108

I find the idea of taxing profit in the first place bizarre. Google put plently into the country with PAYE, NI, business rates and VAT.

If those things aren't enough then increase them. Taxing profit is always going to be "unfair" as it's never clear cut, especially for international companies.

Maybe if we made our tax system loads simpler then some of our best minds would be creating stuff instead of creatively shuffling money around.

jellyroll

I can give a view from the other side as I'm tax director for a multinational group.

Is tax an ethical issue? Probably. But as I'm trained in international tax law and not philosophy, I can't be effective in my role if I attempt to evaluate decisions using ethical criteria. What I do instead is look at the flip side of ethics which is reputational risk. On evaluating a strategy, I ask myself to what extent knowledge of this transaction or arrangement might damage our reputation with our stakeholders. I turn down many strategies on the basis that they feel too aggressive.

If our group did no tax planning, asymmetry of international law and double taxation would result in us paying around 65% of our global profits as tax. We manage that down and actually pay around 25% tax overall, though there are significant differences between countries. We view 25% as a reasonable balance between our social responsibilities on the one hand and an appropriate financial return to shareholders on the other.

With respect to Google. Their historic arrangements are, in my view, aggressive (but not illegal). They have chosen a path which many boards of directors (including my own group's) wouldn't take. On the flip side of course, we all get to use Google products for free every day......

Heartfeltdawn

Chalky said:

If you look at my posts, my argument boils down to "Legal does not mean right". When the case has to be made to change tax laws, as with the case in any change of law, there has to be a moral imperative for the change. If you just accept "Legal means right" then you reduce the reason for any future change in law to whimsy.

 

If you principally go with a moral imperative, then that all depends on whose morals you choose. For example, I presume that any moral imperative which caused George Osborne to lead a successful campaign to change tax laws would differ to a similar campaign led by Jeremy Corbyn. 

I accept that under our current system Messrs Google and Bono are in the clear. They have done nothing illegal. At the same time, I can say that our tax system needs to be updated for the digital age. 

(I would try being more intelligent but it's not happening today. My eyes are streaming, my throat is sore, and my voice sounds like I should be in the House of Lords after a long weekend of coke and strumpets). 

Heartfeltdawn

jellyroll said:

With respect to Google. Their historic arrangements are, in my view, aggressive (but not illegal). They have chosen a path which many boards of directors (including my own group's) wouldn't take. On the flip side of course, we all get to use Google products for free every day......

We use their products for free, they use our data for free, and they make money off of that data via advertising. I'd say that Google consumers undervalue the worth of their data to Google. 

scrumhalf

chrispy108 said:

I find the idea of taxing profit in the first place bizarre. Google put plently into the country with PAYE, NI, business rates and VAT.

PAYE - they collect it on bahalf of their employees. If they fail to pay it over to HMRC the employees are still liable for it.
NI - as above for employees' NIC, they pay employers' NIC as a tax on their payroll.
VAT - unless they are unable to reclaim it, it's only an end-user tax.

CabbageCat

scrumhalf said:

chrispy108 said:

I find the idea of taxing profit in the first place bizarre. Google put plently into the country with PAYE, NI, business rates and VAT.

PAYE - they collect it on bahalf of their employees. If they fail to pay it over to HMRC the employees are still liable for it.
NI - as above for employees' NIC, they pay employers' NIC as a tax on their payroll.
VAT - unless they are unable to reclaim it, it's only an end-user tax.

They don't pay it but they do generate it. Corporations create the wealth that then gets taxed. "Cosying up to them" isn't very popular but if a country's tax law makes it unattractive to corporations then that country loses a lot more than just a couple of evil, greedy fatcats.

crunchman

The EU has made the situation worse with countries like Luxembourg giving Amazon, Feebay etc all kinds of ways to avoid taxes.  If you are going to have an EU then corporate tax across the whole bloc has to be the same to avoid what Luxembourg (and Ireland to some extent) have been doing.  The problem is that that means giving the likes of France a say in our taxes.  I think we are better off out.  If you are in then you do need to have full union.  The Euronuts are right on that.

If we do come out then Google, Amazon, Starbucks etc will need to set up a UK headquarters here and not just have a EU headquarters in Luxembourg.  They would still shift stuff around but it would make it a lot more difficult for them.

BigMonka

My sister lived and worked in the tax haven of the British Virgin Islands - an island with a population of 20,000 had over 1million companies registered there! 

The whole paying as little tax as possible by using shell companies abroad is nothing new and doesn't start or end with Google - there are probably much bigger fish to fry too as I bet all the financial institutes have some pretty clever arrangements.

Chalky

@BigMonka - Er, Google is valued around $500 BILLION. Try finding a bigger fish...

Heartfeltdawn

Chalky said:@BigMonka - Er, Google is valued around $500 BILLION. Try finding a bigger fish...

You're going to need a bigger bank. 

http://www.neonbubble.com/wp-content/uploads/2013/10/roy-scheider-bigger-boat.jpg

Sambostar

Thing is, London is one of the biggest tax havens going.

RaymondLin

Chalky said:

@BigMonka - Er, Google is valued around $500 BILLION. Try finding a bigger fish...

Apple Inc ? Petrochina ?