Today’s Guardian story on the tax avoidance schemes of multi-nationals has done us all a great favour. Not just people who pay tax in the UK, but taxpayers everywhere. The figures involved in what the paper calls the “complex and secretive” schemes are staggering. Remarkably, not even the government seems to know how much is involved, but estimates vary from the Customs and Revenue’s estimates of £3.7bn to £13bn, to the Commons Public Accounts Committee’s £8.5bn, to the TUC’s £12bn. If the TUC is right, that is the equivalent of the tax take of 2.4 million householders. Below are some examples of how ridiculous the situation is:
According to the National Audit Office, in 2006 more than 60% of Britain’s 700 biggest companies paid less than £10m corporation tax, and 30% paid nothing.
Britain’s top taxman, Dave Hartnett, told the Commons public accounts committee last year that 12 major corporations had “extinguished all tax liabilities in 2005-6” thanks to avoidance schemes.
Diageo, parent company of Guinness and other drinks brands, has average profits of £2bn per annum, yet paid an average of £43m – or just over 2%. Two drugs companies have registered themselves elsewhere so they can charge themselves royalties in the UK, reducing their tax bill, and a “household name” has loaded itself with debt so there are no profits, and therefore no taxes.
The worst of it is, all this is entirely legal, and has had a blind eye turned to it by successive governments, decade after decade. Nor is it a problem limited to the UK. As The Guardian report points out, action is being taken in Germany and the US, and some moves in the UK too. In the Republic, we know only too well what the attitude amongst the political and economic establishment is to the paying of taxation.
But, the right wing will cry, in a globalised world regulation to ensure taxation will simply ensure these companies move elsewhere. There is a certain element of truth in that, that there headquarters will move elsewhere. However, that does not mean that production and sale that does take place in a state cannot be taxed there. Nor is there any reason that the tax loopholes that allow independent contractors to avoid the level of tax they should be paying by declaring themselves as corporations, for example.
Such loopholes must be closed. At a time, especially in the Republic, when there is a concerted campaign by the right in positions of business leadership and the media to attack ordinary workers and their living standards in order to pay for the mistakes generated by corporate irresponsibility, reckless speculation, and arrogance, we must ensure that the interests of ordinary citizens are not sacrificed to those of big business and its lust for superprofit. We need a resumption of the type of action by workers that was seen in the marches by PAYE workers in the 1980s. French workers have recently demonstrated what is possible, with their general strike demanding that the corporations and not the people suffer the consequences. The left must provide leadership, as it has done in the past. Trade unions, political parties, and in the UK the government must stand firm and act against these scandals. We must be very clear. This is a class matter, a conflict of interest between the workers and the leading institutions of capitalism, in both its financial and industrial aspects. We must mobilise.
Oh, and in the comments here you can find a link that suggests The Guardian is being more than a little cheeky in running this story.
UPDATE Here is The Guardian Database of the FTSE 100 tax payments