Guardian Revelations of Tax Scam

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

Advertisements

4 Responses to “Guardian Revelations of Tax Scam”

  1. futiledemocracy Says:

    I’m sick of seeing adverts suggesting that benefit cheats are the scum of the Earth (when the reality is most are single parents trying to help feed their kids) yet big business is doing it a lot worse and allowed to get away with it.

  2. Garibaldy Says:

    Most benefit “cheats” are basically working class people doing the best they can to maximise their income. In places with long term structural unemployment, doing the double, or getting on the DLA is the only realistic means of getting a decent living for many. So I agree.

    As you say, the real losses to the state come from the shady and immoral practices of big businesses, which are lauded for trying to maximise their income by whatever means. We see working class people hunted, while no-one seeks out the bribes – money, sexual, narcotics and others – used by many leading corporations. In fact, we have seen one major probe blocked by government. Meanwhile, banks are given tens of billions of our money. Such is the reality of government in the interests of big business.

  3. Justin Says:

    Garibaldy

    You’re right – the Left has to mobilise on tax in the same way that the rich and powerful have mobilised to ensure that wealth stays in their hands.

    Wage theft is another issue which the Left on these islands could look into. This literally involves stealing the wages out of workers’ pockets by not paying them what they’re entititled to by law. As well as thieving from workers this has the added advantage from the owners’ perspective of keeping down the going rate for the job.

    Kim Bobo has written a book about wage theft in the USA which is exerpted on the excellent Dollars and Sense website. The extract below indicates the extent of the problem there.

    The Crisis of Wage Theft By Kim Bobo
    http://dollarsandsense.org/archives/2009/0209bobo2.html

    Wage theft occurs when workers are not paid all their wages, workers are denied overtime when they should be paid it, or workers aren’t paid at all for work they’ve performed. Wage theft is when an employer violates the law and deprives a worker of legally mandated wages.
    Wage theft is widespread and pervasive across all types of companies.

    Various surveys have found that:
    • 60 percent of nursing homes stole workers’ wages.
    • 89 percent of nonmonitored garment factories in Los Angeles and 67 percent of nonmonitored garment factories in New York City stole workers’ wages.
    • 25 percent of tomato producers, 35 percent of lettuce producers, 51 percent of cucumber producers, 58 percent of onion producers, and 62 percent of garlic producers hiring farm workers stole workers’ wages.
    • 78 percent of restaurants in New Orleans stole workers’ wages.
    • Almost half of day laborers, who tend to focus on construction work, have had their wages stolen.
    • 100 percent of poultry plants steal workers’ wages.

  4. Small Business Tax Guru Says:

    I’ve been interested in taxes for lengthier then I care to admit, both on the private side (all my working life-time!!) and from a legal viewpoint since satisfying the bar and pursuing tax law. I’ve furnished a lot of advice and rectified a lot of wrongs, and I must say that what you’ve posted makes perfect sense. Please carry on the good work – the more people know the better they’ll be armed to cope with the tax man, and that’s what it’s all about.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: