Coalition tax reforms to allow large firms and banks to pay NO UK TAX here on income from tax havens
I'm no expert, but George Monbiot and Private Eye report that arcane tax law changes will have the effect of ensuring that medium and large companies that make profits abroad will pay no additional tax when brining it back to the UK. Only Switzerland has such massive tax ememptions......
The government are planning what journalist George Monbiot suggests may be 'the biggest and crudest corporate tax cut in living memory'.
This is not the well publicised cut in the corporation tax rate from 28% to 24% but something far less publicised, yet much more far ranging and destructive to the common good.
The plan is to charge UK companies NO TAX on earnings from their foreign branches, whilst still allowing them to claim the expense of funding those branches against tax it pays in the UK.
This will have the effect of UK companies transferring as much of their operations as possible overseas. So not only do we lose out on a huge amount of tax receipts, we lose a huge amount of jobs too.
The scariest part of this is that something this important can be kept so under the radar. This proposal desperately needs to be publicly debated.
See George Monbiot's article in The Guardian for full details: http://www.guardian.co.uk/commentisfree/2011/feb/07/tax-city-heist-of-century
Iain Smart commented
The government are quite vocal about multinationals and tax scandals but are seemingly prepared to let the situation continue unabated. I believe it is time to exert some pressure on the government to tackle this seriously and have seen many similar suggestions for a solution which have the same theme.
In essence the plan is to identify companies controlled from abroad, or registered in the UK but owned offshore either by shell companies or Limited Liability Partnerships, or franchises owned offshore or abroad, and oblige them by law to register for PAYE Corporation Tax on turnover, to be paid with VAT payments either monthly or quarterly. HMRC would assess each business and issue them with a Corporation Tax Code for making deductions from turnover in the UK. Any alleged overpayment of CT could be reclaimed from the Revenue by providing justification for the refund and HMRC would have the power to disallow any contrived or immaginary expenses ineligible for setting against tax under the same rules that UK owned and resident companies currently have to follow.
Please note that this change would NOT apply to a UK owned and registered company with known and identified UK resident directors carrying on a legitimate business entirely within the UK.
This would have two benefits. Firstly the tax due would have to be paid at the delegated set rate on turnover so the money would not leave the country and never come back. Secondly the big beancounters would be neutralised since the tax dodging schemes they market would be irrelevant.
Any businesses withdrawing from the UK as a resuly would have their places taken by UK businesses.(supplying overpriced coffee for example)
Can any tax experts comment on the feasability of this approach?. It would only involve a change in classification of businesses and an extension of the principle of PAYE from individuals to foreign owned businesses.
Sarah Mumford commented
Am not sure if the title means you want them to pay tax or not to pay tax. ?
we have seen where the tories stand on this, in front of the bankers and ensuring they keep their mismanaged bonus package. tories are traitorus to the UK, sucking on the money teat. TIME TO END THIS SHAM PARLIMENT NOW!!!
James Langton commented
This is a worrying turn of events. To give private companies an opt out on corporation tax will give them a massive advantage. If they want to avoid this tax they should opt for Charitable status and plough the profits from NHS contracts into improve the service they provide.
Not to make even greater profit for their shareholders and directors and using such profits to further undermine NHS service providers.
This does not address the root cause like landvaluetax.org Worse yet, the way money is created taxes the entire real economy to the benefit of the financial sector positivemoney.org.uk
Bruce White commented
Under EC competition legislation it is illegal for any large company to abuse a dominant market position. (See Article 102).
Starbucks, for example, has a policy of purchasing premium high street locations, so that it maximizes footfall and turnover. This drives competition into sites which are less attractive, or even out of business.
In its own words, Starbucks pays no UK tax, as it purports to make no profit. It is therefore subsidising its UK operation from elsewhere. My understanding is that this may be allowable as a start up, but it is illegal under EC law. Starbucks has been in the UK for 14 years.
The same argument applies to all of the above companies and many others. If they don’t pay tax, because they make no profit, then they must be cross-subsidising, which kills competition and is illegal.
Why not campaign to get these mega rich tax dodgers to cough up their share by using existing EC law? Is this a goer?
Renato Rodrigues commented
Even though I admire greatly Monbiot, seeing lipsofashes links, I agree that Monbiot was completely out of depth on this one
Mike Saunt commented
All, please get behind this simple idea - a FairTax emblem like FairTrade for Coffee but for companies to have FairTax emblem that they pay UK tax http://38degrees.uservoice.com/forums/78585-campaign-suggestions/suggestions/2792233-company-fairtax-emblem
yes yes to everyone who as commented on this BUT what are we going to do let the astards get away with it or do something about it eh
typical isnt it govt supporting big bank again.what a sham
The abolition of tax havens, the closure of tax loop holes which enable companies like Barclays to pay less than 1% corporation tax and more progressive taxation (such as a Robin Hood Tax on global financial transactions) would remove the need to make cuts in vital public services like health, education and law and order. This would, at the same time, provide funds for the levels of investment needed to kick-start the economy.
MAKE THEM PAY WHY NOT?
Here are a couple of articles in response to Monbiot's sensationalism:
But I'm sure they're in on the evil, corporate conspiracy bla bla bla bla
Paul Whieldon commented
Tesco pay up you wankers and the rest of you tax dodging slags............
Glenn Abbott commented
I believe that a large percentage of tax havens are British owned. In my view, a tax haven is a place that licences individuals and organisations to dodge tax in the places where they really live and earn their profits. This is as immoral as you get. The UK should simply close down its tax havens or cut the islands off.
Mike Sivier commented
This follows on from Mr Osborne's abject failure to bring gamblers - I mean bankers - to account for causing the financial crisis in the first place. He's actually rewarding them, as well as providing other large corporations with a way to avoid paying the taxes we need in order to pay off the deficit. The result will be that the poorest citizens of the UK will have to foot the bill. This is exploitation of the poorest in society, it is evil, and it must be stopped.
Alan Piercey commented
One of the many tax reforms to help the rich get richer. The worrying thing about all this is that the general public don't seem to be aware of what's going on. We need to move up a few gears regarding getting the information to the public and getting them to understand what's happening.
We should be telling big businesses that if they wish to operate in the UK they have to pay UK taxes or get out. I can't see the likes of Boots, Vodaphone, Topshop or Barclays closing their operations and saying goodbye to all that profit.
Right - obviously someone at 38 Degrees has transferred my votes to this one as there were duplicate campaign ideas. Which is fine, but can the same admin person amend the title to include "Against" at the front!!