Google's teeny UK tax bill 'just not right', thunders senior MP Top Labour MP Margaret Hodge has told The Register that it's "just not right" for Google to get away with paying so little corporation tax in the UK. Hodge, who heads up Parliament's influential Public Accounts Select Committee, rejected the advertising giant's executive chairman Eric Schmidt's defence of his company's tax …
Having a responsibililty to work in the shareholders best interest does not mean it has to maximise profit at all costs.
For example
1) Company shafts customers with corner cutting and poor service (e.g. Tesco's)
2) Customers get annoyed and boycott the company or the government changes
The company's net profit margin is higher until Step 2, at which point turnover drops, profit margins drop etc.
In the short term the directors were working to the idea of first duty to the shareholders, but those business decisions are not working towards the interests of the shareholders once step 2 is reached.
Yeah but if they were being fluffy and behaving like a charidee and paying taxes as uk.gov would like then how long would it be before a shareholder, who happened to be an offshore accounty type, put his hand up and said
'Why aren't you moving your tax burden to the Dominican Republic/wherever, thereby retaining an extra 1.2 Billion in profit?'
And then the other shareholders would start rumbling, eyeballs would spin with dollar signs and then they'd end up doing it.
I'd actually rather Google spent the money saved on building the University of Google (or something useful) in the UK as a real technology-oriented academic institution than just handed the damned cash over to the idiot politicians to evaporate away on anything _but_ the benefit of the electorate as per usual.
I don't think you'll ever be able to write water-tight laws to prevent tax evasion, so I can see why they haven't tried.
But - I have to say I'm impressed with the government. What better tactic to use against popular companies, then actually making them unpopular.
I hear Starbucks has actually had a real down turn in their profits - and with hundreds of coffee shops per city, and this stupid name-your-cup thing, it's quite easy to avoid them.
It's tricky to make Google unpopular, Amazon too.
But this "immoral" onslaught is probably the only way something may change.
I think that it is a lot easier done than said really.
The government should pass a law stating that all money earned within the country is taxable at 25%. If you try to move the money out of the country, then you have to pay a standard monetary exportation fee of 50%.
Unless you are buying goods from the recipient and then we will tax you at the same rate as normal but will charge you a 25% tariff on the goods you are purchasing from the other company. If you are buying the goods from your parent company, then the tariff is 50%
However, the first thing that the government should do is write a law banning lobby groups. But thats where it all falls down because I dont think that any self respecting politician is going to write into being a law that will cut into their chances of getting employed by one of the companies that the lobby group represents.
And as for making Google and Amazon unpopular... just start spreading the rumours that the benefit reductions are all because Google and Amazon wont pay their fair wack of tax...
AVOIDANCE is what the thieving hypocrites are complaining about; something that is not only legal but specificaly encouraged by the very people who wrote the laws - people like hodges
EVASION is ILLEGAL
$deity's sake you have fallen straight into the socialist trap; of getting the basics WRONG.
Avoidance is not only legal - it is your moral duty to your family/shareholders.
If you have ever bought something (taxable) as cheap as you can then you are also guilty of tax AVOIDANCE (cheaper selling price means less VTA which means you just avoided paying soem VAT) - do you feel guilty now ? If not why not ?
I don't think you'll ever be able to write water-tight laws to prevent tax evasion, so I can see why they haven't tried.
Actually it's quite easy and many countries have it. It's known as "principle of payment" legislation. This basically says; "Yes, there may be loopholes in tax law as it's ruddy complicated. However, the tax rate is the tax rate. Apart from specifically stated exemptions that you are entitled to, that you may use to reduce your bill, anything else is evasion.". Or, in other words; "We tell you what you do not have to pay, rather than you telling us.".
Every time it's brought up it gets shelved, as included in the group that would get royally shafted by this happen to be a large number of MPs and most of the more generous lobbyists.
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Maybe she's not the best person to cast the first stone
You feel that hypocrisy is the worst of all possible offenses, and to have engaged in it in the past makes someone ineligible from ever pointing out the deficiencies of another? That's an interesting point of view.
Ongoing hypocrisy (not past) does render her arguments invalid, especially given that in this case she is saying that someone should do something voluntary, ie not required by law, which she is not willing to do herself.
I find "practise what you preach" and "one law for all" are pretty good rules to work by.
Nonsense. A valid argument is a valid argument whether its presented by Mother Theresa or Attila the Hun.
However if you are evaluating whether an argument is valid or not then certainly the past record of the person making it is something to consider very carefully.
Your logic is a bit warped here. On the one hand, you say a valid argument is a valid argument regardless of who presents it. In the next sentence, you say you determine if it's valid partially by looking at the past record of the presenter. That's contrary to your first point, as you're taking the presenter into account to determine if it's valid!!
In reality, people rarely change their character. If someones been a hypocrit once in the past, maybe that's allowance, but when they've done it consistently, that's not. Unless they've had a religious conversion of course.
Unfortunately, the very characteristics that make someone want to be a MP and the methods you have to use to become one, especially if you rise into the cabinet etc., rather make you the kind of person who shouldn't comment.
Now, I'm not defending Google on this. Just that MPs in general, especially those of ministerial rank (or have been), generally speaking have a pretty poor history of acts and therefore are not the best people to point it out. It may be right or not, but having one bad person slag off another bad person (or company) is never as effective as having a good person do it.
> Your logic is a bit warped here. On the one hand, you say a valid argument is a valid argument ...
> ...That's contrary to your first point, as you're taking the presenter into account to determine if
> it's valid!!
Sure. 2 + 2 = 4 (given an appropriate set of conditions), no matter who says it, and when the VAT rate was 17.5% then £13,572 +VAT was £15,947.10 no matter who said it.
However if I'd sung out across the shop "what's 13,572 + VAT", then I'd probably have got more than one figure, and there were some people whose answers I'd have more confidence in than others...
> You feel that hypocrisy is the worst of all possible offenses, and to have engaged in it in the past makes someone ineligible from ever pointing out the deficiencies of another?
I don't think hypocrisy is like having the flu. You get it for a week or two and after that you're cured: a "moment of madness" if you will. I believe it is more an intrinsic part of one's personality (or not). Now, I can accept that people can and occasionally do, change - but acts of contrition after being caught don't cut it - they just reinforce the initial impression.
It might not even be a bad attribute for a politician, if used properly. For example in negotiating with other governments it would be nice if our politicians were better liars, frauds and con-artists than the other guy's were. It's just when they do it (and so badly) to the people who pay them, that it annoys me.
The expense claims scandal is a very good point.
One of the side effects of that was that many MPs ended up paying rather less tax than they should have, as legitimate parliamentary expenses incurred are offsettable against tax.
One common and very seedy trick adopted, by those caught with their fingers in the till, was to make a very high profile point of sending a fat cheque to HMRC for the tax they should have paid. The seedy bit is that, without resubmitting their previous bent tax claims along with that, said cheque would be taken as a payment against current tax and returned as an overpayment at the end of the tax year, or "once the heat's off" as I like to think of it. Of course, if they had done the right thing and resubmitted, thus voluntarily reopening that year's tax return, HMRC would then be able to bring charges for any evasion that had occurred and rather more of the bastards would have gone to jail.
Mmm. Hodge might well be a hypocritcal rent-a-gob, but do her public statements advance your views on taxing google more (or not?)
For example, if you happened to believe Google should pay more UK tax, it would perhaps seem odd behaviour to attack the person (Hodge) whose views agree with yours - but, in contrast, actually manage to get widely reported.
Expecting politicians to be extraordinarily saintly is a bit hopeful, really. In the absence of such saintlyness, I prefer to make decisions based on what they do and how it affects what I'd like them to achieve.
Indeed so. How many MPs hid behind the 'we did nothing illegal' defense even thought their acts were immoral. And now, they're trying to have a go at others who have also done nothing illegal, but have arguably been immoral.
Anyway, it's in MPs power to change things. I wonder how long it will take MPs to realise that over complex tax laws is one of the prime causes of these loopholes existing (and therefore their use by companies). As they can change tax law, why don't they simplify the law massively and therefore remove most of these loopholes. They're complaining about something they created and they have the power to change.
Simpler tax laws would also be useful to us poor non-accountant types who have to deal with HMRC. Most of the time, I find myself 'educating' them on how the tax system works and what the rules are!!
quote: "Anyway, it's in MPs power to change things. I wonder how long it will take MPs to realise that over complex tax laws is one of the prime causes of these loopholes existing (and therefore their use by companies). As they can change tax law, why don't they simplify the law massively and therefore remove most of these loopholes. They're complaining about something they created and they have the power to change."
a) politicians know that complex laws can be used to hide loopholes
b) politicians know that companies use these loopholes
c) in many cases politicians use the same loopholes themselves
d) the initial act of creating the loopholes has yet to be proven an accident
e) if it was an accident it really should have been rectified by now
Given the above, I would put it to you that the creation of these loopholes was a wilful act, intended to benefit politicians directly (campaign funding from pleased backers) and indirectly (companies awarding shares and/or retirement board positions to those selfsame politicians as a reward). The fact that these loopholes have existed through a few changes of government does not speak well for the intent of any political party to actually close them.
I would absolutely love for them to prove me wrong by simplifying tax laws and closing the loopholes. I'm not holding my breath, though.
Your argument is false - I personally don't pay more tax than I have to, I have premium bonds and isas, these are government sponsored tax avoidance schemes. I don't, however pay less than I should do, I am proud to be a higher rate tax payer, I am privileged so I can help society as a whole. I need the guy who runs the corner shop, I need to roads, I need the bin men, the hospitals and all the things that make society hang together. I don't go out of my way to use accounting methods to make me "tax efficient", no funnling money off-shore for me. This goes for the vast majority of people I know.
You're making several very fundamental errors here. Firstly, you're assuming that if Google paid more tax, this wait wouldn't happen? Evidence points otherwise. The NHS hasn't got any better the more money is spent on it. So, the reason you're baby girl is waiting 4 hours for treatment is far more likely to be poor organisation, spending money on the wrong things, poor priorities etc.
Anyone who still believes pouring more money into the NHS (after the huge increases under Labour) will somehow magically fix it is the dimwit. It's about organisation and spending the money right, not about the total. Asking for more money is the easy and ultimately wrong way of fixing it. Don't spend more, spend more cleverly.
Also, you might as well criticise all the people who get boob jobs, or weight reduction surgery or whatever. After all, they're lifestyle choices as well and therefore ultimately 'optional'.
> When its your baby girl waiting 4 hours for treatment becuase there is no A&E bed available , due to staff cuts, think about this post again...... dimwit!
When you can present a coherent argument without resorting to hyperbole, and unrelated hyperbole at that, then please call us. F*ckwit.
BTW the word you're looking for is "it's".
because the only reason you can't aford to go private is the hypocrites have stolen 40% (or more likly 55%) of your income; and then wasted it on crap; and because they 'protect' the management of the NHS (some of the most useless examples of phb going) the money needed to provision said service has been used to pay off some other phb who was going to tell the world just how appaling the NHS management really is
> "Instead companies like Google are creating artificial structures and abusing current tax legislation to move profits offshore in order to avoid tax. That is just not right,”
Did she manage to keep a straight face when spouting that?
http://www.telegraph.co.uk/finance/businesslatestnews/9668396/Margaret-Hodges-family-company-pays-just-0.01pc-tax-on-2.1bn-of-business-generated-in-the-UK.html
Why nothing will be done.
A scary thought is how much Google have on public officials. How many emails pass through Google servers, how much dirt can an internal-to-Google search throw up ?
Imagine the power Google have to skew search results to sway public opinion ... search for "David Cameron" and you get pages of results detailing every negative story from the past 10 years. Search for "Ed Miliband" and you get pages of stories with him kissing babies and posing with puppies .....
The Telegraph have already had to apologise to Margaret Hodge over this story:
An item posted on the Telegraph website last night said: ‘Margaret Hodge MP – Contrary to our report “Hodge faces challenge over family firm’s taxes” (Nov 20), Stemcor, in which Ms Hodge has a small shareholding, has not abused transfer pricing to avoid tax. We accept that there is no inconsistency or hypocrisy in Ms Hodge criticising other companies for tax avoidance and apologise to her for any contrary impression.’
http://www.taxjournal.com/tj/articles/telegraph-apologises-margaret-hodge-over-stemcor%E2%80%99s-tax-affairs-13122012
> The Telegraph have already had to apologise to Margaret Hodge over this story:
The Telegraph article accused her of hypocrisy for denouncing dodgy tax avoidance schemes whilst being a shareholder of a company that pays bugger all UK tax. They apologised because Stemcor's tiny UK tax contributions are all perfectly legal and above board; they did nothing wrong as far as HMRC are concerned.
The problem is that Google's risible contributions are also perfectly legal and above board. If she's decrying Google as immoral for doing exactly the same as Stemcor then what exactly does that make her?
"The problem is that Google's risible contributions are also perfectly legal and above board. If she's decrying Google as immoral for doing exactly the same as Stemcor then what exactly does that make her?"
Not sure what it makes her but it makes her speech hypocritical cant
concluded that while the tech giants were sticking to the letter of the law, their money-shifting shenanigans were "immoral".
Maybe if she'd called it obscene we could do them under the new obscenity laws, which can basically find anything it wants obscene...
Of course, if the great British mass couldn't find Google, Facebook, MS etal because they were all boycotting the UK the electorate would have nothing better to do (UKTV mostly sucks) and might just become interested in what the politicians are actually doing with all their money.
So I'm predicting nothing will actually change.
"No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores"
James Avon Clyde (Lord Clyde)
"It [tax] is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government [...] whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name".
Blacks Law Dictionary
The companies concerned are simply taking advantage of the existing legal framework to minimise their tax bill. All of the politicians that are up in arms over this are the same people that have been taking advantage of similar legislation to minimise their own tax bills.
Pot < -- > Kettle
The fact is that Patrica Hodge and all of the other MPs have the solution in their own hands; change the tax laws. Until they do that, they have no legal authority to coerce any business to pay more money.
Add to that, they need to get their own houses in order; and until they do that, they have no moral authority to ask anyone to pay one penny more than the law requires.
how did Google fleece those companies of 2.5 billion? Google is not a mandated charge you find on most businesses ledger.
The tax laws are the way they are. Don't like it, change it (Protest, vote based on it etc). If people felt strongly enough they would get the law changed quickly like have done with pedophiles or terror laws.
This is just a typical case of "Rabble Rabble Rabble" moving from Banks (because that got no where) to tech. Then everyone gets bored and moves on to the next target/celebutard wedding.
I don't begrudge companies for reducing the amount of tax they pay via legitimate means. If a non-UK company pays tax in another part of the world that they use to offset their UK tax burden, then that is the price that the UK pays for other countries allowing UK countries to do the same.
Many of the methods of avoiding tax can be closed with further regulation or, even better, a complete overhaul of the tax system to get it to the point where it is consistent and understandable to avoid the complex loopholes that exist today.
Getting politicians whose families use similar methods of reducing the amount of tax their companies pay to lecture these "evil" companies in the hope that they will be shamed into paying more tax suggests hypocrisy and cowardice to me....
NOBODY is claiming its fair.
What is being pointed out is that it is the LAW. The law is currently written to allow world trade.
For any Scottish Independence supporters - this is a key principle on which the SNP hopes to make money for Scotland - by having a lower Corporation Tax rate than the rest of the UK. Encourage multinationals to be based in the UK so you can tax all their EU activity at a lower rate than anyone else and you make a LOT of tax.
Let's not forget that Google DOES pay tax on its £2.5Bn of UK sales - just not tax in the UK.
Is this the Hodge person who has something like £20million in shares of her family business all in a trust to avoid tax? Rather like how the Milliband's father - who was rather fond of Marxism - ensured his accumulated wealth was very carefully managed after his death to minimise tax. Oh, Chucka Ummuna like to keep quiet about his pad in Ibiza too, although I understand Toynbee has sold her place near Tuscany. For a hefty profit.
Socialism has a noble idea of equality, but sadly it gets represented by some right shitehawk opportunists.......
Labour were happy enough encouraging globalisation, offshoring, manufacturing in the cheapest place, bringing workers in from around the globe and paying them peanuts.
Now some companies are globalising their tax payments they don't like it. Why not use the cheapest option - they were encouraged throughout Labour's reign....
Its most definetely now a Muttinational....
http://en.wikipedia.org/wiki/Multinational_corporation
I expect it will pay taxes where it has to.
The tax debate is interesting, I know personally I only want to pay the tax I'm required to as an individual (I'm PAYE anyway) Wonder if I owned a business or self employed and had more leeway would I do my utmost to reduce it. Honestly most likely.
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