Guest blog: Osborne’s tax plans stink!
by Maddy Thomas, UK Uncut activist
“It smells and it doesn’t smell of coffee. It smells bad.” So said Richard Bacon MP of the Public Accounts Committee on Monday in reference to Starbuck’s tax avoidance.
Bacon is right to complain about the unpleasant odour left by the global coffee chain’s tax dodging. Starbucks have only paid £8.6 million in corporation tax in the last decade despite racking up £3bn in sales in the UK.
And it’s not just Starbucks ripping off the British public. According to the Independent, last year Google ‘paid £6m in tax on a turnover of £395m while Apple is thought to be paying £14.4 million in tax on more than £1 billion of sales. It has been claimed that a more realistic tax bill would be closer to £570m.’
Yet according to Lin Homer – the UK’s most senior tax official – the government is ‘powerless to stop large multi-national companies like Starbucks and Google from paying almost no tax on their profits in this country.’ Homer’s comments came in response to questioning from the Public Accounts Committee. Next week senior executives from Starbucks are due to face MPs on the Committee to explain themselves.
It’s not only Starbuck’s greed that stinks. George Osborne’s reckless tax plans are sure to get up the nose of anyone who wants a fair and just tax system for this country. The chancellor has said before that he regards ‘aggressive tax avoidance as morally repugnant.’ Now he wants us to believe he’s taking a tough line. In reality rather than being powerless to stop tax dodging, Osborne is making it much easier for mega-rich corporations to avoid tax – money we urgently need to pay for our vital public services.
1. In the recent Budget Osborne went out of his way to help multinational companies reduce their tax bills dramatically by slashing taxes on bringing money into the UK from subsidiaries in tax havens. The chancellor’s announcement of these new policies will make tax avoidance much easier for multinational companies and banks. The Treasury itself has admitted these measures will lose the public purse £1 billion each year.
2. The government is in the process of to axing a further 10,000 HMRC jobs, on top of 30,000 already cut since the department was formed in 2005. Money invested in HMRC to deal with tax avoidance and evasion brings in £60 for every £1 spent – a very good investment!
3. The government is also set to introduce what it calls a ‘General Anti Abuse Rule’ which by the government’s own admission would do almost nothing to tackle tax avoidance. Instead it risks legitimising most of the tax-dodging done by big businesses like Starbucks or Google. If Osborne was serious, he would propose a real General Anti Avoidance Principle that says if it looks like tax avoidance, it is tax avoidance, and is wrong – this measure would rake in billions.
It is important to recognise that the government wants to look like it’s taking strong action to clamp down on tax avoidance because of the public outcry, but are doing the opposite because they believe it’s more important for multinationals to pay low taxes than it is to fund public services.
This explains why, at the same time as the Chancellor is making tax dodging easier, he’s also reducing the amount big business would pay, assuming they’re honest enough to cough up what the law intends. The UK now has the lowest rate of corporation tax in the G7 and Osborne has cut the rate by more than any other G20 country over the past two years – from 28% in 2010 to 22% by 2014.
This country isn’t broke. We must force the government to make mega-rich individuals and corporations pay their fair share. There is an alternative and we can afford our vital public services.
Just imagine how many sure start centres, youth clubs, women’s refuges, hospitals, schools, libraries, houses and other welfare services we could get with the billions avoided in tax every year!