Amazingly, I briefly covered the issue of corporation tax a few weeks ago. Although this highlights the fact that I hadn’t read the TLP, I’m quite proud of my brilliant proactive background research. All jokes aside though, this link does highlight a great worry for the average, honest, hard working British taxpayer.
In the case of Barclays, although they saved the taxpayer money by refusing the government bailout, that does not excuse the corporation tax, or lack of that they were reported to have paid earlier this month . Does this mean that in the future if I choose not to apply for benefits when I am in trouble, I will only have to pay a 3% tax rate? If only...
It’s easy to see why people are so angry about this issue. As individuals, we are all victims of a financial structure that has failed, yet we are the ones that have been lumped with increased VAT rates, rising levels of unemployment, freezing of public sector pay; the list goes on and on... Barclays of course will argue that they are abiding by the laws set in place, and they are right. With businesses looking to maximise their profits, why would you not capitalise on the opportunity to look abroad, where tax rates can be far more attractive?
Whilst on my work placement, I had a discussion with a colleague about my plans to move abroad and work somewhere with a lower income tax rate than in the UK; he raised the issue that it was unfair to want to do that. After everything this country has given me in having an excellent healthcare system and free education etc, what right do I have to not repay that debt through paying taxes to the country that has given me the opportunity I have?
It goes to show the huge gulf there is between what is ‘right’, and what is good business.
For all the talk of legitimacy and corporate social responsibility, the more I look into it; the more I question its relevance. If a business were to genuinely claim that they were legitimate, would they utilise the tax havens of this world through outsourcing operations? There has to be a point where you draw the line between making money to improve shareholder wealth, and just being plain greedy. This isn’t a business being innovative by developing new ways to improve efficiency; it is cheating countries out of money through loopholes. With academics like Suchman suggesting that businesses needing to conform to the sets of rules and values held by a society to have a right to exist, there is very little evidence of some of these companies adhering to any of the rules and values I hold.
Yet the power that they hold puts governments in the situation where they can not afford to lose these companies by closing up these loopholes. It’s not right. It’s not fair. It’s also not going to change any time soon, and until the day it does, it’s people like us that are going to feel the effects whilst companies like Barclays get to report £4.6 billion profits that we will never see.
It’s a shame, but it’s something I suppose we have to live with. In this case, maybe ignorance is bliss..
Ah Jonny, a lovely read! And definately something which seems extremely frustrating and saddening to me, well I suppose all of us wanting a full time job, for income tax is going to emphasise this suffernace just that bit more in our daily lives.
ReplyDeleteYour outright condemning this move by businesses, but are you truely saying if you were the owner of a british busienss, with extremely high taxes, and low profits, that YOU would totally refuse the idea of going elsewhere with lower taxes?
I totally understand the anger towards large corporations like Barclays, but what about small-medium businesses? What if tax was truely ripping into your profits, which you need to survive? What if there's no choice? Or if the decision comes down the necessity of cutting costs, you don't want to make anyone redundant, so...move abroad?reduce the damage your making, by helping your direct employees, and making strangers you don't care about suffer just a little more?
Like spreading the risk, do you spread the damage?
In a way I see the reasons behind Kelly's questions, however this is not really an example here, is it? Barclays and companies like it are global and highly profitable.
ReplyDeleteAnd when looking into these smaller businesses, they don’t really have a high chance to move to a country with lower tax rates and therefore end up paying the local taxes that these huge corporations (who can afford it) do not and which go towards the wealth of the local society...
So not only does it affect smaller (local) businesses, it has an impact on society and each and individual worker within it.
If each and every single individual of a society have a LEGAL obligation to pay tax, so should each and individual corporation that is relative to that society.
What about the possibility of a low corporation tax benefiting society? What if it attacts more investment which in the end will help the economic growth and counteract all the damage of the public spending cuts, in terms of employment?
ReplyDeletewhich in turn will itself create more tax payments through more income tax. What would you recommend the government do? This economy needs growth to recover, and where will the investment come from?What businesses are going to choose to come here when theres other countries offering so much more than just lower corporation tax?