Monthly Archives: January 2016

Google – Tax Avoider

The news this week has been full of comment about Google, its dreadful tax avoidance, and the way it managed to strike a cosy deal with the Inland Revenue to get away with paying only 10% of the tax that should have been due on its colossal UK profits. It’s certainly been one-in-the-eye for George Osborne, who started the week proclaiming the deal as ‘a major success’, though it became increasingly clear the words ‘abject failure’ would have been more appropriate.

Much has been written about where the fault lies, and it can certainly seem difficult to get to the core of the issue. However, as with many things in our corrupted political and economic system, the criminals at the top like to make a simple issue complicated, in order to hide and so sustain their continuing bad behaviour. So let’s look at what’s actually happening here.

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Google are only the latest in a long line of corporates to pay little tax on their vast UK profits.

Firstly, though Google has undoubtedly behaved abysmally, they are not responsible for the well-being of ordinary British people, nor for maintaining our public services, and nor has anyone at Google been ‘elected’ on any such promises. Therefore although it is certainly easy to point the finger at their moral bankruptcy, one can really expect little more from a corporation whose main objective is to maximise profits for its shareholders and staff. The responsibility for ensuring fairness in our society lies with our government and their agents (in this case the Inland Revenue), and if there has been failure (and there undoubtedly has been failure) it is they who are ultimately responsible. However it is here that things get murky.

Our current system of government allows for the private funding of political parties, and that inevitably creates a massive conflict of interest. The Tory party for example gets over half its funding from the financial services sector alone – so to whom do their loyalties lie? The people who fund them or we who elect them? Or to put it another way – if the Tory party were to seriously start clamping down on all the egregious behaviour in the corporate sector, to what extent would that impact their political donations, and consequently their ability to win elections? Such a conflict of interest would be unthinkable in any other area of society, and yet in politics it has become so ingrained that people rarely discuss it.

Make no mistake, clamping down on all the various tax-avoidance measures that companies like Google utilise is actually very easy (and don’t believe for one instance the politicians who say nothing can be done without international co-operation either). Systems have already been devised (for example Unitary Taxation, see link here), which would deal with most of the shifted profits/tax haven nonsense. The fact of the matter is that our leaders don’t want to clamp down on corporate tax avoidance in any meaningful way, because to do so would alienate the very people whose money they need to stay in power. Of course public opinion has to be kept compliant, and so occasional token efforts are made (eg the ‘major success’ of getting Google to pay £130 million tax, when closer examination reveals that £1 billion would have been a more accurate figure), in order to stop the masses getting too restless. However the fact remains that the government, and in particular the Tory Party, are totally hand-in-glove with the corporate sector, and assist them in their continued efforts to rip-off ordinary people.

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George Osborne proclaims ‘major success’ against corporates, but is actually helping them rip us all off. Picture © M. Holland

The sheer hypocrisy of all this of course is that when the government continues to make cutbacks and impose Austerity, justifying it with statements about balancing the books, the reality is that the books could just as easily be balanced by simply dealing with the issue of tax avoidance (which runs at about £95 billion per year* – easily enough to sort out the government finances). Or to put it another way, the Tory party would rather make cuts to the NHS, local government, in-work benefits and a whole host of other social services, all the while increasing the misery for millions of ordinary people, rather than do anything to annoy their fat-cat friends.

As long as private money remains in politics, it means that our so-called democratic processes have been completely hijacked by the wealthiest members of society, and legislation will continue to be enacted (or not enacted) that enables the very-rich to get even richer while ordinary people suffer, and see their standard of living steadily diminished.

* http://www.taxresearch.org.uk/Blog/2013/10/11/hmrcs-new-tax-gap-report-a-work-of-fiction-and-guess-work/

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