Is a debt writeoff the only way out?
Posted 11 June 2012 - 10:16
Yes they pay tax in terms of NI, the staff they employ pay tax, they pay taxes on power etc.
But seriously is 0% on all profits really reasonable?
Not saying they have to make it huge, but even a 1% tax rate on all thopse doing this, which is much lower than corporation tax rates, would be a huge help to the UK economy.
Posted 11 June 2012 - 13:03
But at the moment the burden of those companies not paying their fair share falls on all of us anyway, so at worst there would be no difference.
This is the same crappy argument that the banks use when they're trying to fend of new regulation.
Do you not think that companies which profit from the UK consumer should pay their fair share of taxes here then?
Posted 11 June 2012 - 13:37
That's the theory, but companies can and do throw their toys out of the pram at being asked to pay tax and move elsewhere.
Vodaphone could easily move their HQ and fire all the staff in a kind of "revenge" moment if they wanted to. That would leave the UK in a worse tax position.
I don't fundamentally disagree they should pay some tax on their profits, however I also know that there is a duty to the shareholders to maximise shareholder value. You don't do that by paying tax when you can avoid it.
Posted 11 June 2012 - 15:11
It's not just the corporation tax take that this kind of practice hits but when we are talking about retail, companies like Amazon are also doing damage to British based retailers who pay their fare share of tax and also employ people in the UK.
I would disagree with Daisy. Whilst companies have a duty to give returns to shareholders, I do not think they are doing this. We are heading to a stage where the parasites are killing the host. Surely it is better for a shareholder to have reasonable long term rather than stellar short term returns? Typically for that to happen we need a healthy local market where local wages and infrastructure support demand for a company's products and services. Instead these companies are taking local subsidies (e.g. exploiting government benefits for workers) and not making their contribution (tax evasion). In a local market this is a problem for both sides (the state and business) and both will suffer. At some point people should realise and behaviours change to suit. Corporate behaviour is currently running to suit the people with their hand on the tiller, not their shareholders.
However, in a globalised market that isn't happening. Instead companies will exploit our local market until there is nothing left to take and leave us with exactly that, absolutely nothing. On an individual basis, what Daisy describes is rational. However the adoption of tax avoidance gains you a competitive advantage and soon others will follow until no-one has an advantage, instead, everyone else is at a disadvantage. But you try dissuading people out of doing this, its not called the tragedy of the commons for nothing. UK shareholders will soon find out that widescale corporate tax avoidance in the UK is not in their interests. Do you choose these decisions on an individual basis yet?
Posted 11 June 2012 - 15:11
For this to work though, the individual's tax burden at low levels must be significantly reduced. I would not welcome an increase in the state's stake in the existing economy to 50%+. The intention of any such policy MUST be to transfer the burden rather than just add to it. Otherwise the sort of market distortions we already see from state interference will increase and further diminish our competitiveness.
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