

Is the UK government too scared of Google, Amazon and Starbucks? - ytNumbers
http://www.bbc.co.uk/news/business-20579264

======
unavoidable
Courts in the UK have historically had very narrow interpretations of tax
laws. The classic example is a House of Lords case called Commissioners of
Inland Revenue v. Duke of Westminster, where one of the judges gave this great
judgment:

"Every man is entitled if he can to order his affairs so as that the tax
attaching under the appropriate Acts is less than it otherwise would be. If he
succeeds in ordering them so as to secure this result, then, however
unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may
be of his ingenuity, he cannot be compelled to pay an increased tax. This so-
called doctrine of “the substance” seems to me to be nothing more than an
attempt to make a man pay notwithstanding that he has so ordered his affairs
that the amount of tax sought from him is not legally claimable."

The influence of this case is still strongly felt today in courts, and this
leaves the British Parliament with little power to make "strong" tax laws that
have no "loopholes".

American courts and laws do far more to assert jurisdiction and prevent tax
avoidance, but as we know American tax rates are much lower than most
countries.

~~~
lucian1900
The UK tax code is also the most complex on Earth. A much simpler one would be
much less likely to have "loopholes".

~~~
Atropos
Do you have a source for this? I have never heard this and I very much doubt
it is true. If you look at the "Paying Taxes Report" from the world bank +
PWC, the UK has a yearly time to comply of 110 hours - versus 175 hours USA,
207 hours Germany, 330 hours Japan... Time to comply isn't a perfect metric of
course, but all the classical "easy tax" countries like Switzerland,
Luxembourg, Singapore, HongKong, Ireland have even lower numbers than the UK,
so there is at least a correlation. (If you control for economically
comparable factors)

~~~
lucian1900
If nothing else, it is the longest tax code [1]. It's possibly not the most
complex, but one could argue that it no longer matters at this point.

1\. [http://www.accountingweb.co.uk/topic/tax/uk-now-has-
longest-...](http://www.accountingweb.co.uk/topic/tax/uk-now-has-longest-tax-
code-world)

------
gregsq
I don't think it's that difficult to get. The UK government has been partly
naive, though many would say typically liberal, about corporate activity. In
truth, the only reason this is coming up now is because some elected
politicians equate legal tax minimisation with avoidance. This from a group
who were discovered to be minimising illegally expenses, and where local
offshore tax havens like Jersey have been allowed to continue to operate for a
very long time.

It's politically convenient to blame foreigners while the general population
has had their personal wealth diminished through multiple runs of the money
printing press.

The rationalisation seems to be that because local firms, unless using what
would now be seen as avoidance, cannot avoid profits and so corporation tax,
then everyone else should jolly well pay it too. Of course, in the days when
Britain's large international companies like BP returned taxable profits to
the UK, the accumulation of wealth through extra national activities barely
mattered ethically. Now of course, the UK is contracting both in real terms
and comparatively.

It's odd. These rules were set by the very people complaining about them. And
from what I've heard from some if the participants in the committee, some
haven't the first idea about the Companies Act and its meaning.

If Starbucks is willing to reallocate an amount from an expense to profit for
the purposes of corporation tax, I have to say, even despite any other
consideration, that's its tantamount to a gift. A sensible good will payment,
but a gift none the less.

~~~
gadders
Another amusing facet of this is that the chairman of the Public Accounts
Comittee, Margaret Hodge, is a large shareholder in Stemcor, the Steel Trading
company set up by her father and currently run by her brother.

Stemcor paid £163k of tax on £2.1bl of revenue in 2011 [1]

[1]
[http://www.telegraph.co.uk/finance/businesslatestnews/966839...](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)

~~~
andrew2012
All entirely above board - full tax on operating profit on a company with
geniunely high expenses - as refuted by Private Eye. The interesting question
is..who 'briefed' the newspapers on this (this wasn't investigative
journalism), and who are they being paid by?

~~~
gadders
Why would a steel trading company have such high expenses? Are they
manufacturing and storing it as well?

Then there is also the question of the shares put in trust for tax purposes
also...

------
dizzystar
\-- _Media companies - television, radio and newspapers - have complained for
years that Google takes colossal and growing amounts of net advertising
revenues, while investing relatively little in the gathering of news or the
making of television and radio._

I don't get this argument at all. Google uses advertising to gather news
content via web search. It sounds like, if they started reporting on news, the
media would complain about Google paying 3x what everyone else can afford and
stealing all the talent.

\-- _Owners of small independent coffee shops are not exactly huge fans of
Starbucks._

Studies have shown that Starbucks has actually increased the quantity of
viable coffee shops in neighborhoods. Is this something different in England?

The Gov't not getting taxes is strictly the fault of the Gov't for allowing
the loopholes to exist and be exploited. I'm sure though, that this article
isn't claiming that none of the employees of Starbucks doesn't get taxed.

I think it would behoove the article writer to study and research what has
happened on other parts of the world. Of course, Amazon isn't really good for
B&M bookstores and that is a legitimate fear, but the rest are non-issues. I
really don't get the Google argument at all.

~~~
lmm
>I don't get this argument at all.

The argument, not that I agree with it, is: there is a finite pool of
advertising dollars. By taking them and spending them on other stuff, Google
is cutting the funding of news/television/radio. It's like pg's suggestion
that the invention of the camera may have damaged art by depriving artists of
"day job"s painting portraits.

>Studies have shown that Starbucks has actually increased the quantity of
viable coffee shops in neighborhoods. Is this something different in England?

I doubt it. But there are still many owners of small coffee shops who hate
Starbucks - mostly the ones who can't compete because their coffee is
terrible.

>The Gov't not getting taxes is strictly the fault of the Gov't for allowing
the loopholes to exist and be exploited.

And now the Gov't is taking action to correct that.

~~~
DominikR
Well, if Google's efficiency is the problem they should consider banning all
agricultural machinery. There is untapped job potential for up to 90% of the
population!

Or we could start building pyramids again - with bare hands!

~~~
lmm
Please, read and think a little before jumping on your strawmen.

The allegation is not that google is being more efficient and thereby reducing
employment. The worry is that there will be much less news/television/radio
because google has removed its primary source of funding.

(If you believe the purpose of all things is economic optimization then this
won't concern you, but many consider news/television/radio to be valuable for
their own sakes)

~~~
AnthonyMouse
I'm not sure I buy the premise. It's not Google (the company), it's the
internet as a whole. More competition for news reduces margins. Suppose Google
search was a grant-funded nonprofit operation with no ads. How would that
improve the condition of news reporters?

~~~
lmm
It's not Google's search so much as adsense. The argument is that companies
with ad budgets would no longer be spending them on google ads, so they'd
direct a greater amount of money towards buying newspaper ads. So prices for
ad space in newspapers would rise, and newspapers would have more money (and
there would be more newspapers, as previously unprofitable niches became
profitable) and spend that on reporters.

~~~
AnthonyMouse
Google News doesn't even have ads though, so that can only be referring to
search and apps and the like. I mean it seems like they could just as well be
arguing "billboards are destroying journalism" because the money companies
spend on billboards (or direct mail, or telemarketing, etc.) are marketing
dollars that could instead have gone to supporting newspapers if those
alternatives didn't exist.

------
lmg643
I have always found it interesting that the tech titans, whose employees seem
to overwhelmingly support high-tax blue-state politicians and policies, are
also engaged in the most aggressive tax avoidance in the world, and given
their wild success, probably the largest in history.

We only need to look at Europe to see how widespread tax avoidance plus high
government spending creates an unsustainable path that puts the entire economy
and country at risk.

Since silicon valley seems like such a civic minded place, I'm wondering if we
will ever get realistic about what we'd really like to see happen: either
support lower government spending across the board to complement the
aggressive tax avoidance, or demand that leading companies pay taxes according
to the state or country where the revenue is received, and not based on
wherever a shell company may reside.

------
parenthesis
Something that really annoys me about such debates on taxation is that people
often say `tax' when they mean `corporation tax' (in the case of companies) or
`income tax' (in the case of individuals).

In the UK, about the same is paid in national insurance + VAT + council tax as
is paid in corporation tax + income tax.

------
gadders
Laffer curve, anyone? Reduce the Corporate Tax rates and companies wouldn't
have spend mony on all these contortions to avoid paying.

~~~
onetwothreefour
LOL. You do realize the laffer curve is widely discredited?

All reducing corporate tax rates does is cause a race to the bottom.

~~~
gadders
How can it be discredited if it is actually happening?

I'd prefer a race to the bottom than the current race to the top.

------
wildranter
In the case of media companies vs Google, and Amazon vs everybody else, I
think they deserve for not innovating their businesses, and leaving customers
in the cold.

Now for Starbucks vs traditional cafés, just make better coffee. I doubt
Starbucks would thrive in Italy for that reason.

