Yup: Value Added Tax regulations on food. Is a scone a cake or a biscuit? The most recent was the government deciding that warm take away food would attract VAT. Cold food is zero rated except for cakes that are 'luxury' items. That lead to the infamous 'pasty tax', serious debate as to what temperature could be described as 'warm' and a hasty climb down.
There is however a strong feeling that certain Large Internet Related Companies ought really to pay some tax on their UK operations.
There is however a strong feeling that certain Large Internet Related Companies ought really to pay some tax on their UK operations.
I think it's not so much Internet-related companies as multinationals, who (unlike home-grown, smaller businesses) often have the scale and geographical diversity to play funny money games where all of their profits conveniently wind up being earned in a location where a very low tax rate is payable, even though the money was blatantly earned elsewhere. That creates a huge barrier to competition for those smaller, home-grown businesses, and obviously deprives the government of a lot of tax revenues they "deserve".
The catch is that these businesses do pay a lot of tax in the originating countries: in the UK, for example, they probably collect VAT, make Employer's National Insurance contributions, and pay all kinds of consumption and property-related taxes. Additionally, these businesses typically employ a lot of local people. Consequently, if you sharply change the rules so they can't play their funny money games on Corporation Tax and as a consequence it really does become relatively expensive/unprofitable to operate within a certain country, then if they scale down or outright leave, it still hurts, a lot.
So far, I don't see any happy ending to this impasse for the government that doesn't involve an unprecedented and IMHO implausible level of international cooperation.
The more likely alternative seems to be governments realising that taxes on local profits are effectively a competitive international market, and having to learn to live within their means, probably rebalancing the tax system heavily in favour of consumption taxes and then making a whole round of adjustments to avoid screwing poor people because consumption taxes are regressive by nature. I can believe this would work, if you had sufficiently smart people figuring out how to balance everything properly, but for sure it would look very different to the tax landscape we have in most first world countries today.
Of course there are also the more draconian options: windfall taxes, economic annihilation of tax havens until they stop undercutting everyone else, and the like. But I suspect the long term costs of breaking the rules because you're a government and you can would far outweigh any short term increase in tax revenues, so I don't see any of these as particularly likely.
"So far, I don't see any happy ending to this impasse for the government that doesn't involve an unprecedented and IMHO implausible level of international cooperation."
Such is my cynical nature, I interpreted the 'initiative' as an attempt to distract attention from other areas of Mr Osborne’s policies. Rather like a stage magician.
There is however a strong feeling that certain Large Internet Related Companies ought really to pay some tax on their UK operations.