1) While we are members of the EU there is nothing we can do as we have ceded most of our powers to act independently in this area.
2) HMRC are muggers in suits. They go for the little old ladies' handbags (small businesses who cannot afford to contest their extortion) and leave larger concerns who can afford to argue the toss and prove them wrong alone.
Len,
Point 1 isn't true and, as much as I think they're rubbish and need a good kick up the arse, neither really is point 2. You rarely see one of them in a suit these days. Most of them look like they got dressed in the dark that morning and never had time to wash. ;-)
1) While we are members of the EU there is nothing we can do as we have ceded most of our powers to act independently in this area.
The EU has no influence over income/corporation tax rates in the Member States except where they break EU rules/interferes with the single market, such as by distorting markets. So it's up to each Member State to implements its own taxation policies. So the EU is powerless to influence the UK's taxation policies.
Unless of course you can point to the specific article in the TFEU/TEU which authorises it?
I appreciate you like to bash the EU at every opportunity but you could at least try and be factual.
Idle Hans, lets just agree to disagree on this one.
I know how VAT works. Trust me. I know what I'm talking about here. To say that VAT is not relevant or a cost to retailers is just wrong. I could give you lots of examples, but I just really can't be bothered.
Happy to be educated, Off it, and to concede the point - I may well have missed something...
Sorry if that sounded a bit arsey earlier.
Retailers very much treat VAT as a cost of doing business. They factor it into the equation along with manufacture, freight, store overheads, staff costs, etc when it comes to setting a price. Getting the price point right is key for any product and they set the price according to what they think the market will take, as well as the cost to them and their expected profit margin. It's a balancing act.
By way of an example, say you were an operator of a chain of high street and station outlets which mainly sell a well known savoury product that is particularly popular in the West Country.
Under your previous analysis if the good people at HMRC decided to change the VAT liability of this product overnight from 0% to 20% the retailer would just add that amount onto his price and collect it from the punter. Fine in theory, except the punters would have largely fcuked off elsewhere because the price has gone up 20% overnight, whereas Upper Crust are still knocking out their baguettes for the same price as before, and it was always a bit of a toss up between the two anyway.
So the retailer can't just whack his prices up, he has to either absorb it and take a hit on his profits or make savings on some of his otHer costs, such as laying of staff, buying cheaper ingredients, etc. he was already charging the maximum he thought he could get away with, so there's not much elasticity in the price.
So, VAT very much is a cost to that business and knowing the FD of one such business I reckon he would be likely to chin anyone who suggested otherwise, such is the potentially disastrous impact this particular change has had on the business he is doing his level best to keep afloat.
1) While we are members of the EU there is nothing we can do as we have ceded most of our powers to act independently in this area.
The EU has no influence over income/corporation tax rates in the Member States except where they break EU rules/interferes with the single market, such as by distorting markets. So it's up to each Member State to implements its own taxation policies. So the EU is powerless to influence the UK's taxation policies.
Unless of course you can point to the specific article in the TFEU/TEU which authorises it?
I appreciate you like to bash the EU at every opportunity but you could at least try and be factual.
That's actually not entirely true either. VAT, for example, is governed by a single European VAT Directive and although Member States do have a fair degree of leeway in certain areas, we have to abide by ECJ decisions which take precedent over any UK courts. Also, the European Commission launch infraction proceedings against Member States that they think are out of kilter with the Directive. A prime example is the Commissions ongoing proceedings against both France and Luxembourg over their introduction of lower rates of VAT for electronically supplied services (eg. Downloads of music, books, games, etc) whilst the rest of us tax them at the higher standard rate.
Of course, it's purely coincidence that Amazon's e-services business is based in Luxembourg. But then again, if you could choose anywhere to base yourself but you were going to be taxed 3% of turnover in Lux and 25% in one of the Scandinavian countries, then where would you go?
That's actually not entirely true either. VAT is governed by a single European VAT Directive and although Member States do have a fair degree of leeway in certain areas, we have to abide by ECJ decisions which take precedent over any UK courts.
You are confusing VAT/sales tax with income and corporation tax, the EU has no competence for income/corporation tax, something I made quite clear.
The reason why Amazon route sales through to Luxembourg is because of their low corporation taxes.
And yes I know that EU law takes precedence over Member States law - those interested can look up Van Gend n Loos v Niederlande and Costa v Enel from the 1960s (ie before we joined).
The ECA 1972 enables EU law to take precedence in the UK (where there is a competence) and this was tested judicially in cases like Factortame (2).
Another EU power is to move towards harmonization whereby countries can maintain current levels and schemes of VAT but if they raise them they cannot then bring them down again. A tad controversial, certainly with Len, but perhaps the EU countries should look to harmonize VAT more aggressively and perhaps even share the receipts based on country of origin.
I am sure Luxembourg might disagree but isn't that why EU needs majority voting.
Again I don't know all the numbers but a big issue is profits leaving the EU when supply, added value and distribution is mainly within UK/EU. Tackling this and a handful of other changes could restore European economies fairly swiftly. Sooner or later the Germans and others will move on this as one of the ways to strengthen the €uro and €urozone - personally I hope the UK is at the centre of this shaping the debate for this century.
So Len is right to bring up the EU but I'm not sure he meant to suggest that it could be part of the solution!
I'm not confusing anything mate. You said, "So the EU is powerless to influence the UK's taxation policies."
I just pointed out that that statement is not actually correct and gave an example.
Good to see that your ability to selectively quote is in order...what I wrote verbatim:
"The EU has no influence over income/corporation tax rates in the Member States except where they break EU rules/interferes with the single market, such as by distorting markets. So it's up to each Member State to implements its own taxation policies. So the EU is powerless to influence the UK's taxation policies."
So to re-iterate the EU has no competence over corporation and income tax. Have you got that?
I am fully aware that we can theoretically set our own levels of corporation and income tax although the desire to comply with and mirror EU (or EEC) stability pact requirements has certainly shaped our attitude to this in the past.
However what I meant is that as EU members we almost certainly would not be able to introduce a turnover tax, as Idle Hans suggested higher up the thread, because of single market legislation.
We might be able to do something for countries outside the EU, rather like we do with immigration when we stop Australians and Zimbabweans with British heritage coming in, but as regards EU countries, just as we do with EU immigration we have to lump it.
I'm not confusing anything mate. You said, "So the EU is powerless to influence the UK's taxation policies."
I just pointed out that that statement is not actually correct and gave an example.
Good to see that your ability to selectively quote is in order...what I wrote verbatim:
"The EU has no influence over income/corporation tax rates in the Member States except where they break EU rules/interferes with the single market, such as by distorting markets. So it's up to each Member State to implements its own taxation policies. So the EU is powerless to influence the UK's taxation policies."
So to re-iterate the EU has no competence over corporation and income tax. Have you got that?
Except where they (Member States) break EU rules / interferes with the single market.
We are dealing in semantics here. Yes we still have some leeway but as you yourself admit when it comes to the crunch the EU trumps us.
I am fully aware that we can theoretically set our own levels of corporation and income tax although desire to comply and mirror EU (or EEC) stability pact requirements has certainly shaped our attitude to this in the past.
There's no "theoretical" about it - the EU is powerless to impose on the UK taxation policies unless they are used to distort the operation of the internal market.
I know you think otherwise but the EU's competences derive from two treaties - TFEU and TEU, and nowhere does it allow the EU to rule on Member States internal corporation and income taxes.
As seriously red wrote, this is a really important issue, and not just for the UK. On CL there are a lot of smart people with their own specialist knowledge which I appreciate learning from, and that is very much in evidence on this thread. To answer Off_it's question re Amazon, if I buy from Amazon UK I would think it fair that the corporation tax on the profit is paid in the UK, whereas if I buy from Amazon Germany, I would expect it to be paid in Germany. I also accept that there are no easy solutions, but that shouldn't stop us talking about the problem, and I think Idle Hans idea of a sales tax, which I have seen sugggested in the press is going in the right direction. Having discussed this with people over the weekend I think Amazon deserves more venom than Google. It is true that Google has significant resources based in Dublin. That said, most of its innovation is still conducted in The US, and they don't pay much tax there either compared to their size. But Amazon has nothing of significance in Luxembourg. I am not even sure their invoicing centre actually sits there. They are the ones who are more clearly taking the piss. Seems like those in the know have confirmed my suspicion that HMRC is seriously behind the curve. I think that if you offered people with serious business experience of various kinds, jobs in an elite force in HMRC, with performance related bonuses, you'd see some results. Rodney. Richard Murray's company, Avesco, is a publicly quoted UK based company. I dont like the Charlton set up but it's a drop in the ocean, and not RMs idea.
To answer Off_it's question re Amazon, if I buy from Amazon UK I would think it fair that the corporation tax on the profit is paid in the UK, whereas if I buy from Amazon Germany, I would expect it to be paid in Germany.
Prague, the problem with that is that even if you are buying from a .co.uk website that doesn't mean you are buying FROM the UK. Goods can come from anywhere - we don't exactly make a lot in the uk anymore as it is so they probably originated somewhere else - and we already know that e-services come from Luxembourg (albeit with little actual human or techncial involvement, because they dont need any).
Seems like those in the know have confirmed my suspicion that HMRC is seriously behind the curve. I think that if you offered people with serious business experience of various kinds, jobs in an elite force in HMRC, with performance related bonuses, you'd see some results.
You might be right there, but how long would it be before consultancy firms were offering the same people more money to leave HMRC? They tried something similar once before and in my experience, barring a few notable exceptions, only ended up recruiting a load of second rate people who either already had or quickly adopted a civil service mentality, i.e. "it's not my job to do that, and anyway it's gone 4pm so I'm off home".
Arguably some of the best successes HMRC have had is in agreeing these "sweetheart deals" everyone is now up in arms about, where they got people to agree to cough up more tax than they were paying before, but probably still not as much as they might have to. Not ideal, but perfectly understandable if you accept a hard-nosed business approach to things, i.e. they get some money in the door with minimal time, effort and resources rather than getting tied up in loops for years and no guarantees of getting anything after that process.
Also, agree witht the comments above re the importance of the high street and the impact its demise could have on us all. There's no point in people moaning about the likes of Amazon avoiding tax in a perfectly legal and sensible way (from their perspective) if you then go and buy all of your shit from there and feed the beast. Mind you, even then I think you are still within your rights to expect the people who's job it is to safeguard the integrity and take of the various UK taxes to do their fcuking jobs properly and if the system is broke THEN BLOODY WELL FIX IT!
Given the size of the UK market for books, CDs etc. I kinda suspect that any orders on the internet are dispatched from a warehouse near the M25 and not from Luxembourg?! Processing a sales order for books or advertising outside of the UK when the transaction and delivery are in the UK should not enable any company to shift the economic value of the transaction and associated tax on profits offshore. The authors and artists might reside anywhere on the globe but the publishing and distribution all make up part of the value chain. To minimize the proportion of the sale associated with the actual sale goes against all accepted analysis and practice to date.
And the politicians might pick up some interest and votes if they addressed these issues - the same ones which have come up here before when discussing the demise of the high street, pubs etc. Perhaps George Osborne might do something as chair of the G8 summit?
One way to shore up bricks and mortar trading might be to increase sales tax and reduce/eliminate business rates. Again I don't know the numbers but we want more not less businesses with more jobs so that there is more payroll tax paid and more disposable income about.
And once again the only way that this will move forwards is with a trans EU approach - its not what Len and UKIP want but it is actually what the EU is for. Perhaps the OECD will provide some guidance in their forthcoming paper on the subject coming out in July.
It would appear that HMRC with the assistance of a whistle blower may be onto something with Google - it's all over the Sunday Times today* and if true/proven then Google could find themselves paying a lot of back tax with perhaps 100% penalties. If the government / HMRC do not follow through then that sort of undermines ALL tax collection efforts?
Oof, that looks tasty, seriously red. Lets see where that goes.
On the other hand I have to hold my hand up and say that Amazon - now - has a much bigger presence in Luxembourg than I had previously understood. On Linked IN I got 468 entries currently employed there by Amazon. On the other in the UK I got 2,838, including loads of marketing and sales positions.
Off_it, I have to concede that you are right about the sweetheart deals, though I guess we'd agree that better quality HMRC people would increase the amounts that would be negotiated. As far as you know, am I right to say that this government has reduced the amount they can spend on senior people? I am sure I read of a row in Parliament about it.
Good luck to anyone avoiding paying tax! If I could get away with paying no tax, then I, like most people wouldn't pay it. Just because its two massive companies everyone pisses and moans about it.
Yes, because if nobody paid any tax then that would work out great.....
....but only up to a point. He knows that Google would pay more tax in the UK if it didn't work very hard to circumvent the rules. If companies ignore the spirit of the rules - as Barclays did for example - then it makes life very difficult for politicians. You simply can't right a rule book to cover every possible scenario and "clever" lawyers and accountants will always be one step ahead of the evolving rule book.
If what's in today's Sunday Times is correct Mr Schmidt's "politicians" should hammer Google.
Idle Hans, lets just agree to disagree on this one.
I know how VAT works. Trust me. I know what I'm talking about here. To say that VAT is not relevant or a cost to retailers is just wrong. I could give you lots of examples, but I just really can't be bothered.
Happy to be educated, Off it, and to concede the point - I may well have missed something...
Sorry if that sounded a bit arsey earlier.
Retailers very much treat VAT as a cost of doing business. They factor it into the equation along with manufacture, freight, store overheads, staff costs, etc when it comes to setting a price. Getting the price point right is key for any product and they set the price according to what they think the market will take, as well as the cost to them and their expected profit margin. It's a balancing act.
By way of an example, say you were an operator of a chain of high street and station outlets which mainly sell a well known savoury product that is particularly popular in the West Country.
Under your previous analysis if the good people at HMRC decided to change the VAT liability of this product overnight from 0% to 20% the retailer would just add that amount onto his price and collect it from the punter. Fine in theory, except the punters would have largely fcuked off elsewhere because the price has gone up 20% overnight, whereas Upper Crust are still knocking out their baguettes for the same price as before, and it was always a bit of a toss up between the two anyway.
So the retailer can't just whack his prices up, he has to either absorb it and take a hit on his profits or make savings on some of his otHer costs, such as laying of staff, buying cheaper ingredients, etc. he was already charging the maximum he thought he could get away with, so there's not much elasticity in the price.
So, VAT very much is a cost to that business and knowing the FD of one such business I reckon he would be likely to chin anyone who suggested otherwise, such is the potentially disastrous impact this particular change has had on the business he is doing his level best to keep afloat.
Apologies for rambling on!
Fair point, Off_it, and completely concur re price points - I have a background in the fashion industry, which operates pricing in a similar way. The key difference is that VAT applies to all products as standard (excepting kids clothes) so the problems encountered by your pastry-based snack friend don't arise, and there's no prospect of fiscal neutrality being compromised as there is in your example.
In fact, I now work in a business where the sale of static caravans forms a major part of our margins (oh the glamour!), so we have had the random and botched introduction of VAT on new vans to contend with since last month.
This is all a bit off the point though. I don't blame Amazon, Google et al for using tax law to their advantage where possible. Corporations are amoral (not immoral), and will act, as has been stated already, to the benefit of their shareholders. Indeed, it is the duty of the directors to do just that. It is the responsibility of tax legislators to frame the law in such a way as to ensure tax revenues are properly and fairly collected. They have completely lagged behind internet and off-shoring thus far, but criticising corporations who are playing within the legislators own rules is feeble - they should be looking hard at amending the rules to render the income taxable in the first place.
Good luck to anyone avoiding paying tax! If I could get away with paying no tax, then I, like most people wouldn't pay it. Just because its two massive companies everyone pisses and moans about it.
Yes, because if nobody paid any tax then that would work out great.....
Idle Hans, lets just agree to disagree on this one.
I know how VAT works. Trust me. I know what I'm talking about here. To say that VAT is not relevant or a cost to retailers is just wrong. I could give you lots of examples, but I just really can't be bothered.
Happy to be educated, Off it, and to concede the point - I may well have missed something...
Sorry if that sounded a bit arsey earlier.
Retailers very much treat VAT as a cost of doing business. They factor it into the equation along with manufacture, freight, store overheads, staff costs, etc when it comes to setting a price. Getting the price point right is key for any product and they set the price according to what they think the market will take, as well as the cost to them and their expected profit margin. It's a balancing act.
By way of an example, say you were an operator of a chain of high street and station outlets which mainly sell a well known savoury product that is particularly popular in the West Country.
Under your previous analysis if the good people at HMRC decided to change the VAT liability of this product overnight from 0% to 20% the retailer would just add that amount onto his price and collect it from the punter. Fine in theory, except the punters would have largely fcuked off elsewhere because the price has gone up 20% overnight, whereas Upper Crust are still knocking out their baguettes for the same price as before, and it was always a bit of a toss up between the two anyway.
So the retailer can't just whack his prices up, he has to either absorb it and take a hit on his profits or make savings on some of his otHer costs, such as laying of staff, buying cheaper ingredients, etc. he was already charging the maximum he thought he could get away with, so there's not much elasticity in the price.
So, VAT very much is a cost to that business and knowing the FD of one such business I reckon he would be likely to chin anyone who suggested otherwise, such is the potentially disastrous impact this particular change has had on the business he is doing his level best to keep afloat.
Apologies for rambling on!
This is all a bit off the point though. I don't blame Amazon, Google et al for using tax law to their advantage where possible. Corporations are amoral (not immoral), and will act, as has been stated already, to the benefit of their shareholders. Indeed, it is the duty of the directors to do just that.
Its not quite that simple. There can be a fine line between amoral and immoral behaviour and Corporations sometimes cross that line without breaking any rules. The Banks, for example, have done so repeatedly and are now being forced to change their behaviour, in part by regulatory change, but also because they're beginning to understand that they'll pay a very heavy price if they don't.
Idle Hans, lets just agree to disagree on this one.
I know how VAT works. Trust me. I know what I'm talking about here. To say that VAT is not relevant or a cost to retailers is just wrong. I could give you lots of examples, but I just really can't be bothered.
Happy to be educated, Off it, and to concede the point - I may well have missed something...
Sorry if that sounded a bit arsey earlier.
Retailers very much treat VAT as a cost of doing business. They factor it into the equation along with manufacture, freight, store overheads, staff costs, etc when it comes to setting a price. Getting the price point right is key for any product and they set the price according to what they think the market will take, as well as the cost to them and their expected profit margin. It's a balancing act.
By way of an example, say you were an operator of a chain of high street and station outlets which mainly sell a well known savoury product that is particularly popular in the West Country.
Under your previous analysis if the good people at HMRC decided to change the VAT liability of this product overnight from 0% to 20% the retailer would just add that amount onto his price and collect it from the punter. Fine in theory, except the punters would have largely fcuked off elsewhere because the price has gone up 20% overnight, whereas Upper Crust are still knocking out their baguettes for the same price as before, and it was always a bit of a toss up between the two anyway.
So the retailer can't just whack his prices up, he has to either absorb it and take a hit on his profits or make savings on some of his otHer costs, such as laying of staff, buying cheaper ingredients, etc. he was already charging the maximum he thought he could get away with, so there's not much elasticity in the price.
So, VAT very much is a cost to that business and knowing the FD of one such business I reckon he would be likely to chin anyone who suggested otherwise, such is the potentially disastrous impact this particular change has had on the business he is doing his level best to keep afloat.
Apologies for rambling on!
This is all a bit off the point though. I don't blame Amazon, Google et al for using tax law to their advantage where possible. Corporations are amoral (not immoral), and will act, as has been stated already, to the benefit of their shareholders. Indeed, it is the duty of the directors to do just that.
Its not quite that simple. There can be a fine line between amoral and immoral behaviour and Corporations sometimes cross that line without breaking any rules. The Banks, for example, have done so repeatedly and are now being forced to change their behaviour, in part by regulatory change, but also because they're beginning to understand that they'll pay a very heavy price if they don't.
The thing is while other companies are using these tax avoidance schemes, everybody else has to, to remain competitive. In fact it could be viewed (tenuously maybe) that while companies have a duty to their shareholders to maximise profits and these schemes do exactly that, they then have a duty to implement them.
If anyone thinks that this is a simple issue (as we are led to believe by those in political opposition) they are kidding themselves. This kind of thing, while not new is relatively recent in its extent, the advent of global trading and the communication/banking revolution has expanded the depth and broadened routes to tax avoidance. Governments and companies have always played a game of cat and mouse however when you deal with international companies there is less of a moral incentive to 'play the game' especially where they can repatriate the monies
I have some sympathy with Greenie's comments above, while it is true that if everybody avoided tax we'd be in the brown stuff good 'n' proper (as in Greece), if some are able to avoid it then why should anyone else pick up the slack? Some companies are able to gain a competitive advantage by avoiding tax rather than by better productivity or innovation then everyone else is at a disadvantage if they don't. If as was recently discovered, Starbucks is moving its profit overseas by buying in expensively priced coffee beans, then where is the moral imperative for other coffee owners to pay up?
Equally where is the simple piece of legislation that will obligate a company to buy from a given source or at a given price, I'm not sure that can ever be done. I'm no tax expert but it seems to me that closing these loopholes will be very difficult indeed and as usual the issue is being used as a political football because of the times in which we live.
All tax is born by consumers and individuals, businesses simply pass on the costs, they might write the cheques but the cost always ends up with us.
But it isn't that difficult to look at the value chain and make an estimate of the fair value of the different parts of the transaction - it's as easy as ABC - Activity based costing and companies do it all the time themselves to analyse how to reduce losses / increase profits. There may be a need for legislation to clarify / simplify the position and my point higher up the thread is that this will have to be passed across all major economies. You only have to type Google whistleblower into...err Google and the story is all over the media. Overpricing coffee beans is a pretty simple transaction to challenge
If I charged my professional services from Dublin when I lived and worked in and around London I would expect to be challenged eventually especially if I was paid in sterling into a London bank account.
And I am not sure I hold with your assertion that customers pay more. Google makes massive profits and the only people to lose would be jurisdictions who currently receive the tax revenues like Ireland and Bermuda.
I do agree that with e-publishing and music the whole thing is much more complex since despatch of the goods can easily be from a low VAT country like Luxembourg - but the answer there is to work with EU partners to stop excessive tax competition which reduces overall revenues and is contributing to the decimation of the High Street
Comments
Point 1 isn't true and, as much as I think they're rubbish and need a good kick up the arse, neither really is point 2. You rarely see one of them in a suit these days. Most of them look like they got dressed in the dark that morning and never had time to wash.
;-)
The EU has no influence over income/corporation tax rates in the Member States except where they break EU rules/interferes with the single market, such as by distorting markets. So it's up to each Member State to implements its own taxation policies. So the EU is powerless to influence the UK's taxation policies.
Unless of course you can point to the specific article in the TFEU/TEU which authorises it?
I appreciate you like to bash the EU at every opportunity but you could at least try and be factual.
Retailers very much treat VAT as a cost of doing business. They factor it into the equation along with manufacture, freight, store overheads, staff costs, etc when it comes to setting a price. Getting the price point right is key for any product and they set the price according to what they think the market will take, as well as the cost to them and their expected profit margin. It's a balancing act.
By way of an example, say you were an operator of a chain of high street and station outlets which mainly sell a well known savoury product that is particularly popular in the West Country.
Under your previous analysis if the good people at HMRC decided to change the VAT liability of this product overnight from 0% to 20% the retailer would just add that amount onto his price and collect it from the punter. Fine in theory, except the punters would have largely fcuked off elsewhere because the price has gone up 20% overnight, whereas Upper Crust are still knocking out their baguettes for the same price as before, and it was always a bit of a toss up between the two anyway.
So the retailer can't just whack his prices up, he has to either absorb it and take a hit on his profits or make savings on some of his otHer costs, such as laying of staff, buying cheaper ingredients, etc. he was already charging the maximum he thought he could get away with, so there's not much elasticity in the price.
So, VAT very much is a cost to that business and knowing the FD of one such business I reckon he would be likely to chin anyone who suggested otherwise, such is the potentially disastrous impact this particular change has had on the business he is doing his level best to keep afloat.
Apologies for rambling on!
Of course, it's purely coincidence that Amazon's e-services business is based in Luxembourg. But then again, if you could choose anywhere to base yourself but you were going to be taxed 3% of turnover in Lux and 25% in one of the Scandinavian countries, then where would you go?
You are confusing VAT/sales tax with income and corporation tax, the EU has no competence for income/corporation tax, something I made quite clear.
The reason why Amazon route sales through to Luxembourg is because of their low corporation taxes.
And yes I know that EU law takes precedence over Member States law - those interested can look up Van Gend n Loos v Niederlande and Costa v Enel from the 1960s (ie before we joined).
The ECA 1972 enables EU law to take precedence in the UK (where there is a competence) and this was tested judicially in cases like Factortame (2).
I/ we need to have a long hard look at our lives ;-)
I am sure Luxembourg might disagree but isn't that why EU needs majority voting.
Again I don't know all the numbers but a big issue is profits leaving the EU when supply, added value and distribution is mainly within UK/EU. Tackling this and a handful of other changes could restore European economies fairly swiftly. Sooner or later the Germans and others will move on this as one of the ways to strengthen the €uro and €urozone - personally I hope the UK is at the centre of this shaping the debate for this century.
So Len is right to bring up the EU but I'm not sure he meant to suggest that it could be part of the solution!
I just pointed out that that statement is not actually correct and gave an example.
"The EU has no influence over income/corporation tax rates in the Member States except where they break EU rules/interferes with the single market, such as by distorting markets. So it's up to each Member State to implements its own taxation policies. So the EU is powerless to influence the UK's taxation policies."
So to re-iterate the EU has no competence over corporation and income tax. Have you got that?
However what I meant is that as EU members we almost certainly would not be able to introduce a turnover tax, as Idle Hans suggested higher up the thread, because of single market legislation.
We might be able to do something for countries outside the EU, rather like we do with immigration when we stop Australians and Zimbabweans with British heritage coming in, but as regards EU countries, just as we do with EU immigration we have to lump it.
Now, go and have some more gateaux.
Except where they (Member States) break EU rules / interferes with the single market.
We are dealing in semantics here. Yes we still have some leeway but as you yourself admit when it comes to the crunch the EU trumps us.
Hence my original assertion above.
Clothes pegs Sir?
;-)
There's no "theoretical" about it - the EU is powerless to impose on the UK taxation policies unless they are used to distort the operation of the internal market.
I know you think otherwise but the EU's competences derive from two treaties - TFEU and TEU, and nowhere does it allow the EU to rule on Member States internal corporation and income taxes.
Your handy guide to EU competences:
http://ec.europa.eu/citizens-initiative/public/competences/faq#q1
To answer Off_it's question re Amazon, if I buy from Amazon UK I would think it fair that the corporation tax on the profit is paid in the UK, whereas if I buy from Amazon Germany, I would expect it to be paid in Germany.
I also accept that there are no easy solutions, but that shouldn't stop us talking about the problem, and I think Idle Hans idea of a sales tax, which I have seen sugggested in the press is going in the right direction.
Having discussed this with people over the weekend I think Amazon deserves more venom than Google. It is true that Google has significant resources based in Dublin. That said, most of its innovation is still conducted in The US, and they don't pay much tax there either compared to their size. But Amazon has nothing of significance in Luxembourg. I am not even sure their invoicing centre actually sits there. They are the ones who are more clearly taking the piss.
Seems like those in the know have confirmed my suspicion that HMRC is seriously behind the curve. I think that if you offered people with serious business experience of various kinds, jobs in an elite force in HMRC, with performance related bonuses, you'd see some results.
Rodney. Richard Murray's company, Avesco, is a publicly quoted UK based company. I dont like the Charlton set up but it's a drop in the ocean, and not RMs idea.
Prague, the problem with that is that even if you are buying from a .co.uk website that doesn't mean you are buying FROM the UK. Goods can come from anywhere - we don't exactly make a lot in the uk anymore as it is so they probably originated somewhere else - and we already know that e-services come from Luxembourg (albeit with little actual human or techncial involvement, because they dont need any).
Seems like those in the know have confirmed my suspicion that HMRC is seriously behind the curve. I think that if you offered people with serious business experience of various kinds, jobs in an elite force in HMRC, with performance related bonuses, you'd see some results.
You might be right there, but how long would it be before consultancy firms were offering the same people more money to leave HMRC? They tried something similar once before and in my experience, barring a few notable exceptions, only ended up recruiting a load of second rate people who either already had or quickly adopted a civil service mentality, i.e. "it's not my job to do that, and anyway it's gone 4pm so I'm off home".
Arguably some of the best successes HMRC have had is in agreeing these "sweetheart deals" everyone is now up in arms about, where they got people to agree to cough up more tax than they were paying before, but probably still not as much as they might have to. Not ideal, but perfectly understandable if you accept a hard-nosed business approach to things, i.e. they get some money in the door with minimal time, effort and resources rather than getting tied up in loops for years and no guarantees of getting anything after that process.
Also, agree witht the comments above re the importance of the high street and the impact its demise could have on us all. There's no point in people moaning about the likes of Amazon avoiding tax in a perfectly legal and sensible way (from their perspective) if you then go and buy all of your shit from there and feed the beast. Mind you, even then I think you are still within your rights to expect the people who's job it is to safeguard the integrity and take of the various UK taxes to do their fcuking jobs properly and if the system is broke THEN BLOODY WELL FIX IT!
And the politicians might pick up some interest and votes if they addressed these issues - the same ones which have come up here before when discussing the demise of the high street, pubs etc. Perhaps George Osborne might do something as chair of the G8 summit?
One way to shore up bricks and mortar trading might be to increase sales tax and reduce/eliminate business rates. Again I don't know the numbers but we want more not less businesses with more jobs so that there is more payroll tax paid and more disposable income about.
And once again the only way that this will move forwards is with a trans EU approach - its not what Len and UKIP want but it is actually what the EU is for. Perhaps the OECD will provide some guidance in their forthcoming paper on the subject coming out in July.
* I just looked it up on google!
On the other hand I have to hold my hand up and say that Amazon - now - has a much bigger presence in Luxembourg than I had previously understood. On Linked IN I got 468 entries currently employed there by Amazon. On the other in the UK I got 2,838, including loads of marketing and sales positions.
Off_it, I have to concede that you are right about the sweetheart deals, though I guess we'd agree that better quality HMRC people would increase the amounts that would be negotiated. As far as you know, am I right to say that this government has reduced the amount they can spend on senior people? I am sure I read of a row in Parliament about it.
If what's in today's Sunday Times is correct Mr Schmidt's "politicians" should hammer Google.
In fact, I now work in a business where the sale of static caravans forms a major part of our margins (oh the glamour!), so we have had the random and botched introduction of VAT on new vans to contend with since last month.
This is all a bit off the point though. I don't blame Amazon, Google et al for using tax law to their advantage where possible. Corporations are amoral (not immoral), and will act, as has been stated already, to the benefit of their shareholders. Indeed, it is the duty of the directors to do just that.
It is the responsibility of tax legislators to frame the law in such a way as to ensure tax revenues are properly and fairly collected. They have completely lagged behind internet and off-shoring thus far, but criticising corporations who are playing within the legislators own rules is feeble - they should be looking hard at amending the rules to render the income taxable in the first place.
The thing is while other companies are using these tax avoidance schemes, everybody else has to, to remain competitive. In fact it could be viewed (tenuously maybe) that while companies have a duty to their shareholders to maximise profits and these schemes do exactly that, they then have a duty to implement them.
If anyone thinks that this is a simple issue (as we are led to believe by those in political opposition) they are kidding themselves. This kind of thing, while not new is relatively recent in its extent, the advent of global trading and the communication/banking revolution has expanded the depth and broadened routes to tax avoidance. Governments and companies have always played a game of cat and mouse however when you deal with international companies there is less of a moral incentive to 'play the game' especially where they can repatriate the monies
I have some sympathy with Greenie's comments above, while it is true that if everybody avoided tax we'd be in the brown stuff good 'n' proper (as in Greece), if some are able to avoid it then why should anyone else pick up the slack? Some companies are able to gain a competitive advantage by avoiding tax rather than by better productivity or innovation then everyone else is at a disadvantage if they don't. If as was recently discovered, Starbucks is moving its profit overseas by buying in expensively priced coffee beans, then where is the moral imperative for other coffee owners to pay up?
Equally where is the simple piece of legislation that will obligate a company to buy from a given source or at a given price, I'm not sure that can ever be done. I'm no tax expert but it seems to me that closing these loopholes will be very difficult indeed and as usual the issue is being used as a political football because of the times in which we live.
All tax is born by consumers and individuals, businesses simply pass on the costs, they might write the cheques but the cost always ends up with us.
If I charged my professional services from Dublin when I lived and worked in and around London I would expect to be challenged eventually especially if I was paid in sterling into a London bank account.
And I am not sure I hold with your assertion that customers pay more. Google makes massive profits and the only people to lose would be jurisdictions who currently receive the tax revenues like Ireland and Bermuda.
I do agree that with e-publishing and music the whole thing is much more complex since despatch of the goods can easily be from a low VAT country like Luxembourg - but the answer there is to work with EU partners to stop excessive tax competition which reduces overall revenues and is contributing to the decimation of the High Street