Don’t boycott Amazon, boycott the State!

There’s something sickening in the arrogant rudeness of the Commons Public Accounts Committee. For some reason it has become the culture to treat those appearing before it with sneering, and constant reminders of how important the Committee is. The members, such as chairman Hodge, like to preen themselves as dragon-slayers, when all they resemble is a bunch of sadistic schoolboys torturing a lizard.

Floating on clouds of faux-righteousness, they purport to be fighting the big companies, so they will pay their ‘fair share’ of money into the bottomless pit of government expenditure. The truth they don’t want to face is that, however the Committee wails and snarls, the companies are playing by the established rules, and taking advantage of other tax jurisdictions. Underlying the Committee’s inquiries are a number of false presumptions, such as:

A company like Amazon does not contribute to the UK, if it doesn’t hand over huge corporation tax payments to the bloated state. In fact, the millions of products Amazon sells to UK customers are adding to the wealth of the nation, by satisfying customer desires.

Companies like Amazon have an unfair advantage. In fact, companies based solely in the UK have an unfair disadvantage, owing to the avaricious, plundering state. If two people walk home, and one of them is mugged, you can’t say the other person had an unfair advantage, and that justice would be served if they both had been victimised.

If only companies like Amazon paid their ‘fair share’, the rest of us would be better off. This does not follow at all. The government’s expenditure is not dictated by its tax revenue. It spends all that, and keeps going by borrowing, mainly from the Bank of England at the moment, which magics up the cash for the purpose. Tax avoidance does not harm the economy. The more money a company avoids paying in tax, is more money available to invest and grow its business, although, unfortunately much of this will be swallowed up by accountants and tax lawyers, attempting to steer a course through the treacherous seas of regulation.

If the Public Accounts Committee wants to improve the state of the nation’s finances, it’s looking in the wrong place. The state is the problem. It is eating into the nation’s capital. It’s not working for us, we’re working for it, and if the parasite grows any bigger, the host may very well die.

19 Comments

  1. While the situation exists that company profits are taxed somewhere, I’d rather they paid tax into the UK’s coffers than Luxembourg’s or Belgium’s. The reason they don’t is because our corporation tax rates are too high.

    If UK corporation tax and personal was more competitive, they’d perhaps think about setting up their European Headquarters here, and maybe Starbucks would bring their coffee bean exchange from Switzerland to the UK. Lower tax means more investment, more jobs and a lower benefits bill. It’s a virtuous circle. Neither the Coalition or the Labour opposition seems to have grasped this. Instead they drive investment out with high taxes and then wonder why the growth isn’t returning.

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  2. I am also led to believe Ms Hodge’s tax arrangements aren’t the most ‘ethical’ given her millionaire status. But then again when has a politician ever given a damn about hypocrisy.

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  3. Absolutely agree tax must be lowered and the system simplified to attract investment.
    But before that can happen, spending must be reduced. That is what the Public Accounts Committee should be looking at.

    However, whatever tax there is should be fairly applied. It is not fair that a UK business pays a higher effective tax rate than a multinational on the same gross UK profits If profits are earnt from economic activity in the UK then tax should be paid in the UK at the same rate for both.

    Also, how can these multinationals justify such large payments to offshore companies in the same group thus reducing their UK profits. Google says it pays “royalties” to its own company in tax free Bermuda for using intellectual property. This is fiction. That’s evasion not avoidance.

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    1. I agree up to the word ‘however’.

      Unless and until the government deals with those points, I don’t see why a company should make it easy for the taxman, and I can’t raise even a grain of moral indignation, especially as we are seeing the political case being made, by these politicians and even more so by the likes of Richard Murphy, that it is immoral not to pay whatsoever tax a government claims it is owed and that the distinction between evasion and avoidance is insignificant, and in Murphy’s case that, essentially, the government owns everything and what you get to keep is a matter wholly for the discretion of the government.

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    2. Let’s be clear about this. The right to avoid tax is absolute and total, and it is a moral right. It is the essence of freedom that a man can choose what he does with his limited hours on earth. A free man owes no duty to anyone else aside from the benevolence he offers to those upon whom his own sense of justice bestows it.

      Tax is not theft, it is partial slavery, backed up by the threat of prison for tax evasion, which would be partial murder.

      People that screech moral outrage that someone else is not paying enough of their profit ignore the fact that profit comes from effort and effort takes time. They are literally claiming a right to the limited hours of somebody’s life, those hours will not be replaced or compensated for (an economic nonsense due to the impossibility of central planning). If they are claiming welfare and spending it on food, then they are cannibals in a literal sense.

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      1. I agree the state is a monstrous bloodsucker whose blood supply should be cut off asap. However tax is a reality right now. To the extent it exists, it should be applied fairly between taxpayers. Profit is hard earnt by both the UK business and the multinational. Is it fair that the multinational pays tax at a far lower rate by creating artificial overseas payments? I am not talking about paying “a fair amount of tax” which is meaningless. This is about fairness in the sense of treating like cases alike and looking at the reality of what businesses are doing.

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      2. No, it’s not fair on the UK businesses, but the blame lies on the UK government, for writing the longest tax code in the world (I believe), setting tax too high, and living beyond its means for most of the last century.

        The attempt to divert attention to these big companies and trying to shame them publicly and whip up an outraged mob offends me, especially when the case is being led by people like Richard Murphy who believes that government is God.

        You recognise, of course, it doesn’t make much difference what I think, taxes being ‘a reality’ as you say, but the key must be tax reductions, not trying to make tax ‘fair’, which it can never be.

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      3. You’re right to get this into perspective. The unfairness to the UK business pales in comparison to the unfairness of the state to every honest person in this country.

        And yes the glee with which these politicos seize a chance to loot successful businesses is nauseating.

        I see Murphy’s new book is called “The Courageous State”. Ha!

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      4. There are many things that are not fair; never mind them, worry about the things that aren’t just*. This is not a case of injustice, the corps are simply running rings around the government. Good for them. There are plenty of opportunities for BigCorp bashing, but this isn’t it.

        I used to think tax simplification or fairness etc. would be a good thing. These days I think it’s better that its as complicated and unfair as possible, because that p***** people off, and demonstrates government incompetence/corruption. Let’s not fall into the Milton Friedman trap of actually trying to help the b*******!

        *This is a drum I like to bang. Who cares who gets the most lashes: stop the lashing!

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  4. They actually think they are a court. It would be funny, but they are serious. Tragically the Starbucks(?) bloke claimed they weren’t avoiding tax, no such weaseldom from Google. Margaret Hodge isn’t safe to be let out.

    I have ordered multiple items from Amazon today and I still feel safely on the moral high-ground.

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  5. I cannot understand the logic of people who argue that there is a requirement to pay more tax than the state demands according to the laws it enacts.

    If a mugger puts a gun in your face and asks for your wallet is there a “moral imperative” to point out that you’ve got some money in the bank and offer him your card and pin number as well?

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  6. “If it is suggested that Capitalism to be satisfactory must honour the bill for any stupidity which any parliament cares to devise, find the money at the moment when it is required, and still be able to prosper and provide the maximum standard of comfort for everyone, then some credence might be attached, but even then very little, to the outrageous theory of the failure of Capitalism.

    Considered from the other and saner point of view, it becomes apparent that the triumphs and successes of Capitalism are immeasurably greater than is commonly supposed. The imagination boggles at the thought of the wealth and the comfort which might now be available for all if the money squandered by irresponsible and incompetent agents of the State had been left, like the smaller sums of half a century ago, to fructify in the pockets of the people.”

    Sir Ernest J. P. Benn – ‘Honest Doubt’ (1932)

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  7. The companies who have taken on debt (rather than using profits to finance investment) as a tax measure, will go bankrupt in 2013 and 2014 (as the international economy falls off a cliff).

    A lot of companies will go bankrupt that did not need to – if only the tax structure in previous years had not encouraged debt.

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  8. 2013 will see a major economic decline, and in 2014 this decline will continue (and deepen). That is two years rather than one – and I see no reason why the decline should not go on after 2014.

    Sadly nothing I am saying is original (otherwise I could make money on it) – all the major investors (such as Jim Rogers and so on) know all this.

    I might as well say “water is wet” and “one plus one equals two” – but I enjoy saying the obvious, it may be the Hobbit in me (I must give my furry feet a brush).

    120 billion Federal borrowing for October alone (22% more than last year) the pre election boomlet was rather expensive.

    As for Britain – the official figures do not look as bad as the news on the ground, even the “fastest developing area in Britain” (the East Midlands) is, in reality, falling apart economically. More bad news in my town just today – long expected but still grim.

    I think it is too late for articles. But I would advice anyone with money or marketable skills to find a bolt hole somewhere overseas. Everywhere is going to get hit – but not everywhere will be hit as badly as Europe and the United States.

    As for companies who took on debt (partly so they could reduce their tax bill – partly so they could pay profits to shareholders without cutting investment), well a lot of these companies are going to collapse over the next couple of years.

    Nothing can be done about this now.

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