The game has changed.. is it dawning on people yet?

[I1L2T3]

There you go then. 2 perfectly legal ways to avoid tax.

 

What it does or does not do for the country is another matter. That is why the onus is still on the Government. If they consider that legal tax avoidance they allow is damaging the economy they need to pull their finger out and get on with changing things.

 

Absolutely they need to sort it. I'm not holding my breath.

 

Consider that the corporation tax is 21% in the UK. I can accept that in many cases (e.g capital allowances) the eventual amount paid can be reduced. But corporations are completely taking the mickey. Some pay nothing. Others claim rebates.

 

The fact is that the tax burden is increasingly falling on individuals and small businesses. It's wrong. It is going to destroy the economy. I can't believe you defend it.

 

---------- Post added 26-05-2013 at 22:55 ----------

 

How is it economically beneficial to encourage people to save and pay less tax?

 

Encouraging them to spend and pay more tax would make much more economic sense if you are looking for economic growth.

 

Look it up.

[ricgem2002]

You are happy to buy Chinese made goods. Why don't you just by British/eu/American of your choice? You have the power unless you take ed milliband with you when you go shopping.

 

The Man needs to close the loopholes but the rest of it is down to you and your conscience.

yes your right we bought cheap foreign goods and didnt think of the consequences. now we have seen what happens we need to buy local/british and reverse the trend.

[Anna Glypta]

And many of them live without clean water, sanitation, health services, education, suffer endemic preventable disease etc... etc...

 

If you aspire to that move to Mozambique.

 

You can't have it both ways. If we pay high wages and are prepared to buy goods manufactured in cheap labour economies our high wage jobs cease to exist.

Countries in Africa are now experiencing growth of 5-10% each year, as is China, India, and many other low wage economies. Their economies are booming on the back of our preparedness to buy their goods that were once made here. The bubble has burst already. The days of living on credit cards and borrowed money are drawing to a close because our debts are at the point where our credit ceases to be any good.

 

That's what happened in Italy, Spain, Ireland, Cyprus, Greece etc etc...

 

Did I mention that Spain has almost 30% unemployment.

[ECCOnoob]

 

The fact is that the tax burden is increasingly falling on individuals and small businesses. It's wrong. It is going to destroy the economy. I can't believe you defend it.

 

I am not "defending" anything.

 

I am saying that nobody other than the Government can do anything about it. They need to get it sorted.

 

I keep saying this. A company will only do what they are legally obliged to. That is the same whether you are a sole trader or a multi national.

 

If the laws allow you to reduce your tax liability then you going to use then. Dont tell me that anyone voluntarilly pays more than they need to.

 

I have been self employed and know many others who still are. If an accountant provided me with a nice simple option to reduce tax I would grab it with both hands.

 

Laws are the problem and only one place can change that.

 

What I dont understand is why people are under some impression that massive corporations somehow should have a moral duty to pay more tax on the sole basis that they earn the most. Why?

 

Just because Megacorp earns £50m profit and Smith & Son only earns £50k profit. Does that automatically mean that Megacorp should take some moral high ground and not use the wideley available legal tax reduction schemes whereas it would be perfectly fine for Smith & Son to use it just because they are the "little man"??? Hardly fair is it.

 

What would be the incentive to make money?

 

The key issue is this. We need a level playing field across the board. No loophole. No tiered rates dependant on profit. No ability to change jurisdiction when you feel like it. Once that has been established then everyone will have to play by the rules and nobody can whine of unfair advantage.

[I1L2T3]

I am not "defending" anything.

 

I am saying that nobody other than the Government can do anything about it. They need to get it sorted.

 

I keep saying this. A company will only do what they are legally obliged to. That is the same whether you are a sole trader or a multi national.

 

If the laws allow you to reduce your tax liability then you going to use then. Dont tell me that anyone voluntarilly pays more than they need to.

 

I have been self employed and know many others who still are. If an accountant provided me with a nice simple option to reduce tax I would grab it with both hands.

 

Laws are the problem and only one place can change that.

 

What I dont understand is why people are under some impression that massive corporations somehow should have a moral duty to pay more tax on the sole basis that they earn the most. Why?

 

Just because Megacorp earns £50m profit and Smith & Son only earns £50k profit. Does that automatically mean that Megacorp should take some moral high ground and not use the wideley available legal tax reduction schemes whereas it would be perfectly fine for Smith & Son to use it just because they are the "little man"??? Hardly fair is it.

 

What would be the incentive to make money?

 

The key issue is this. We need a level playing field across the board. No loophole. No tiered rates dependant on profit. No ability to change jurisdiction when you feel like it. Once that has been established then everyone will have to play by the rules and nobody can whine of unfair advantage.

 

It's not actually true that companies will pay only what they can get away with.

 

Many large companies and corporations do pay substantial amounts of corporation tax. Many of them, if they wanted, could employ tax accountants and lawyers and absolutely minimise their payments just like Google do. But they don't. Why is this?

 

1. Corporate responsibility. Thankfully there is still a strong sense of this in many companies, a commitment to the countries they operate in. I think this sense of responsibility is being eroded though which is a highly dangerous situation.

 

2. Reputational damage. No company wants their customers to start boycotting them which is a risk when bad news about tax avoidance gets out.

[Anna Glypta]

If you read my post I was responding to the idea that the tax burden should fall on citizens. Clearly that would push up wages, a big proportion of which would be used to pay tax. A company needs people on the ground to operate in a country and would be discouraged by punitive rates of personal taxation.

 

---------- Post added 25-05-2013 at 19:20 ----------

 

 

It really changed in the 70s. We're now seeing the full effects.

 

That doesn't alter the facts that you cannot dictate to a multinational company the price it charges for goods it supplies to a distributor in the UK.

 

You are right. The game changed in the 1970s. That's when we started to get swamped with cars, TVs and just about everything else made overseas. It has just taken 40 years for the facts to dawn on us that since then much of the country's infrastructure and the imagined wealth that most people have is on borrowed money and credit cards.

[I1L2T3]

That doesn't alter the facts that you cannot dictate to a multinational company the price it charges for goods it supplies to a distributor in the UK.

 

You are right. The game changed in the 1970s. That's when we started to get swamped with cars, TVs and just about everything else made overseas. It has just taken 40 years for the facts to dawn on us that since then much of the country's infrastructure and the imagined wealth that most people have is on borrowed money and credit cards.

 

I think you can dictate it but it would require changes to the tax laws.

 

Companies are selling to distributors at rock bottom prices. They are cross-charging between entities within the same corporate groups at rates and using mechanisms that help them avoid tax.

[Anna Glypta]

I think you can dictate it but it would require changes to the tax laws.

 

Companies are selling to distributors at rock bottom prices. They are cross-charging between entities within the same corporate groups at rates and using mechanisms that help them avoid tax.

 

Easy words to say but then you don't have to try and enforce it.

 

OK tell us this. Hyundai make cars in Korea for £4000 each. They sell them through their UK company to the dealers for £6000 each. So they make £2,000 mark up on each car. How much do you think Hyundai in Korea should charge Hyundai UK per car, and how are you going to enforce it?

[carosio]

I've never heard of anyone offering to pay more council tax than that demanded because they think the rates are too low, nor anyone being able to legally avoid it.

[I1L2T3]

Easy words to say but then you don't have to try and enforce it.

 

OK tell us this. Hyundai make cars in Korea for £4000 each. They sell them through their UK company to the dealers for £6000 each. So they make £2,000 mark up on each car. How much do you think Hyundai in Korea should charge Hyundai UK per car, and how are you going to enforce it?

 

This is a case where a tax based on the production location of a product could help. For example the tax would be lower on products assembled in the UK, or where most of the final value of the product has been added in the UK.

 

In that specific Hyundai case as the final product has been fully assembled in Korea and therefore most of the value of the final product has been added in Korea then the tax would be higher.

 

This kind of tax would place incentives on manufacturers to assemble products in and source components from the UK. If Hyundai still wanted to assemble in Korea they could pay the tax. If they didn't like it they could withdraw from the UK market and a competitor can meet the UK demand for vehicles instead.:-)

 

We have to start protecting our industry and our jobs. I see it as a cornerstone of any EU renegotiation.