Google chairman Eric Schmidt has defended the company's tax policies, saying of the internet giant's moves to get out of paying billions of dollars: "It's called capitalism". "I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate." http://www.smh.com.au/business/world-bu ... 2batw.html Annoyingly, he does correctly point out that the governments offer incentives and they just use them. I think it's just the way he comes across with such impunity and even perhaps arrogrance. What people like this fail to realise, is that they can be well and truly done over by the public who don't realise what power we have. If people were serious, they could simply put it out there to everyone to simply not use Google again until they pay what they owe. It really is that simple. Get people to use other search engines and to change their default search engine away from Google. If it was pushed worldwide via the web and got any form of publicity, you watch their share price drop. "It's called capitalism"

Google chairman Eric Schmidt has defended the company's tax policies, saying of the internet giant's moves to get out of paying billions of dollars: "It's called capitalism". "I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate." http://www.smh.com.au/business/world-bu ... 2batw.html Annoyingly, he does correctly point out that the governments offer incentives and they just use them. I think it's just the way he comes across with such impunity and even perhaps arrogrance. What people like this fail to realise, is that they can be well and truly done over by the public who don't realise what power we have. If people were serious, they could simply put it out there to everyone to simply not use Google again until they pay what they owe. It really is that simple. Get people to use other search engines and to change their default search engine away from Google. If it was pushed worldwide via the web and got any form of publicity, you watch their share price drop. "It's called capitalism"

He's right though, I believe Google have a major office in Dublin and obviously its because the Irish set their rate of Corporation tax low so as to attract such businesses, if the Uk government want to attract business, attract lots of jobs which then hand over lots of income tax and NIS and a little lower Corporation tax which is actually higher than none because Google avoid paying it here, then they know what they have to do.

Avoiding using Starbucks is far, far easier than avoiding Google though - well actually, no its not, its just not as convenient, and at the end of it all, they aren't doing anything illegal at all.

He's identified the problem and the solution in one throwaway comment.

Indeed. But essentially it is pretty standard government practice: offer massive incentives - such as zero tax rates - to get large corporations to operate in the UK; in the event, then blame them for doing it if made public.

All the smoke and mirrors about them "complying with the law" is just that. There IS no specific law, for example, to say you can't transfer all your profits as "royalties" to your "sister company" in Holland or wherever. I get sick and tired of this "we're breaking no law" claptrap. You don't, and couldn't, make a separate law to cater for every possible combination of factors. The argument is a bit like being caught speeding, but saying there is no specific law that says I can't speed at 19:53 on this stretch of Acacia Avenue. Like the speeding law, there is indeed general law and powers to catch what may be termed "associated operations" etc., and the taxman has the power to look at the whole picture, and assess the company on what it is really doing, rather than on the basis of convoluted artificial schemes set up at huge cost to no purpose but to avoid tax.

The truth is that the taxman has NEVER gone after any of these big deals. They are content to ruthlessly pursue lesser mortals. They have no interest in the likes of Starbucks since they bloody well know that the whole arrangement is with government connivance agreement and encouragement anyway, and while they have to bluster for a bit when occasionally caught out, in the end, nothing will change.

And you will always get apologists for the Amagooglebucks of this world who bleat about "Yes, but they create jobs and gather tax and NI and if you make them pay tax they will go elsewhere etc etc". Really? They would? Well, then bye.

But that is not the issue. The issue is that this is all privately of great embarrassment to those in power and their clone predecessors, who publicly have to make certain noises but privately know it is all basically agreed on the QT on secret understandings and assurances, many of which end up with certain people in the future happening to land certain handsomely paid executive jobs or be otherwise handsomely rewarded. I'd bet even the mincing PR release from Starbucks ("We hear you; we now see we 'need to do more' when it comes to paying corporation tax") did not come out before they had agreed tactics to sing from the same hymn sheet. They all know though that the fuss will die down, and that nothing will materially change.

It's reasonably simple and transparent to avoid Starbucks and find a readily available alternative, less so with google, eBay & Amazon. People can see that they pay Starbucks because they actually hand cash over at the counter. Few pay google directly when they buy anything, similarly with Amazon & eBay, they make their revenues from advertising and from sellers' fees, so it's less transparent.

Starbucks offer of a £20m gift is laudable and laughable at the same time. If these companies choose not to participate in contributing to the benefits dervived from the provision of healthcare, education and indfrastructure, through taxation, then HMG should simply send them an annual bill with a guestimate. It's no different to what Starbucks have offered.

Too right, it's annoying that companies like Google get out of paying their fair whack of tax. I believe they should, indeed, pay what they technically owe.

BUT, if such incentives were not offered, Google (and others) simply wouldn't set up business there. They'd find somewhere else with a more 'attractive' tax system. You might think that's OK, but with companies like Google come lots and lots of jobs, and with those jobs come employees, all of whom pay tax on both their earnings and on what they spend their wages on. Without companies like Google investing in the local economy, those jobs simply wouldn't exist.

And then you've got the money Google spend on being able to do business and provide those jobs. Their offices have to be paid for, as do their internet connections, their phones, their office equipment, any office materials, and whatever else Google need to use in order to do business.

I'm not defending this, but Governments have to do their sums too, and if the lack of corporation tax is more than made up for with the tax they collect on related activities, then the argument that the country is being robbed stacks up a bit less than if you simplify it all as "Google don't pay tax"

I'm not saying it's right, all this, but if it's a case of "jobs v no jobs", or more accurately "jobs, investment and local spending v a fat nothing" then what's the alternative, really?

ROBINSON wrote:Too right, it's annoying that companies like Google get out of paying their fair whack of tax. I believe they should, indeed, pay what they technically owe. BUT, if such incentives were not offered, Google (and others) simply wouldn't set up business there. They'd find somewhere else with a more 'attractive' tax system. You might think that's OK, but with companies like Google come lots and lots of jobs, and with those jobs come employees, all of whom pay tax on both their earnings and on what they spend their wages on. Without companies like Google investing in the local economy, those jobs simply wouldn't exist. And then you've got the money Google spend on being able to do business and provide those jobs. Their offices have to be paid for, as do their internet connections, their phones, their office equipment, any office materials, and whatever else Google need to use in order to do business. I'm not defending this, but Governments have to do their sums too, and if the lack of corporation tax is more than made up for with the tax they collect on related activities, then the argument that the country is being robbed stacks up a bit less than if you simplify it all as "Google don't pay tax" I'm not saying it's right, all this, but if it's a case of "jobs v no jobs", or more accurately "jobs, investment and local spending v a fat nothing" then what's the alternative, really? But other companies in the same market who do pay corporation tax are then disadvantaged. This has long been a complaint of Tim Waterstone (amongst others) who see their companies being undercut by those who don't pay tax. If you're going to go down the 'ah, but they create jobs' route, you surely also need to take into account the jobs lost elsewhere in those companies being undercut.

ROBINSON wrote:Too right, it's annoying that companies like Google get out of paying their fair whack of tax. I believe they should, indeed, pay what they technically owe. BUT, if such incentives were not offered, Google (and others) simply wouldn't set up business there. They'd find somewhere else with a more 'attractive' tax system. You might think that's OK, but with companies like Google come lots and lots of jobs, and with those jobs come employees, all of whom pay tax on both their earnings and on what they spend their wages on. Without companies like Google investing in the local economy, those jobs simply wouldn't exist. And then you've got the money Google spend on being able to do business and provide those jobs. Their offices have to be paid for, as do their internet connections, their phones, their office equipment, any office materials, and whatever else Google need to use in order to do business. I'm not defending this, but Governments have to do their sums too, and if the lack of corporation tax is more than made up for with the tax they collect on related activities, then the argument that the country is being robbed stacks up a bit less than if you simplify it all as "Google don't pay tax" I'm not saying it's right, all this, but if it's a case of "jobs v no jobs", or more accurately "jobs, investment and local spending v a fat nothing" then what's the alternative, really? But other companies in the same market who do pay corporation tax are then disadvantaged. This has long been a complaint of Tim Waterstone (amongst others) who see their companies being undercut by those who don't pay tax. If you're going to go down the 'ah, but they create jobs' route, you surely also need to take into account the jobs lost elsewhere in those companies being undercut.

Google's European operations are based in Ireland. They pay Corporation Tax to the Irish Treasury, at the appropriate rate, on any profits that they make.

See also Ebay and Amazon in (IIRC) Luxembourg.

Where their end customer is has absolutely zero relevance to where the Corporation Tax is payable on their profits, in the same way that a UK business pays UK Corporation Tax on its profits even if all its customers are overseas.

There is a campaign of significant misinformation coming out of HMG at the moment as regards "tax avoidance". Still, it's much easier to find some corporate sap to blame than actually sitting down to address the widening tax gap and why the tax authorities are incapable of doing the job they are supposed to be there to do.

Red John wrote:But other companies in the same market who do pay corporation tax are then disadvantaged. This has long been a complaint of Tim Waterstone (amongst others) who see their companies being undercut by those who don't pay tax. If you're going to go down the 'ah, but they create jobs' route, you surely also need to take into account the jobs lost elsewhere in those companies being undercut. I don't doubt this, and I do agree to a point. But small companies are also disadvantaged in most areas. Comparative lack of cash availability and buying power (thus being unable to get as large a trade discount as a bigger buyer, for instance) being two examples. The point I'm making is that there are many other things to take into account as well as corporation tax. For instance, no-one is saying that sliding scale trade discounts have to end, are they?

Red John wrote:But other companies in the same market who do pay corporation tax are then disadvantaged. This has long been a complaint of Tim Waterstone (amongst others) who see their companies being undercut by those who don't pay tax. If you're going to go down the 'ah, but they create jobs' route, you surely also need to take into account the jobs lost elsewhere in those companies being undercut. I don't doubt this, and I do agree to a point. But small companies are also disadvantaged in most areas. Comparative lack of cash availability and buying power (thus being unable to get as large a trade discount as a bigger buyer, for instance) being two examples. The point I'm making is that there are many other things to take into account as well as corporation tax. For instance, no-one is saying that sliding scale trade discounts have to end, are they?

Of course they would still operate here. The UK is Google's 2nd biggest market, and accounts for 11% of their global business revenue. Starbucks generate over £3bn in revenue in the UK. The UK is too valuable to them simply to avoid being here. They would still be here, even if they had to pay 25% corporation tax.