‘Tax avoiders’ beware – the Government is about to come down on you like a tonne of bricks. Last week’s G8 Summit at Enniskillen outlined measures to tackle the problem of tax avoidance by the ‘bogeymen’ of multi-nationals such as Google, Amazon and Apple.
In recent months, large corporations have come under the media microscope for the way they have – legally - reduced their liabilities.
It was the thoroughly unhelpful and headline-grabbing posturing in the media that led to calls for a clampdown. Some forward-thinking companies such as Accenture have even moved their HQs from Bermuda to Ireland to show they are paying tax in the EU – just at a much lower rate than in the UK!
The G8 saw the assembled world leaders agree to further transparency on the sharing of tax information. The G8 leaders announced that they will draw up a template for global corporations to report to tax authorities where they make their profits and pay taxes around the world. The new powers will give governments a tool against tax avoidance by multinationals and will be particularly helpful to the governments of developing countries. So far, so fine and dandy; or is it?
The problem is that these bogeymen in the multi-nationals are protecting their interests in a totally legal and above board way. Greater transparency is one thing, but this will naturally entail more bureaucracy and a further damaging slew of negative headlines.
At a time when the economy continues to be on its uppers, with unemployment standing at 2.51 million (I Googled that!), should we be knocking these companies for protecting their profits? Don’t forget, those profits are paid as dividends and go to fund our private pension schemes!
Profitable businesses employ people. Large profitable businesses employ A LOT of people. Taking people off the unemployed list doesn’t just give politicians a warm fuzzy feeling when they get to announce improved statistics, it makes a huge difference to peoples’ lives and helps to keep tax down for all of us.
Employed people also spend more in the economy and this helps retailers and their supply chains to thrive. In turn, these retailers employ more people and more money by way of income tax and the VAT on goods sold, which goes into the economy.
Yes, there is a moral argument that companies shouldn’t “get away with it” by paying proportionally less tax than others. However, isn’t it more important to encourage job creation? The social benefits alone, which come from increased employment, are surely evidence that these companies are actually a force for the good and not multi-national bogeymen.