Shaming companies who avoid tax, although legally, is big news at the moment. Whether it’s Google, Amazon or Starbucks no-one seems to avoid massive headlines, being pulled before MPs and the more extreme members of public refusing to shop with these companies.
However, I always feel torn as to how I should feel. It’s legal but morally.. well, I guess that’s an individual decision. Although some people will state otherwise companies do NOT have a legal duties to maximise profits and, hence, avoid tax wherever possible. But, is this the fault of the companies or the government? Why isn’t the government – and let’s not forget that the Prime Minister himself waded into this discussion recently by berating the companies that do this – fixing the loopholes that are being exploited?
I’m certainly no economist or any kind of expert in this area but it seems to me that the government has a tricky toe to line – they need to retain international companies in the UK and don’t want to scare them off with high tax rates, particularly when other countries will happily offer much better rates and, indeed, routes around rules, whatever we set.
So, difficult for government, and the companies are under no obligation to do it. It sounds more morally unjust now.
Sadly, the “naming and shaming” has got to the point of almost a witch hunt, where anybody and everybody is being labelled.
Just this week a group of organisations published a report on Alliance Boots about their tax. It claims 1.1 billion of tax has been avoided and, to make the point seem more personal, quotes how many nurses, etc, could have been paid for with the money.
Except it’s rubbish.
Alliance Boots is a private company, bought out by an investment firm. As is usual in this situation the capital to buy it out was gained by bank loans. UK rules means that a low rate of tax is paid on any profit that’s then used to pay off bank loans. Alliance Boots has not done this as a tax avoidance measure – going to the bank and debting yourself “up to your eyeballs” is hardly good monetary practise. Sadly, daring to have bank debts and paying them off with income seems to be too much for the publishers off this report who seem to see this as some daring attempt to rip off the UK taxpayer. As Boots’ own press release has stated none of the authors bothered to check any of this with them before publishing.
Let’s be clear – neither the law nor economists see this as tax avoidance in any way, shape or form.
Ironically, one of the authors of this report is the union Unite, who were recently shown to have paid no tax for the last 2 years and, even more recently, were hit with a bill of £2.3 million for unpaid taxes. The irony is not lost on me.
One of the other authors is a charity known as War on Want. It should be noted that a UK charity benefits from not having to pay tax. So a charity that spends it time chasing down organisations that avoid paying tax is, again, deliciously ironic.
Sadly most people don’t look past the headlines and, right now, Boot’s Facebook page is awash with angry people (although often the same people writing the same rhetoric) demanding they pay their tax.
Personally, I’m annoyed with this current trend, usually churned up by the media, of “pitched-forked villagers” taking things into their own hands. Usually, uninformed, and often lacking rather important facts they spend their time telling everybody about paedophiles, tax rip-offs and anything else they can get angry about.
The thing is, there is a reason here to get angry. The companies that are avoiding tax don’t have an obligation to do what they’re doing and they are intentionally, even though legally, doing it. Is it right morally? Probably not – but it’s an individuals conscious who must decide this. Let’s just make sure we concentrate on the right things for the right reasons.