Jonathan Dodd‘s latest column. Guest opinion articles do not necessarily reflect the views of the publication. Ed
Whoever would have thought that buying a simple cup of coffee would get so complicated?
I do sometimes wonder whether everyone else is living in the same world as me, because sometimes the idea that pops into my head when I hear things seems to be ignored by everyone else (If you do think like me, I apologise, but then you didn’t tell me you were thinking the same thing, so how was I to know?).
When I heard about Starbucks offering to pay tax they plainly didn’t think they needed to, I actually thought of two things. My first idea was that they decided to tip the Inland Revenue, as a sort of pat on the head. My second idea was about the Revenue itself.
Five lorry-loads of paperwork
I remember many years ago working on a large IT project run by an international consultancy.
I overheard a conversation that went like this – ‘We have no trouble with the Revenue.’
‘Oh?’
‘Yes. We tell them how much we want to pay and offer them a cheque then and there. They never argue.’
‘Why not?’
‘We give them an alternative. We ask them where they would like us to deliver five lorry-loads of paperwork. They always take the cheque.’
I don’t blame the Revenue for failing to collect tax because they’re lumbered with limited resources and tax rules and legislation that spreads like bindweed, and because a basic rule of life is that rich people employ better accountants than the Civil Service.
Fairness v the Law
The headlines suggest that Vodafone and Google and Amazon don’t pay any tax. They do, of course, but they manage to choose to pay it in countries with a lower rate of tax, as in Luxembourg or Holland or Ireland.
And let’s face it, how many of us, given the opportunity to pay less tax perfectly legally, would refuse because of fairness? Tax is all about the law. If the law behaves like an ass and the government is unable to frame laws that work, and other people are taking advantage of that, wouldn’t we?
Three answers?
There are three answers, it seems to me.
The one we’ve been ignoring all these years is to pretend it isn’t happening. That seemed to be working out very well for Greece for a while.
We could always simplify our tax rules in a proactive way and hope that rich people, entrepreneurs and companies would pay up rather than transferring everything to another part of the world.
Our government probably isn’t capable of simplifying anything, and it isn’t very good at this sort of brinkmanship, as in their failure to crack down on bankers because they threatened to decamp to Frankfurt or New York. Such a move would be quite a gamble, and just might lead to a lot of empty headquarters buildings littering our cities and countryside. But what the heck, we’re bankrupt anyway.
My thought is that we’re part of various financial and legal networks, as in the European Union, whose purpose is supposed to be able to act together for the common good. The countries where these corporations are paying tax are also in the EU.
Would it not be beyond the realms of possibility for the EU governments to agree to levy the same tax rates on multi-national corporations doing business in any member state?
Missing something valuable
There are people who break the rules and avoid paying tax illegally. That is for the Fraud Office to pursue and prosecute. They should be doing a better job at that.
There are also a lot of people and companies who work within the law as it is, within its letter rather than its spirit. You can’t prosecute them for that, but you can simplify the rules to make the playing field leveller. I see no sign of that.
Trying to embarrass companies to cough up some change because of embarrassment seems a little like inviting robbers into your house and hoping they miss something valuable when they leave.
But we’re all right – there isn’t a Starbucks over here.
If you have been, thank you for reading this.
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