Friday, 7 December 2012

Corporation Tax

A few years ago while I was sorting out my late father's estate, a solicitor said half-jokingly that Inheritance Tax is entirely voluntary. This is true: there are many ways a chap can prevent his estate having to forego 40% above £325,000. Chief amongst these is to spend your money before you die, or to give it away. Yer average tax consultant can find lots of other legal ways to do it, of course, just as David Cameron's father's advisers did. In a way, I can sympathise with avoiding Inheritance Tax because, after all, in most cases the money is mainly money which was taxed when it was earned (although not apparently in Cameron's case).
But it seems that Corporation Tax too has now become 'voluntary'. Starbucks have magnanimously announced that they will pay £20 million Corporation Tax over the next two years despite the various dodges which permit them legally not to do so. Well, thanks a bunch! No doubt the fat cats at Starbucks have reached the view that they can do without the negative publicity of the current campaign to boycott tax-dodging corporations.
The boycott campaign, however, won't solve the problem in the long-term. Corporations might do the decent thing for a while, but once the heat dies down they'll go back to their old ways. In any case, a boycott against the likes of Amazon and Google just isn't going to work.The tax laws need to be changed and the tax-dodgers should be pursued with the same vigour that the authorities employ to hound benefit claimants, issue parking tickets and collect council tax etc. And there should be no 'settlements' such as the one HMRC agreed with Vodafone. On the Government's own figures there is a tax gap of some £32 billion between what is expected and what the Treasury actually receives. The so-called structural deficit could be rectified remarkably quickly!

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