Sunday, 9 December 2012
Fancy a Cuppa?
It is not a simple race to the bottom as such, because Government procurement departments (civil service run) are the only ones that automatically believe that the best product is the cheapest one - an interesting strategy to ensure quality goods and services, always defaulting to the lowest bidder; guarantor of real quality. Anyway, I digress… point is rich people and companies have the option to massage their tax around and chose where to pay it. Every country's exchequer would like their revenue service to be the one the companies and individuals chose to pay the bulk of their tax to. So countries need to produce a system that has a sensibly low rate of tax to attract people to pay it there and avoid the costs of avoidance schemes. It still has to be high enough to bring in some revenue though (a 'fair' amount, no wonder).
So the move towards 20% corporation tax (too slow for my liking) is geared towards making " Britain open for business" as George says. If someone is legally exploiting tax loopholes you have options: firstly, try to close all loopholes, or secondly, to remove the need for them to find those loopholes. Clearly a mix of the two is needed and the balance as ever is the key.
Now brazen tax avoidance schemes should probably be sought out and closed, but really what is required is a total rewriting of tax law. Only then, when you can restart legislation and therefore have a good grasp of it and what it is intended for, can you stand a reasonable chance of staying ahead (or at least not too far behind) the clever accountants. Much of our tax legislation was written for a world very different from today - adapt to survive and all that.
But in the meantime, perhaps look at why people go to these lengths - it is because the cost of avoiding is still worthwhile to pay their tax elsewhere (like the Netherlands in Starbucks' case). It is all very good saying tax rates should be high because these companies earn so much, but as can be seen from the reported tax receipts from the Googles, Amazons and Starbucks of this world, grandstanding over 'fair' rates of tax turns companies away from the door of HMRC, and rightly so - they have a duty to their shareholders to maximise profits, part of which is minimising tax. Simples.
Those calling for higher tax rates (personal and corporate) remind me of a moron (pick your favourite, there are many) on Dragons' Den insisting on retaining a greater share of their company in exchange for Duncan Bannatyne's money and thus walking away empty handed. Taking the moral high ground and keeping a 100% share in fuck all will earn you less than realising where the power in the relationship lies, meeting half-way and walking away with a reasonable share of something. If you insist on slicing open the golden goose, all the others will find it more attractive to migrate. But I really wanted to talk about hot chocolate.
You see I am changing jobs so I have been meeting lots of very helpful people which generally happens in coffee shops. Now here I try to sell my various positive personal traits (or ones I pretend to have), like integrity. Problem is, I always get off on the wrong foot on the whole integrity thing. This isn't because I used to hang out with PR gurus or TV presenters in the 70s, or because I swipe the charity box from the counter. Instead it is because as you well know if you have ever been in a similar position, you are only permitted (under "the rules") to ask if someone can spare time for a chat over a coffee.
And I hate cofffee.
But you have to ask them for coffee. You see, if my wife and I bump into you whilst out walking/shopping/whatever, we might invite you round to our house for a cup of tea. This is within "the rules". If coming round to somebody's abode is in the frame, invitations for tea are de rigueur. If you have perhaps come round for dinner and the end of the night is approaching, I am permitted to offer you an array of hot beverages. I am perfectly entitled, for instance, to ask if you would care for a hot chocolate. And I wouldn't even get so much as a raised eyebrow.
Now try to swap those latter drinks into the work email… "Could you spare some time for a cup of tea?" Sounds weird. "Could you spare some time for a chat over a hot chocolate?" Sounds like I am odds on to propose marriage to my prospective drinks pal. Positively out of the question.
So I am stuck in this mire having to propose meeting for a beverage I would probably rather dip my crown jewels into than drink. I can only hope they don't realise my bare-faced lie when instead of asking for the very drink I coaxed them out of their office for, I sidle up to the counter and furtively ask for a medium hot chocolate, marshmallows and sprinkles, hold the cream. Damn these pesky rules...