Google Tax Avoidance Row: Search Not Found

This is something I wrote earlier on in the year when the Google tax deal was sealed between Google and HMRC. With Apple flagging up the discussion around tax avoidance I thought I’d post it to get some use out of it.


It is commonly said that only two things in life are certain, one being death, and the other taxes. While the former is ultimately unavoidable, the latter unfortunately is. Unfortunate because taxes are one of the primary ways in which government gets its funding, which in turn provides vital public services and the bureaucratic upkeep of the nation state. Taxes being the mandatory financial contribution which entities, ranging from people to corporations, make to the state.
Large commercial entities are always in the news for the amount of tax they pay or, rather, how little they pay. The most recent example of this relates to Google, who have been in negotiations with HMRC (Her Majesties Revenue and Customs). After the conclusion of a 6 year inquiry by HMRC, it has been agreed that Google will pay £130 million in corporation tax, covering the years 2005 – 2015[1]. To the average consumer this may seem like a lot of money, but in reality it is a pittance of what Google has made in the UK within the same time period. For example in 2013 Googles revenues were reported as being £3.8bn while they only paid £20.4m in taxes[2].
It is a great shame that the tax system is exploitable due to its complexity to the point where large corporations are able to avoid paying their fair share of tax while earning millions/billions. Google is not the only culprit: Amazon[3] also manipulates the system to pay a pittance of what is owed. The total tax shortfall (year 2012/2013) cost to the country amounts to well over £30bn[4] which consists of “£14bn in uncollected income tax, national insurance and capital gains tax, and £12.4bn in uncollected VAT.”[5] while the Financial Times equates £4.1bn to tax evasion and £3.1bn to tax avoidance[6]. In an age of austerity, having an extra 30bn; or at the very least an extra £7bn would be a a welcome sight, whether its used to stem the bleeding or simply reduce the deficit.

Companies have a moral responsibility to pay their due to the society which feeds them. Given the conditions which the UK generates it provides profitable business opportunities and for that it is only right that companies pay their taxes. For example, Google benefits massively from the UK, providing countless customers which use its advertisement services, combined with a user base which includes basically everyone who uses the internet bestowing substantial revenues upon them, as well as the educated workers to staff Google’s facilities which without they would not function.
It’s not only moral but social obligations too. When companies avoid or evade taxes it’s the working classes who suffer; the disadvantaged whose social mobility programmes are cut due to lack of government funding, increases in council taxes, the list goes on. The Guardian reported that by the end of 2015 NHS England will have a substantial deficit of £2.2bn[6]. Imagine that, £2.2 billion pounds sterling, and the deficit will only grow larger as time goes on unless there is significant investment, which cracking down on tax avoidance would bring, even at the financial figure the Financial Times gives, the deficit to an end and would provide funds for further investment, such as the many A&E department closures[7] could be reversed, privatization halted. Further Education, too, has had its fair share of cuts, 35% funding cut since 2009[8] for colleges, and university cuts have forced them to lean on student loans for funding. Without appropriate funds, higher education establishments will inevitably cut corners on students’ education, resulting in fewer courses available, less qualified teachers, maybe even less hours for full time students. Ironically, this will culminate in a skills shortage which in turn could cause these same companies, who fail their duties, to suffer from a lack of educated workers.
In an effort to combat this, however, George Osborne unveiled what has since been dubbed the “Google Tax”. This simply put will be a tax of 25% for money shifted by companies overseas to avoid paying UK corporation tax [9].
While tax evasion is an illegal practice and tax avoidance is legal but not within the spirit of the law, both still persist in this capitalist society, breeding greed and ignorance like an Ant Queen breeds workers for the colony. As such the working class suffer, which in turn society suffers, and we’re poorer for it. Will the Chancellor’s efforts to clamp down on companies shifting profits overseas to avoid tax pay off? Only time will tell. [1] [2] [3] [4] [5] [6] [7] [8] [9]

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s