As through this world I wander
I meet lots of funny men.
Some’ll rob you with a six-gun
And some with a fountain pen.
-Woody Guthrie, “The Ballad of Pretty Boy Floyd”

Parliament, in the ‘robust’ shape of Margaret Hodge, has been mounting a determined appeal to companies to donate money to pay off the national  debt. In particular, they lighted on the high profile form of Starbucks. It always helps to have a celebrity to pick on, makes life easier for their mates in the media.

Starbucks were paying all the tax that UK parliamentarians had legislated for, but they had all this lovely money swishing through their bank accounts, and the Hodge Fund didn’t see why they shouldn’t ask for some of it. Nicely, mind.

They could have asked all the Guardian journalists to make a voluntary donation out of their pay, but that wouldn’t have appealed so much to the foot-soldiers, so Starbucks it was.

Having harried and humiliated Starbucks, against all the rules of chugging, to find a way to increase their profits and thus pay more tax, Starbucks finally agreed and went away to think about it.

Profit, being the difference between what it costs you to produce an item, and what you can sell it for (that bit added for stray Guardian readers who have a problem with this concept) can be increased in a number of ways.

1. You can put your prices up – the ‘BBC’ method, and in effect tax each of your customers a small amount so that the total can be legally handed to the Treasury and pay off this debt.

2. You can cut the amount you pay to your suppliers – the ‘Tesco’ method, and one that has come in for much scorn in the left wing press.

3. Or you can cut your overheads – not pay the landlord, do away with the Christmas party, staff bonuses, expected pay increases, that sort of thing.

Starbucks have opted for No 3.

They will make more profit next year, and thus will pay more corporation tax as requested. They will make more profit because they will no longer pay their lowly workers sick pay from the first day they are sick, nor will they continue with their generous maternity benefits, nor will they pay their staff whilst they take their lunch break…

Perhaps Ms Hodge would have preferred that they take option 2 and cut the amount they pay to even more lowly paid workers in the third world for cultivating the coffee beans, or maybe she was an advocate of option 1, taxing all the canary wharf workers every time they bought a cup of coffee. Who knows, but option 3 is the one she has got, and I dare say she will count the increased corporation tax as some sort of achievement.

Quite why she didn’t suggest an option 4 – legislating to increase the amount of corporation tax that companies must pay, including those who benefit from ‘secretive company structures’, like, for instance, the Guardian Newspaper Trust in the Cayman Isles, or perhaps the Stemcor Trust of which her family is a beneficiary, I really don’t know – but hopefully she will be able to explain her frothy thinking to the 7,000 unskilled employees of Starbucks who will next year be contributing towards the national debt as requested…

I think I finally understand why some millionaires vote Labour…

Bill Irvine December 9, 2012 at 13:30

How much tax do the Kinnocks pay? They are socialists and they are
millionaires. Aaauuul riiiight

Pat December 6, 2012 at 17:44

Corporation tax is paid by people, as any other tax. The people who pay it
are some mixture of the customers, the workers and the investors. The reason
for existence is to fool investoors, customers and workers into thinking that
they are paying less tax than they in fact are. The reason the rules are so
complicated is to ensure that accountants, whether working for companies or
HMRC can get paid a lot of money for arguing with each other how much tax is
due.
The best way forward would be to abolish corporation tax and honestly
tax the people directly (Politicians being honest? One can dream.). At least
allowances could be further simplified, though in this case I believe that
would require a change in EU law (European politicians being…etc.).
And in
either case expect massive wailing and gnashing of teeth from accountants who
are no longer being paid handsomely for arguing with each other and will have
to retrain.
Failing that, Starbucks should simply continue to pay the
minimum tax possible, and place a collection box on every counter labelled
HMRC, to which all staff and customers would be invited to contribute, if
those people thought more tax was due. Alternatively they could publish
parallel price lists, and parallel wage levels, whereby those staff and
customers who felt more tax payable could bring this about. Investors could
similarly be asked for a contribution to HMRC when they receive their
(taxable) dividends.

belinus December
5, 2012 at 10:42

The strange thing today when it comes to taxation is the fact no law
demands we pay any private enterprise a tax or fee, especially when receive no
service back.
The United Kingdom is a private corporation, Lancashire
County Council in its entirety, is today owned by the Blues and Twos Credit
Union, a charitable trust overseen by the equally private constabulary. My
town council is also a private enterprise as decreed by FOI to me this
year.
I have paid no council tax for over three years on that basis, and
when the bailiff used to come calling I reminded them that a failure to
present their oath would lead to my arresting them for impersonating the
constabulary..
Statutes are not nor never the law, they are rules of
commerce which carry the power as if power of law once contract has been
agreed, today they issue their terms and through tacit agreement they claim
consent, they claim contract.
The constabulary have only one mandate, the
upkeep of the peace within common law. It is a failure by successive Judges,
the people, politician’s and indeed her majesty, in the upkeep of the
constitutional realm that has allowed statutes to fake precedent over land
law.
We are deceived.

https://www.lifeinthemix.info/british-law/

John
Galt December 5, 2012 at 11:08

Ahhh! another Freeman-on-the-land (or variant thereof), I suspect your
respite from those seeking council tax arrears may be short lived.

The poor dears in the enforcement division are used to tails of woe and
threats of violence, but the procedure manuals don’t cover how to deal with
those suffering from alternate reality delusions.

You have my sincerest sympathies.

belinus December 5, 2012 at 11:25

The freeman movement came directly out of the court of the queen
mother, so I agree that to gain freedom under statute is a false idea of
freedom.
What I have formed, used, and spread around the country, with
expanding success, is the fact that all things statute aim at the legal
person, a fictitious legal entity denoted in the upper-case, and or, with
a title such as Mr Miss etc.
In the game of commerce only the legal
entity (a corporation) can sue and be sued.
Unless you are indeed a
legal person over your humanity then the fantasy lies with you.
When
ststute goons come a calling they are specifically looking for the legal
person, an entity owned by the crown, they want you first to commit a
fraud by claiming to be something you are not, and second, in doing so you
breech crown copyright. They will get more of your assets through the
varied statutes they will hit you with after you commit fraud and breech
of copyright, than to take you to court for copyright breech alone.
As
for alternative reality, it is clear… Great Britain gives the people all
the rights in law, the United Kingdom is a statutory entity and therefore
all statutes are formed to serve the entity, or all rights shift to the
corporation.

The shift from not able to touch your property such as your car only
changed after they shifted the purchaser of the vehicle from owner to
keeper, the crown owns every vehicle purchased here, and so they can lift,
clamp, ticket, and crush them.
reality over presumed reality, you must
watch Darren Brown more intently, as I am afraid you have been hacked.

https://www.lifeinthemix.info/2012/03/legal-person-nature/

John
Galt December 6, 2012 at
07:12

I do apologise most sincerely, I mistook your commentary as a
Freeman-on-the-land delusionist.

I didn’t realise that you were a REDEMPTIONIST (upper case being
important to you guys)

I often get my alternate reality delusions mixed up.

Errr…..No Contract! Return to Sender!

belinus December 6, 2012 at 13:03

It would seem you do get mixed up rather.
I am not involved at
all with the freeman groups, my information comes from some four years
study and then the implementation of what I learned. To be a freeman
is to be of the feudal system under statutory license, the way I have
used with success is to position the constabulary back under oath, to
remind all statutory enforces they are not dealing in law, while
reminding the same that to claim to be so, having taken no oath to
hold such office, is an arrestable offence.
It works with all
health and safety personnel
it works with the constables
the
census, council tax, motor offences, in fact so far all statutes are
defeated by British law so long as you understand the real
relationship you have with the legal person created at the
registration of your birth is one of power of attorney, the liable
agent is the owner of said legal entity.

But of course it is all about choice.
https://www.lifeinthemix.info/2012/03/constables-power-arrest-statutes/

And here is one you can test yourself :
https://www.lifeinthemix.info/2012/06/demolish-speeding-fines-issuance-penalty-points/

My thoughts on the freeman :
https://www.lifeinthemix.info/2012/02/profile-freeman-movement/

You may want to re-programme your prologue image bank in order you
upgrade your expected images pre- visual cortex, because the likes of
Darren Brown have formed your library of perceived images when the
reality is quite different.

Dembones December 5, 2012 at 08:18

Let Government cut Corporation Tax so that it is cheaper than anywhere else
in EU (obviously better out of EU altogether, keeping our money here and not
being skimmed off every step of the way), more corporations set up shop here,
we are the winners. In simple terms 100% of 10% is 10%. 10% of 50% is 5%. What
about no Corporation Tax at all, more corporations set up shop here, more NI,
more VAT? Fair share is nonsense. It depends on which side of the counter you
are on. Not a valid argument.

Ted Treen December 5, 2012 at 12:31

Well, Income tax was first introduced in 1798 – as a ‘temporary measure’
(like all governmental nasties) – to allow us noble Brits to indulge in one
more of our periodic bouts of Froggie-bashing.

We have foresworn the enjoyable part, but retained the nasty bit.

Span
Ows December 5, 2012 at 13:10

We have foresworn the enjoyable part, but retained the nasty
bit.

Unless they’ve been saving up for one almighty bash…

I love the BBC
December 4, 2012 at 23:30

Tax is not an extortion, that’s nonsense. These companies could not make a
farthing without our publicly funded roads and other communications, they need
an educated workforce and they need a state which can be backed by force if
necessary – they need the infrastructure, physical and legal, of a modern
country and by god they have to pay for it, somewhere. As we all do. It amazes
me how many people think this country could function without taxation. It’s a
childish fantasy.

cascadian December 5, 2012 at 02:21

Interesting that roadside taverns (the fore-runner of todays coffee
shops) existed along the old trunk roads in the days when coaching was the
main transport, and made a very pretty penny. I’m pretty sure that predated
Pitts Tax Law 1798.

So no publically funded roads, tolls were paid to those who maintained
the roads. Other communications?-there were none the fast coach delivered
mail (but who could write?). Educated workforce?-don’t make me laugh, the
landlady did not need a barista with an anthropology degree just a young
wench in a low cut blouse. A standing army?-nope, the army was raised
as-and-when required. So your thesis seems flawed.

Of course the peasants were pretty poor (as they are today) and everybody
had to work for their keep, it was by no means nirvana. Perhaps somewhere
between that time and today there is a “sweet spot” where the citizens pay
for basic services and see everybody contributing to the common-wealth. A
flat rate tax on EVERYBODY of 20% should do it, then throw away the volumes
of the Tax Laws. See the economy flourish, there would be zero corporation
tax and less whining from Hodge. And the BBC?-privatised and one tenth its
present size.

The Meissen
Bison December 5, 2012 at 09:02

an educated workforce
They’ve rather missed the boat if that’s
what they need…

they need a state which can be backed by force if
necessary
…and that boat sailed away roughly a century ago…

the infrastructure, physical and legal
…like the newly
beefed-up HMRC.

Span
Ows December 5, 2012 at 13:09

You seem to be missing the point that ‘these companies’ ALREADY pay
MILLIONS in tax, and rent, and rates, and employ thousands so NI (tax) to
pay etc etc etc.

I love the
BBC December 5, 2012 at 23:22

No they don’t. The whole point is that many of them do not pay ONE
PENNY in corporation tax, while still enjoying every benefit they can
identify. Of course they pay rent and rates, why should they not? Do we
not also pay such things? I can never understand the desire of some people
to be more perfectly, artfully and ideologically-correctly ripped off than
they are already. No-one is picking on these companies because we want to
put them out of business. We want to see fairness, social justice. If you
don’t have at least an element of that in a period of austerity then you
are treading a damnably dangerous road.

cascadian
December 6, 2012 at 03:56

Ahhhh, I see, it’s social justice you want. Well you should head to
the social courts then and file a writ. I’m sure Ed Balls can direct you
to these mythical buildings that protect your mythical rights.

Most people make do with contract law in the regular boring courts
for their commercial disagreements.

And you can exclude me from your pious “We want to see fairness”, I
prefer to speak for myself and not have economically illiterate people
do so.

JimS December 4, 2012 at 22:37

Doesn’t this money just go round and round?

Starbucks doesn’t pay tax so we get taxed more but get cheaper coffee.
Starbucks pays tax so we pay less tax but have dearer coffee. (Well in theory
anyway, the ultimate outcome will inevitably be higher taxes and dearer
coffee!).

In a similar way Millband has been banging on about how he would spend the
magic 4G money. Surely that is just a tax on what might, in another speech, be
described as investment in essential high-tech infra-structure? I’m sure there
must be a ‘investments’ with a better rate of return than new house and school
buildings.

Jonathan Mason
December 5, 2012 at 11:25

No, because the cost of the coffee is only a very small fraction of what
you pay Starbucks for a drink. Mostly what you are (over)paying for is
convenience, location, advertising, executive salaries, etc.

cascadian December 4, 2012 at 21:47

There is a message to be learned here. NEVER be an employee, form a
corporation and let employers hire your corporations services (your work), be
sure to claim for all earnings related expenses, it should not be too
difficult to ensure that any excess earnings (otherwise known as profit) is
minimised. Senior civil servants and BBC employees do it so it is obviously
legal.

In essence this is what Stemcor, Starbucks and others are doing obviously
on a far larger scale, it is not illegal and one wonders why la hodge believes
it to be immoral. Guido’s suggestion that Stemcor should be made to appear
before her committee to explain their tax situation is a good one.

John December 4, 2012 at 19:46

I am still trying to understand why Starbucks has received the “name and
shame” treatment from Hodge, whilst the multi-billion dollar metals company
owned by her family which is dodging it’s honourable share of UK taxes, is
not?

Monty December 4, 2012 at 19:45

Option 4 would require us to leave the EU, completely. No national
government can legislate to force any EU multinational to pay corporation tax
into its national treasury. These companies are doing precisely what the EU
explicitly permits them to do, within the single european market.

Jabba the Cat December 4, 2012 at 19:28

All tax payers and wealth creating businesses have a moral obligation to
pay as little tax as possible, so that the tax eater side of the economy is
kept as small as possible…

Ted Treen December 5, 2012 at 12:35

What he said…

Kevin B December 4, 2012 at 19:01

It might help if politicians had some small inkling of how capitalism
works.

Cut Starbucks profit by bludgeoning them into paying more tax and you put
pressure on their share price. The share price determines the capitalisation
of the company. It costs a lot to open a coffee shop in a new area; rent
premises, fit out shop, pay business rates, hire staff, train staff, buy and
transport coffee and muffins etc, and all before you’ve sold a single skinny
latte. The company gets that money by persuading people to invest their money
in the hope of getting a bit of profit back and if the share price drops then
you have less to play with. Pressure on the share price means you can’t open
new outlets so all that commercial activity is lost.

So managers are under pressure to increase profits, and customers and staff
will pay in one way or another.

Still, we’ve stiffed those greedy shareholders – insurance companies, ISAs,
pension funds and the like – so that’s ok.

Jonathan Mason
December 4, 2012 at 21:12

The company got its money initially from venture capitalists and then
much more when it floated shares on a stock exchange, plus from any
additional share offerings, plus from any bonds issued, plus from any
retained earnings reinvested. Pressure on the share price, per se, has
nothing to do with the company’s ability to open new stores–it would be
pressure on earnings that might affect the company’s credit rating and
ability to borrow for expansion.

However the issue has come up that Costa Coffee seems to be able to
expand and make a profit in the UK too, even though the playing field does
not seem to be quite level. It is generally desirable to have competition,
otherwise you might end up having no choice with Starbucks selling its (in
my opinion unpleasant and overpriced coffee, though you may disagree,) at
every airport and train station or sports event to the exclusion of
competitors who may well offer a better cup of coffee at a better price.

Kevin B December 5, 2012 at 11:00

Jonathan, the share price is the main factor that affects ability to
borrow, It is the capitalisation, the amount the company is worth.
Knocking twenty percent off of profits is the very definition of pressure
on earnings.

Costa Coffee is playing on a level playing field. It operates under the
exact same European Union trading rules as any other company. That it
chooses to operate its business in the way it does is entirely its own
decision.

Jonathan
Mason December 5, 2012 at 11:21

This is not correct about the share price, because the share price is
not the same as the capital value which is the share price minus short
and long term debt plus cash in hand. Credit worthiness is determined
more on the basis of free cash flow and projected future earnings.

Observor December 4, 2012 at 22:50

Shareholders are gamblers. No sympathy there needed. And yes that is how
capitalism works and why capitalism is a hungry beast that eats itself in
the end : unless strictly controlled.
However the US & UK stopped
being capitalists decades ago when corporatism took over. Otherwise the
great 2007/2008 crash would have seen banks destroyed. But they weren’t were
they.

Dick
Puddlecote December 4, 2012 at
17:49

“Having harried and humiliated Starbucks, against all the rules of
chugging,”

Thanks for reminding me of this, Anna.

http://dickpuddlecote.blogspot.co.uk/2012/12/when-government-does-it.html

Pogo December 4, 2012 at 17:40

I eagerly await a set of American “ambulance chasers” to initiate a class
action against the directors of Starbucks for failing to maximise the
profitability of the company.

Engineer December 4, 2012 at 16:54

Starbucks are being somewhat unfairly pilloried. They will be paying
Employer’s National Insurance contributions (at 12% of earnings, I think) on
the wages of their employees, and quite significant sums in Business Rates on
their trading premises. If they have limited their tax liabilities (in ways
the law allows) in other areas, then you can’t really blame them.

Perhaps the real problem is that the tax burden on the smaller enterprises
and individuals, who find it harder to legally mitigate their tax liabilities,
is too high. It’s so high, it’s stifling growth. The sooner government learns
to live within it’s means, the better. Margaret Hodge, take note.

Ted Treen December 4, 2012 at 18:02

“The sooner government learns to live within it’s means, the better.”

Totally agree, but would also say that the sooner government gives us a
tax system that’s fit for purpose, the better. It appears that the more
complex they make it, the more holes they leave for creative accountants –
and others – who will gladly take advantage.

And why not?

The viewpoint thrown out by so many professional outragees that we should
all pay to our wonderfully wise and frugal authorities more than we are
legally required to do is arrant nonsense.

Anyway, I’m going to exempt myself from tax for the next couple of years
by taking that nice Mr Hartnett to lunch…

Engineer
December 4, 2012 at 18:46

Can’t recall where I saw this, but I gather that Tax Law filled two
thick volumes in 1997. By 2009, it filled five volumes. That, I think,
rather bears out your point.

binao December 4, 2012 at 19:32

There is something that the brothers (red yellow and blue, not a
Rizla between ‘em) seem to find hard to understand; our income is ours
(individuals & companies). We don’t owe any of it to anybody else
just because they have less or are overspent. It’s ours to do with as we
wish. We earned it, all of it.
We must pay our leagal dues- most of
us can’t escape PAYE, corporation tax, VAT, NICs, whatever, but nothing
more.
What’s left is ours.
I don’t want my pension fund invested
in companies that feel obliged to give my money away, and I promise not
to send back tax saved on ISAs.
These vilified companies either
comply with the rules or they don’t; it can’t be that hard to sort out,
they never let me off the hook.
HMRC/Parliament seem to be entirely
the problem here. Big business let off billions while taxing people on
benefits. And didn’t HMRC themselves sell their offices (i.e. our
offices) to an offshore company?

cascadian
December 5, 2012 at 01:51

” I don’t want my pension fund invested in companies “…………..you
will be very happy with the results of your NI contributions then!

cascadian being mischievous or a jerk, I leave it to you to
decide.

Observor December 4, 2012 at 22:45

Oh come on- it’s more complicated than that,
Of course a business will
only pay what it’s mandated to and what the taxman demands but to imply
that’s all OK avoids reality. This often becomes (and one used by Starbucks
etc) so often : they are providing jobs , paying Nat Ins. etc etc.

Companies like Amazon & Starbucks (and News Corp is one of the
world’s worst offenders) highlight – and are in no way unique- why the tax
system must be fair.
They are all gobbling up resources. Those employees
may be paying tax on their wages but they are get to work via tax funded
means- roads,tubes, buses and so on as does Starbuck’s, Amazon’s products
etc.
One poster gets it right : the tax system is badly designed and
politicians are either useless or complicit in letting big corporations get
off lightly. And just because a few pollies fiddled their expenses doesn’t
negate others avoiding tax.
I’ve threatened to strangle the next person
(can’t through the net) who justifies tax avoidance by the claim the
Starbucks of the world provide jobs when in reality they destroy jobs.
People drank coffee before Starbucks came along but with their franchising
they put out of business and thousand small employers.

There is one way of curing all this : allow unions and wage earners to
lawfully base themselves in Litchenstein while earning their pay in the UK.
Watch the howls of protest.
This tax debate is just another example of
how corporations now wield the most power and how politicians are frightened
of them. Little steps to fascism.

Engineer
December 5, 2012 at 18:37

“Oh come on – it’s more complicated than that.”

No, it isn’t. Overall tax take is 43% of national income. That’s too
much, and is high enough to make it worth the while of organisations and
individuals to find ways to legally mitigate their liability. When tax
rates are more realistic, there will be less avoidance.

Andrew December 7, 2012 at 03:35

“This tax debate is just another example of how corporations now wield
the most power and how politicians are frightened of them. ”

Nonsense.

Businesses don’t point guns at you and demand your money, they don’t
try to control every single second of your life, they don’t have you
thrown in jail if you say the “wrong” thing, they don’t routinely commit
genocide.

Any “power” they may have is given to them by the political slime – and
can quickly and easily be taken away.

Politician’s monopoly of land and violence ensures the only people they
need to be frightened of are others like them who want to takeover their
tax farm.

And a huge chunk of their power comes from useful idiots buying into
their narrative and attacking those who see through the near-transparent
lies.

This is all nothing but theatrics, designed to further the propaganda
that government=good and business=bad.

Observor December 4, 2012 at 22:59

And if they were not there they would be replaced by small coffee shops
who tend to employ more people and ultimately pay more insurance.

As the USA has now found with Walmarts having destroyed every small town
centre over the decades , having driven down wages -it is now the long
fabled Ronald Reagan’s Welfare Queen where it’s employees have to be
subsidised by the government in order to live- while all it’s goods are made
in China and it pays minimal tax. It is now a burden on the US taxpayer.

The inevitable result of Starbucks, Amazon, Google, News Corp,Guardian
etc etc is a nation based in cyberspace, a collapse in local manufacturing
and people with no money to spend in Starbucks, at Amazon etc etc.

Jonathan
Mason December 4, 2012 at 23:46

Precisely! How does Britain really benefit if Amazon drives every UK
bookseller out of business? If it was the case that thousands of people
selling books could be redeployed more profitably in coal mines or mowing
golf courses or delivering parcels for Amazon (or something) then perhaps
there might be a case to be made. But there isn’t.

binao December 5, 2012 at 09:07

Are saying then that the tax system can be used for
protectionism?
I sat in a meeting yesterday morning looking at the
businesses and jobs in my community- what’s out there, how can we
strengthen it, make it prosper, etc, etc.
One of the obvious things
is that often small businesses, for all sorts of reasons, don’t grow,
they just rub along providing a living for the owner and maybe a bit of
work for others. The ambition to be a multinational isn’t there, or
possibly, the opportunity. Most UK businesses are very small.
These
big companies, for all I might despise some of their products, are
successful. Sometimes creating new demand, sometimes killing old methods
of doing business. We may mourn the victims, but it’s really no
different from Henry Ford vs the livery stables.
And when it comes to
not paying a living wage, whatever that is, we lost that battle a long
time ago. Every supermarket/mall being built relies on low wage, usually
part time staff. Without social housing/housing benefit this model
couldn’t function .
Sure, not enough tax being paid but I still think
the politicians and HMRC are the problem. PAYE taxpayers are a soft
touch so we get soaked; same by and large with VAT. Just look at what’s
been done with the 40% income tax band, this year and next.

Jonathan
Mason December 5, 2012 at 11:15

“We may mourn the victims, but it’s really no different from Henry
Ford vs the livery stables.”

My mother’s family ran a livery stables, but when the internal
combustion engine came in, they owned the first charabanc in their
part of England and to this very day some relatives still own and run
a small local bus company in eastern England.

Dave
December 4, 2012 at 14:05

Hi Anna,
As you may know Danny Alexander MP, Chief Secretary to the
Treasury
[Who BTW is getting fatter] is boycotting Starbucks.[The Telegraph
3 Dec.]
Anyway I went to his charming website
http://www.dannyalexander.org.uk/
Where Danny is begging
for cash. See button on left, “Make a Donation”
I did and paid 9 [nine]
pence into his account using PayPal.
Go on pay Danny twopence …..or
sixpence ….
I urge everyone to send tuppence to Danny.

ivan December 4, 2012 at 17:38

Dave, you have posted this in another thread – once should be enough.
Anyway, so what and how does it apply here?

Span
Ows December 5, 2012 at 13:06

Yes, he even posted in on my blog, clearly desperate!

Andrew Duffin
December 4, 2012 at 13:52

I note with interest, that it’s “immoral” for corporations to arrange their
affairs, in full accordance with the law, so that they don’t have to pay more
into the public purse than the law requires, but for some reason it’s
not “immoral” for MP’s to arrange their affairs, in full accordance etc
etc, in order to extract as much as possible from same public purse.

Can someone explain the difference?

Jonathan Mason
December 4, 2012 at 15:21

Both are immoral, but a lot depends on the circumstances.

For example in the United States I can get deductions from the income tax
I pay equal to mortgage interest or to funds that I put into a retirement
savings account. The reason for this is that the government wants to
encourage home ownership and savings for retirement so that people don’t
become impoverished and dependent on government when they can no longer
work.

Possibly in the UK members of Parliament are encouraged to rent or buy
homes in London or to use high speed transportation to ensure that they show
up at Parliament and participate in debates, committees, and votes and to
ensure that distant parts of the island are properly represented in London.
If Parliament wished, it could pay hotel expenses instead or assign a fixed
expense to each constituency according to where it is located relative to
London.

Inevitably there will be some who will game the system to their own
advantage.

Umbongo December 4, 2012 at 17:18

Tell us Jonathan why Starbucks or Amazon – or you – should pay anything
more than is legally required in tax. Why is it immoral to pay the least
tax you can legally to the shysters in power so they can look good by
distributing the moolah and – as a by-product – buy votes with somebody
else’s money? You smear perfectly respectable companies by comparing them
with the goings on among corrupt politicians. As it happens Starbucks and
Amazon in the UK are doing exactly what is required of them by the EU
single market directives. This happens to have tax advantages which have
been well known to our politicians including, I’m sure, Margaret Hodge
(the member for Stemcor). You, again, smear Amazon by implying that its
P/E ratio is down to tax fiddling but a more straightforward explanation
is because Amazon is growing exponentially and – in the eyes of the market
– will produce (evenually) earnings which make a ridiculously high
present-day P/E ratio explicable.

Jonathan
Mason December 4, 2012 at 18:11

“Tell us Jonathan why Starbucks or Amazon – or you – should pay
anything more than is legally required in tax. Why is it immoral to pay
the least tax you can legally to the shysters in power so they can look
good by distributing the moolah…”

Well, I think it is a matter of complying with the spirit of the law
rather than the letter. Obviously if you believe that governments are
illegitimate, as implied in your post, you might want to go for the
letter rather than the spirit. Companies like Amazon and Starbucks rely
on the UK’s health system for their employees, its roads for
transportation or for customers to get to the stores, its police to
prevent their warehouses and stores from being robbed and so on, so why
should they not pay their fair share?

Where is it written that companies must pay themselves royalties in
other countries so as to comply with the law? What would happen if
Amazon UK refused to pay royalties to Amazon Netherlands?

Why is it that Costa coffee makes a profit in the UK and pays taxes
on it, but Starbucks does not make a profit (on paper)? Are you
suggesting that Costa Coffee ought to move its headquarters to Bermuda
so as to avoid paying taxes in the UK? If all UK companies did this, who
would benefit from it?

Engineer
December 4, 2012 at 18:43

When it comes to tax law, there is no ‘spirit’. It’s legal
extortion, pure and simple. When the extorted funds are used for the
common good (defence of the Realm, keeping the Queen’s peace, the
impartial administration of justice, for example) then it can be
accepted by the ordinary individual. However, when one looks at what
we get for 43% of our annual national earnings being extorted from us
(plus 9% of national earnings borrowed, thus exposing us all to
interest payments for several future decades), one becomes somewhat
cynical about the ‘spirit’ of tax law.

Brass
Monkey December 4, 2012 at
19:06

A company pays it’s taxes in accordance with a system set up by
Parliament and “enforced” by H.M.R.C.. So why are plonkers in
Parliament & on the blogosphere complaining that these companies
are not paying their “fair share”? Oh, I forgot. There are always
idiots out there who seem to think that anyone who makes a good living
doing whatever it is they do should pay more and more in “voluntary”
taxes & “donations” just so that the government of the day can
piss it further up the wall.

Joe Public
December 4, 2012 at 17:40

Hi Jonathan. As a Stateside resident, are you aware of the 2009 “MPs’
expenses scandal” which highlighted the number of thieves amongst the UK’s
ruling elite?

This helps explain why many UK voters hold our hypocritical
parliamentarians in such contempt.

http://en.wikipedia.org/wiki/United_Kingdom_parliamentary_expenses_scandal

“Possibly in the UK members of Parliament are encouraged to …. show up
at Parliament and participate in debates, committees, and votes and to
ensure that distant parts of the island are properly represented in
London.” Perhaps you should Google the current attendance record, of our
previous Prime Minister; one whose conscience seems unaffected by his
monthly acceptance of full salary & expenses.

Jonathan
Mason December 4, 2012 at 18:15

Yes, I know about this. It seems that many MP’s bought into a culture
of maximizing expenses when they saw that others were doing it and were
told that it was expected. As I alluded to in another post, the US has a
culture of much stricter enforcement of its laws, whereas the UK tends
to be very laissez-faire and these expenses clearly were not
sufficiently audited. Had their been independent auditors from the
get-go, it would have been eliminated much earlier.

Joe
Public December 4, 2012 at
18:54

And if our MPs had been honest, there’d be no need for
auditors!

Ladle December 4, 2012 at 12:36

Years ago, the late (and sorely missed) Alistair Cooke said on his ‘letter
from America’ show that “all politics is theatre” and those four words sum up
the whole selfish mess we call parliament. There is also the old saying that
politics is show-business for ugly people.

None of this is news, but we still get to see a new show every day from the
same old actors with pretend tears and high-pitched demands. So irrespective
of how many options are on the table (a Starbucks coffee table, perhaps) or
what sums are done on the back of a napkin, the show is the thing. Ms Hodge,
would-be actress employed by the NuLab variety ensemble, makes a public demand
to appease or entertain the gallery. The fact that, as has been mentioned, the
politicians who rail publicly against the taxation laws are one and the same
who not only dreamed up the schemes in the first place but also benefit from
them thanks to being able to afford the very best accountants, etc, always
escapes the right-on left-leaning media.

No matter, the rabble are being entertained and that is all that matters. I
think Russell Crowe in ‘Gladiator’ asked the safely-watching arena crowd if
they were not being entertained by seeing death, and in a way the prospect of
a major company like Starbucks being put to the sword is our new mass
entertainment. Ms Hodge is merely taking the chance to go centre-stage even if
the sword is now that of impending legislation, subject to approval by the EU
of course.

But, please vote at the next election, because the show must go on!

Joe Public December 4, 2012 at 12:04

Oh the irony of politicians blaming Starbucks, for playing by the rules
written by the politicians.

Jonathan Mason
December 4, 2012 at 13:17

Actually the rules were probably written by someone else and then
approved by politicians who probably didn’t know how each clause might work
in practice. For example it might seem quite reasonable that a franchise
business is able to deduct royalties for the use of a brand name from
pre-tax profits, but not so reasonable if the company is paying itself (or a
foreign branch of the same company) for the right to use its own brand name.
To me it looks like this may be legal, but dishonest.

The parliamentarians who voted for such laws may not have been aware of
how they might be interpreted.

NielsR December 4, 2012 at 13:53

Probably true, but what’s your point? Not the MPs fault because they’re
clueless?

Jonathan
Mason December 4, 2012 at 15:12

Well, Mr. Public was saying that it was ironic that the politicians
were complaining about companies following a tax deduction strategy
devised by politicians. I was just explaining that it might not be quite
as simple as that. The Conservatives (and I think New Labour) have
always tended to favour so-called “light-touch regulation” in the
somewhat naive belief that businesses are inherently responsible and
good for society. Recent revelations make it rather obvious that large
companies and banks are not playing the game according to the Marquis of
Queensbury Rules–more like bare-knuckle prize-fighters.

The United States also has tremendous problems with tax collection.
For example there has been an ongoing furore about Amazon.com avoiding
state sales taxes and therefore competing unfairly with
bricks-and-mortar businesses, which in turn deprives the states of tax
revenue. However the US does tend to regulate in a much more detailed
way than the UK, and enforce its domestic laws very vigorously, having
in place a clear system by which laws can be challenged in the courts
and then reaffirmed or overruled by the courts according to their
interpretation of the law, or their whim (as it often seems).

It is notable that Amazon stock has a p/e (price to earnings ratio)
of about 100 to 1, implying that Amazon has razor thin profit margins or
struggesl t break even, yet the stock remains remarkably high. One is
tempted to think the the profitability of its business is actually much
greater than it would appear due to accounting shenanigans.

Joe
Public December 4, 2012 at
17:21

Re-written as:-

“Oh the irony of politicians blaming Starbucks, for playing by the
rules approved by the politicians.”

Solves any ambiguity.

Jonathan
Mason December 6, 2012 at 14:26

More on Starbucks from today’s The Guardian:

QUOTE

Kris Engskov, managing director of Starbucks UK, said even if the
company failed to make a profit – due to a series of payments to
various European subsidiaries – it will still make the unprecedented
payment to HM Revenue and Customs.

He said the anger among consumers over revelations that the coffee
chain paid just £8.6m in corporation tax since arriving in the UK 14
years ago, despite sales of £3bn, “has taken us a bit by surprise”,
suggesting sales had been hit as customers boycott the stores…

“Specifically, in 2013 and 2014 Starbucks will not claim tax
deductions for royalties or payments related to our intercompany
charges.”

Starbucks currently makes a loss due to a 4.7% premium paid to the
Netherlands division – where the coffee beans are roasted, and another
20% premium to Switzerland to buy the coffee beans. The company said
it would not claim deductions on these payments, or against
intercompany loans.

UNQUOTE

So there you have it, Starbucks has been buying coffee from coffee
producing countries such as Brazil via its Swiss operation and then
charging Starbucks stores in other countries a 20% markup on coffee
bought FROM ITSELF with the sole intention of reducing its paper
profits in the countries where the coffee is drunk and making more
profit in the country where the coffee trading operation is located
(which has lower taxes).

Did Parliamentarians really intend such a manoeuvre to be legal and
indeed to encourage it? I really doubt it.

Anna Raccoon December 6, 2012 at 15:21

Did Parliamentarians really intend such a manoeuvre to be
legal and indeed to encourage it? I really doubt it.

Oh, I don’t know – I’d want to take a look at which
parliamentarians might have had a stake in a Swiss trading operation
before I was confident of making that statement.

belinus December 6, 2012 at 16:40

It would appear after the 1930 bankruptcy declaration to secure
credit from the fund today known as the Bank for International
Settlements, the people were positioned as the collateral. In
order to implement it they required another world war after which
we all gained social security numbers, NI numbers, and a
corporation set up as a mimic of our Christian names for
commerce.
It was a deception carried out through war, and a
re-education programme followed. You have to be of the aristocracy
to understand this position, as it is their main loophole and the
reason they rarely end up before a magistrate.

John
Galt December 7, 2012 at
05:54

@belinus:

Don’t you need Lithium supplements or something for these
paranoid fantasies of yours?

John
Galt December 7, 2012 at
05:51

Ahhh, you mean Margaret Hodge MP the honourable member for
Stemcor?

belinus December
4, 2012 at 11:17

Come now! Some millionaires are millionaires thanks to Labour.
Just knew
I shouldn’t have voted screaming lord such…

The Meissen Bison
December 4, 2012 at 11:13

I think I finally understand why some millionaires vote Labour

Come now! Some millionaires are millionaires thanks to Labour.

belinus December
4, 2012 at 11:10

I would question the fact we owe a national debt, after all governments
have not had the power of attorney to act on our behalf since Michael
Foot.
I wonder does the cabinet have shares in Whitbread the proud owners
of Costa Coffee? Would explain the choice of victim in Starbucks, or is it a
fact a cup of costa is better than a cup of starbucks….answers on a postcard
to nescafe..

Elena ‘andcart
December 4, 2012 at 10:27

I feel as though Option 3 is awful, but I can’t quite work out why.
Excepting that I had a Christmas Party for my staff to say thank you for their
efforts. I didn’t have a party to avoid paying Tax, although I might have done
if I had thought of it.