Friday, 25 February 2011

Cut Tax Loopholes Not Services

Guest post from 38 Degrees

23rd March is Budget day. That means over the next month George Osborne will making decisions about cuts and taxes. It also means that it's a key time for us to turn up the heat on our Chancellor. Together let's pile the pressure on George Osborne to tackle tax dodging.

We've already raised £20,000 to publish another round of Artful Dodger ads. So where should we put them next to put the most pressure on George Osborne?

In local election hotspots so that when candidates are knocking on doors they're getting quizzed about tax dodging?
In cabinet member constituencies so that George Osborne's closest colleagues are flooded with questions from their local voters over the governments poor record on tax dodging?
In national newspapers so that while George Osborne is reading the morning papers, he sees himself as the Artful Dodger and knows that we want him to tackle tax dodging?

Click here to vote where you think the ads should be:

George Osborne says the deficit means that we have no choice over cuts. But that's only half the story. Tax dodging costs us up to £120bn a year - more than three times what we spend on schools. [1] Companies like Barclays only pay a tiny 1% in tax while libraries, SureStart centres and Disability Living Allowance are being cut. [2] Does George Osborne really think "we're all in this together"?

As Chancellor, George Osborne should be doing something to close these dodgy tax loopholes. But instead, he's doing the opposite. He's scrapped plans that would have made the banks pay more tax. [3] He's relaxing rules to let UK businesses move money into foreign tax havens to dodge tax. [4] And he's even going to benefit from a £1.6m tax dodge himself!

Click here to vote where the ads should go next:

We know ads like these help push the issue up the agenda. Last time our Artful Dodger ads caused a real stir, hit the headlines and put ministers under pressure. A government Minister was put on the spot during a live breakfast TV interview. The presenter asked him why he was "fiddling about with VAT when tax dodging costs us £120bn" - all thanks to our Artful Dodger ads. [5]

38 Degrees' campaigns work because we plan them together. And by planning this campaign together, we can put even more pressure on the government. So, as the budget draws closer, help decide where we put our Artful Dodger ads next for the most impact!

Thanks for being involved,

David, Hannah, Johnny, Charlotte and the 38 Degrees team


[1] Tax Gap: ; Education Budget:
[2] Guardian: "Barclays bank forced to admit it paid just £113m in corporation tax in 2009" ; Daily Mail: "Barclays branches hit by protests over '1% taxbill': Campaigngers target bank that made £1bn profit"
[3] Guardian: "George Osborne shelves bank tax plan"
[4] Guardian: "To us, it's an obscure shift of tax law. To the City, it's the heist of the century"
[5] Blog: "Artful Dodger ads are causing a stir"


noodle said...

the barclays tax story was terrible reporting, done by people seemingly lacking the most rudimentary understanding of financial reporting or tax. it's really disappointing to see it being repeated mindlessly in this way - you are just feeding ignorance. there is an excellent critique of the story here:

there is an awful lot that can and should be done to ensure that companies make a fairer contribution to society - but unless the arguments start from a foundation of actual facts, not misunderstanding, ignorance and hyperbole, we're not going to get very far.

Jonathan Bryce said...

It helps to understand how Barclay's tax bill was so low before campaigning to do something about it.

Out of c£10bn profit, they paid c£100m in UK tax. c£5.5bn of that profit was a capital gain on the sale of Barclays Global Partners. Gordon Brown introduced something called substantial shareholding relief which means that this capital gain was not taxable. It is not a loophole, it is a specific policy decision made by Gordon Brown. We could remove substantial shareholding relief, but first we should look at why Gordon Brown introduced it.

The other reason it is so low is that they claimed double taxation relief on foreign profits. Barclays France for example, pays French tax on its profits. Then it calculates the UK tax bill on those same profits and deducts the French tax already paid. That means that it effectively pays the higher of the UK tax or foreign tax on those profits. On these profits, Barclays paid an effective tax rate of 23%, which is still a little on the low side.

George Osborne is planning to change this so it would only pay the foreign tax, no matter how low it is. His reason for doing this is to discourage companies from moving their HQs to other countries to avoid UK tax on foreign profits. That would lower the tax bills of many multinational companies, but ensure that HQ jobs stay in this country, along with the resulting income tax and national insurance, and VAT from people spending their money here. You can consider whether or not you think this is a good idea. Certainly, we would need to have measures in place to stop companies shifting their UK profits into tax haven countries.

Adrian Windisch said...

Interesting that you have both focused on Barclays. Its only a small part of the post.

Personally I think many corporations take the mik. They messed up our economy, expect us to bail them out and avoid paying tax. Meanwhile the Tories are blaming Gordon, though at the time they praised him.

Google avoided paying tax by claiming there hq was in ireland. Cut the loopholes not services.

noodle said...

my focus on barclays was rather about the poor reporting of that particular story, and your repeating of very misleading figures. even if we put loopholes and policies aside - the fact that the uk tax take is being tallied against global profits is significant. if you look at the barclays accounts for the year in question (which are published on their website) you can see that their total tax charge was £1bn.. ten times the figure you used.

is £1bn enough? well that's getting closer to the discussion that needs to be had.. but if the arguments of those who believe that corporations are undertaxed are to be taken seriously then they have to start from a position of knowledge. nobody who understands the issue will listen to someone who is just repeating sensationalist press reports.

Adrian Windisch said...

If you cant be bothered to read and respond to what is written then there is no debate. Just repeating the same thing is pointless.