12 May, 2013

Avoidance and the duck

At a sort of pre-meeting of G8 finance ministers prior to the G8 summit there has been an undertaking to do something about tax avoidance. The meeting was in Aylesbury and no one will be surprised that they look as if they are going to duck the issue (sorry).

I get confused and alarmed at all the nonsense spoken about tax avoidance, which is of course perfectly legal (when it is illegal it is called 'evasion'). So it's rather like being persecuted for driving at 69mph in a 70mph limit. 'And to cap it all the swine Hedges had a particularly accurate speedometer on his car. If that isn't cheating I don't know what is'.

We pay the amount of tax the Treasury tells us to pay or we are subject to the criminal law. Sometimes big companies do a deal with the Revenue before setting up. Recently the Chancellor did a deal with the makers of the new Star Wars film, so that it can be made in Britain. Are they tax avoiders? Is someone evil f he pays a little bit more into his pension scheme, thereby paying less tax?

One of the common schemes for avoiding tax is transfer pricing. This is one of the accusations against Starbucks coffee. The coffee is owned by a company in a low tax area and sells it into Britain for a high price, such that the profit accrues in the low tax area. Sneaky? Then why does the government allow it? Several countries, including Germany, I think, don't allow this. We do, because we want these multinationals trading in our country.

Now the multinational always has the threat to trade elsewhere, just as the Star Wars people threatened to film elsewhere. So for a co-ordinated action we are going to have to standardise the rules, between Germany, America, France, the Netherlands Antilles and so on.

Not really likely. An Aylesbury duck.

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