Amazon, Google and Starbucks have been criticised by British politicians for “immoral” tax avoidance. The UK representatives of the three American firms appeared before a parliamentary public accounts committee hearing this week to explain why they pay little or no corporation tax.
The committee’s main gripe was that all three firms use fancy tax tricks, such as paying royalties to international subsidiaries to minimise their UK profit and avoid corporation tax on their British operations.
What commentators said
“Never before have such corporations been held accountable to our parliament for the tax they do and do not pay here in the UK,” says Richard Murphy in The Guardian. Perhaps that’s why they “made such a mess of this event”.
Starbucks revealed all of its complicated arrangements for shifting profit abroad, including a royalty arrangement with the Dutch government so favourable “it was not allowed to talk about it”, added Murphy. Google argued the tax should go to the US because that’s where the technology was developed.
Nice idea – until it admitted that European technology payments actually ended up in tax-free Bermuda. But Amazon did worst of all. Its failure to reveal its UK profits enraged MPs who have summoned it to return in two weeks.
But all this corporation bashing misses the point, says Allister Heath in The Daily Telegraph. Companies don’t pay tax, people do. “The burden of taxes supposedly levied on companies is borne either by investors, workers or consumers.”
So while it might be popular to make firms pay more, it’s actually “just a way of stealthily taxing these people, ensuring nobody really understands who is picking up the bill.” It’s time for a radical overhaul of the tax system.