Marks and Spencer does an Amazon and they don’t sell my books

I personally have broken the story about Marks and Spencer avoiding corporation tax by setting up their website in Ireland. But unlike Amazon and Google they do not sell any of my fine books about tax avoidance so there can be no accusation of hypocrisy this time.

Now, let’s be clear, there’s nothing illegal about this. Also, the argument that “tax avoidance is legal” is dead and buried following the release of my GAAR guidance. So this must not be legal as it is tax avoidance.

However, this is legal and tax avoidance, but not caught by the comprehensive GAAR guidance I wrote (due to the other members of the panel inserting loopholes into my guidance, I hasten to point out). This does not contradict that statement I made in the slightest. Obviously.

But, the similarities with Amazon are shocking. Look:

Amazon immorally don’t pay corporation tax in the UK where the sales occur. M&S immorally don’t pay corporation tax in the UK when the sales occur in Germany, France, Belgium and everywhere else but the UK.

Amazon are essentially a foreign business trading with the UK. M&S are essentially a UK business trading in the UK (including when they trade with other countries but from a non-UK country).

Amazon are being accused of not being taxed on their full profits in the UK. M&S are being accused of not being taxed on their full profits in the UK.

See? Identical situations.

So if you accept that Amazon is avoiding UK corporation tax, the completely uncontradictory conclusion is that M&S are also avoiding UK corporation tax. As Iven Horrocks has pointed out in his illuminating comment on another post, the UK should tax both companies on exactly the same basis because although the facts appear to be completely different, the outcome is exactly the same of the UK not getting any money!The common denominator here isn’t one of a continual persecution complex by UK tax campaigners. No, it is not. It is one of morality.We in the UK are morally entitled to all the tax from both M&S and Amazon on online sales occurring here and occurring abroad respectively. The reason I know it is a moral issue is that the people who think they should benefit are upset that they are not benefiting as much as they want. And they are complaining louder than everybody else so I think we should listen to them.
If that’s not a compelling moral case, I don’t know what is.

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4 thoughts on “Marks and Spencer does an Amazon and they don’t sell my books

  1. Thank you for your kind words.
    I’ve been turning my mind to the route cause of this problem. Something that has regularly been mentioned on your excellent blog is the trend to lower corporate tax rates and the race to the bottom that this tax competition causes. As you know, this deprives governments of the much needed tax revenue which they need to build roads, hospitals, infrastructure etc. It is clear that multi-national corporations responding to these incentives are truly morally repugnant tax avoiders. As has been said before, these policies should be reversed irrespective of what democratically elected governments say.

    It then occurred to me that grants and subsidies are also used to attract companies in the same way as low tax rates. They are just a different side of the same coin. The resources on these items (which I calculate at $41.563 trillion globally) are also diverted away from roads, hospitals, and Margaret Hodge’s expenses. So without tackling these items the situation will simple perpetuate but under a different guise. Therefore, these things need to be removed as well. This will mean that the market will not need to take any of these incentives into account when making business decisions and so will be unencumbered by interference from the State. I expect a chorus of dissent on this from the neoliberal trolls but I fear they will argue with anything.

    • Agreed

      Multi-nationals should behave as if they were encouraged by tax incentives, including lower rates, but pay over the corporation tax that would be due without the use of the incentive. This is the only morally acceptable course of action.

      Therefore, Google should allocate its entire global profits to the UK and pay 100% of this amount over as corporation tax.

      I would then be satisfied that we could pay over some sort of subsidy to them to encourage them to stay in the UK. Perhaps a small grant based on the number of union members they employ.

      • Can I just say Land Value Tax would solve all this and more. Oh I feel quite giddy now just thinking about LVT.

        By the way Iven it is “root” not “route”. The way to remember it is roots grow in land (which should be taxed on its value). Oh, there I go again. Toodle pip.

      • As always Prof. Murphy, great post! Do you think a tax rate of 100% is enough?! I say this for 3 reasons:
        Carried Forward Tax Losses – Remember some of these companies have been agressively and alegally using carried forward losses, worse still my research shows that these losses have been carried forward from periods when no tax was paid and the loopholes which allows this were written by the Grandson of an KPMG Partner whilst he was on his high school work experience at HMRC.
        Capital Expenditure – If that was not enough some of these neo-liberals have also been spending billions on Infrastructure in year 1, then claiming the tax deduction over a 5-6 year period for 100% of the cost and then claiming a deduction for the salaries of the jobs it has created! If i ignore the outliers/facts that do not support my arguments (i.e. income tax paid by new employee and the saving on state benefits) i can conlcude that capital expenditure increases the tax gap!!!
        R&D – Finally my extensive research shows 100% of companies that i have already decided i dont like have agressively claimed a 125% R&D relief. When questioned their only defence was ‘it is allowed under UK tax law and was the sole reason we moved our HQ and 10,000 jobs to the UK’! How is this helping to stimulate the UK economy?!
        This is why UK companies should be taxed on 125% of their global turnover! This rate, the GRAPIST and LVT will heal the tax gap!

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