The UK Politics and EU Referendum thread - merged

[Jon MW]

What do you think is better for the country - companies that pay millions to the treasury or benefit cheats that take millions from the treasury?

I know the point you are making, but the argument is that if the big corporates left and were replaced by small independents (who paid full tax) then it would generate more revenue than is lost by benefit cheats.  Hence via opportunity cost, the big corporates faffing around in Luxembourg/Caymans and dominating the high street cost us more than the benefit cheats.

There are a few companies that really take the mick - but the majority of companies pay the tax that they're 'meant' to (as long as you take into account that a number of tax avoidance measure are eminently sensible and are designed to help the economy in the long term).

A lot of big corporates raise a lot more than if they were replaced by small independents - how many people went to independent coffee shops before Starbucks et al popularised them? What would the total footfall be in a number of small independents compared to single Tesco Extra's? (for example).

I already said I don't think benefit fraud and tax avoidance are comparable subjects but given that they are both small percentages of the overall economy I'd say the illegal and immoral drain on the economy was a worse evil than the legal, if sometimes immoral, contributor to the economy (even if it doesn't contribute as much as it could do).

[DungBeetle]

Going off on a tangent here, but I'd say there is a decent argument to be made for the UK having zero corporation tax.  It's 9% of our tax take and we'd get it back via increased economic activity through PAYE/VAT/Rates and we'd level the playing field with the big corporates for our small business.

Unfortunately we aren't allowed to do this as part of the EU as far as I know.

I'd be up for this if wages rose considerably alongside it.

I think "in theory" it wouldn't raise wages but product prices would fall (if you believe corporate tax burdens are passed on to consumers) so standard of living would increase.  Also if we increase economic activity because all of Ireland's fund administration industry (for example) jump ship and come here then we can offset the 9% tax take lost and end up with more revenues to spend on public services.

Of course I'm talking pie in the sky here but I think it could work.

[AlunB]

What do you think is better for the country - companies that pay millions to the treasury or benefit cheats that take millions from the treasury?

I know the point you are making, but the argument is that if the big corporates left and were replaced by small independents (who paid full tax) then it would generate more revenue than is lost by benefit cheats.  Hence via opportunity cost, the big corporates faffing around in Luxembourg/Caymans and dominating the high street cost us more than the benefit cheats.

There are a few companies that really take the mick - but the majority of companies pay the tax that they're 'meant' to (as long as you take into account that a number of tax avoidance measure are eminently sensible and are designed to help the economy in the long term).

A lot of big corporates raise a lot more than if they were replaced by small independents - how many people went to independent coffee shops before Starbucks et al popularised them? What would the total footfall be in a number of small independents compared to single Tesco Extra's? (for example).

I already said I don't think benefit fraud and tax avoidance are comparable subjects but given that they are both small percentages of the overall economy I'd say the illegal and immoral drain on the economy was a worse evil than the legal, if sometimes immoral, contributor to the economy (even if it doesn't contribute as much as it could do).

But back to the original point, why does one consistently make newspaper front pages and election speeches and the other one is, generally, only spoken about on forums and blogs? If both are relatively minor issues that is.

Also how many people went to bookshops before Amazon came along? How many independent petrol stations, bakers and butchers has Tesco put out of business? I remember them all being pretty well established in most towns when I was a kid. There is a yin for every corporate yang I believe.

[DungBeetle]

So all we've established is tax avoidance is a significant integer multiple higher than benefit fraud and we're still saying benefit fraud is worse? Or did I misunderstand? Genuinely not trying to put words in anyone's mouth here.

From my perspective, I think you also need to take into account the net negatives of large corporations. It's nowhere near as simple as saying they create jobs and wealth. In some ways they can be like the mid-high stakes pros of the poker world making a small initial deposit then churning round everyone else's money and taking a chunk of it out of the system each year.

It's worse because avoiding tax isn't illegal.  The corps are taking advantage of weak legislation around transfer pricing.  Our politicians should strengthen that legislation.

Benefit fraud is breaking the law.  I'd agree tax evasion (at £10 billion) is a bigger issue to worry about on ground of magnitude.

Don't get me wrong - I'd like to put an end to corporate tax avoidance.  It it inherently unfair that a small coffee shop pays for whack corporation tax while starbucks can fiddle around in Holland and Luxembourg, make the saving and undercut him.  It's an issue that winds me up.  

But the reality is corporation tax is a relatively minor revenue source, and HMRC get a big whack off the PAYE/Rates/VAT generated from successful business in any case.  What concerns me is the lack of awareness of what actually makes up the tax gap and that it gets used for political ends.

Lots of really good points there. Only thing I would take issue with is this.

Yes, one might be illegal and the other legal (albeit usually against the spirit of the original law). But if one is actually having more of a net negative effect on society shouldn't we be more concerned about that?

It's a fair point of view.  When it comes to tax avoidance often you're in a grey area.  Starbucks will be offering a reason to HMRC why their inter group payments are fair and "at arms length".  If HMRC disputes this it now has to conduct extensive work to show evidence to the contrary.

The solution (for me) isn't enforcement.  It's about refining existing rules to stop abuse.

It's also about giving people full knowledge of the figures rather than empty political sound bites.  If we're looking at:

£1 billion benefit fraud (I've taken this from earlier thread so dunno if accurate)
£4 billion corporate tax avoidance
£10 billion tax fraud
£8 billion shadow economy

If it were me, I'd be focusing on increased tax fraud recovery first rather than bashing up Starbucks.  However, I get the impression from reading general media that people think Starbucks are the number one villain in town.

[AlunB]

So all we've established is tax avoidance is a significant integer multiple higher than benefit fraud and we're still saying benefit fraud is worse? Or did I misunderstand? Genuinely not trying to put words in anyone's mouth here.

From my perspective, I think you also need to take into account the net negatives of large corporations. It's nowhere near as simple as saying they create jobs and wealth. In some ways they can be like the mid-high stakes pros of the poker world making a small initial deposit then churning round everyone else's money and taking a chunk of it out of the system each year.

It's worse because avoiding tax isn't illegal.  The corps are taking advantage of weak legislation around transfer pricing.  Our politicians should strengthen that legislation.

Benefit fraud is breaking the law.  I'd agree tax evasion (at £10 billion) is a bigger issue to worry about on ground of magnitude.

Don't get me wrong - I'd like to put an end to corporate tax avoidance.  It it inherently unfair that a small coffee shop pays for whack corporation tax while starbucks can fiddle around in Holland and Luxembourg, make the saving and undercut him.  It's an issue that winds me up.  

But the reality is corporation tax is a relatively minor revenue source, and HMRC get a big whack off the PAYE/Rates/VAT generated from successful business in any case.  What concerns me is the lack of awareness of what actually makes up the tax gap and that it gets used for political ends.

Lots of really good points there. Only thing I would take issue with is this.

Yes, one might be illegal and the other legal (albeit usually against the spirit of the original law). But if one is actually having more of a net negative effect on society shouldn't we be more concerned about that?

It's a fair point of view.  When it comes to tax avoidance often you're in a grey area.  Starbucks will be offering a reason to HMRC why their inter group payments are fair and "at arms length".  If HMRC disputes this it now has to conduct extensive work to show evidence to the contrary.

The solution (for me) isn't enforcement.  It's about refining existing rules to stop abuse.

It's also about giving people full knowledge of the figures rather than empty political sound bites.  If we're looking at:

£1 billion benefit fraud (I've taken this from earlier thread so dunno if accurate)
£4 billion corporate tax avoidance
£10 billion tax fraud
£8 billion shadow economy

If it were me, I'd be focusing on increased tax fraud recovery first rather than bashing up Starbucks.  However, I get the impression from reading general media that people think Starbucks are the number one villain in town.

Excellent points again. I'd argue that for most people benefit cheats are the number one villain, then Starbucks and the rest they have very little interest in. As you say the order of those is somewhat out of whack.

[DungBeetle]

So all we've established is tax avoidance is a significant integer multiple higher than benefit fraud and we're still saying benefit fraud is worse? Or did I misunderstand? Genuinely not trying to put words in anyone's mouth here.

From my perspective, I think you also need to take into account the net negatives of large corporations. It's nowhere near as simple as saying they create jobs and wealth. In some ways they can be like the mid-high stakes pros of the poker world making a small initial deposit then churning round everyone else's money and taking a chunk of it out of the system each year.

It's worse because avoiding tax isn't illegal.  The corps are taking advantage of weak legislation around transfer pricing.  Our politicians should strengthen that legislation.

Benefit fraud is breaking the law.  I'd agree tax evasion (at £10 billion) is a bigger issue to worry about on ground of magnitude.

Don't get me wrong - I'd like to put an end to corporate tax avoidance.  It it inherently unfair that a small coffee shop pays for whack corporation tax while starbucks can fiddle around in Holland and Luxembourg, make the saving and undercut him.  It's an issue that winds me up.  

But the reality is corporation tax is a relatively minor revenue source, and HMRC get a big whack off the PAYE/Rates/VAT generated from successful business in any case.  What concerns me is the lack of awareness of what actually makes up the tax gap and that it gets used for political ends.

Lots of really good points there. Only thing I would take issue with is this.

Yes, one might be illegal and the other legal (albeit usually against the spirit of the original law). But if one is actually having more of a net negative effect on society shouldn't we be more concerned about that?

It's a fair point of view.  When it comes to tax avoidance often you're in a grey area.  Starbucks will be offering a reason to HMRC why their inter group payments are fair and "at arms length".  If HMRC disputes this it now has to conduct extensive work to show evidence to the contrary.

The solution (for me) isn't enforcement.  It's about refining existing rules to stop abuse.

It's also about giving people full knowledge of the figures rather than empty political sound bites.  If we're looking at:

£1 billion benefit fraud (I've taken this from earlier thread so dunno if accurate)
£4 billion corporate tax avoidance
£10 billion tax fraud
£8 billion shadow economy

If it were me, I'd be focusing on increased tax fraud recovery first rather than bashing up Starbucks.  However, I get the impression from reading general media that people think Starbucks are the number one villain in town.

Excellent points again. I'd argue that for most people benefit cheats are the number one villain, then Starbucks and the rest they have very little interest in. As you say the order of those is somewhat out of whack.

Yes - you're right about the benefits fraud - the media coverage puts them top. 

[Jon MW]

...

But back to the original point, why does one consistently make newspaper front pages and election speeches and the other one is, generally, only spoken about on forums and blogs?...

You'd probably need a psychologist for that - the people doing it know what they're doing. I'd guess something to do with people's general inability to grasp big numbers (?). If people are told someone claimed £100,000 benefits they're completely shocked but if they're told a company avoided a billion pounds of tax they can't associate with it enough to properly appreciate the severity.

[DaveShoelace]

...

But back to the original point, why does one consistently make newspaper front pages and election speeches and the other one is, generally, only spoken about on forums and blogs?...

You'd probably need a psychologist for that - the people doing it know what they're doing. I'd guess something to do with people's general inability to grasp big numbers (?). If people are told someone claimed £100,000 benefits they're completely shocked but if they're told a company avoided a billion pounds of tax they can't associate with it enough to properly appreciate the severity.

This is the book I referenced earlier which attempts to answer just that:

http://www.amazon.co.uk/Chavs-Demonization-Working-Owen-Jones/dp/1844678644/ref=sr_1_1?s=books&ie=UTF8&qid=1445349574&sr=1-1&keywords=chavs



By no means a perfect book, but does bring up a lot of interesting arguments.

As you say, it's easier for us to comprehend the benefits cheat. Especially when you hear about someone who is living on more money than you, but isn't working. That seems way more unjust. Plus we all probably know and have a few anecdotal stories of someone we know spunging off the system. Meanwhile the tax avoiding billionaire almost seems like a cartoon character in terms of how hard they are to relate to or recognise.

[Woodsey]

Get the tax laws changed then we can bitch about the big corps too!!

[Woodsey]

Surprised nobody has got on a soap box about the Chinese Presidents visit. Seems to be a lot in it for us, should we be schmoozing them? Or principles before business?

[AlunB]

George Osborne met with the Chinese President this week amid controversy.

"I understand there are issues with draconian laws that penalise the disabled and poor, but they are an important trade partner," the Chinese President said.

[nirvana]

Happened across this documentary the other day, really found it fascinating and a pretty good example of how the bourgeoisie (petite and otherwise) create myth and ill informed perspectives on 'issues'

http://www.bbc.co.uk/iplayer/episode/b03h8r1j/this-world-dont-panic-the-truth-about-population

[TightEnd]

v good maiden speech yesterday from conservative heidi allen on tax credits

"Truly brave and truly well-argued" http://bit.ly/1LBdxTX

[TightEnd]

sir humphrey is alive and well. re the chinese state visit speech

[RickBFA]

I think we'd all like to see big multi nationals pay tax on earnings made in our country within our system.

I get the impression though that to make changes in this field effective it requires cooperation across all countries?