THE BLOG

The Google Tax Deal Is a Slap in the Face of Small Businesses

26/01/2016 09:51 GMT | Updated 25/01/2017 10:12 GMT

Imagine yourself to be the owner of a small business, a café owner, a micro-brewer or a start-up tech company, you are trying to make the sums and make ends meet, day in, day out. You sit at night, when your business is shut, to make your financial planning, see if your business is viable, if it has a future. You know that at some point you will have to pay 20% corporation tax or 1/5 of your profits and you will struggle to make that payment.

Then you read that Google, a giant, multinational company, has made a £130million tax payment. Excellent you think, everyone pays their way. Then you read that Google made approximately £7billion the last 18 months and cold realisation descends that this is a government that has two sets of standards, displays an "us and them" mentality and doesn't really care about you, your small business or even competition.

The Google tax deal makes a mockery of small businesses. It massively skews competition as there is no small company out there that has the ability to hide most of its profits and then agree to pay only a meagre tax bill. The difference in tax paid by small companies at 20% and the suggested 3% paid by Google is often the difference between viability and closing down a business. It is money that would be spend on research and development, on innovation, on hiring more people. Money that could give a company the edge to succeed. How are small companies expected to compete and innovate when from the beginning, the field is tilted towards the big, established, multinational conglomerates?

David Cameron has previously stated that "The founders of Google have said they could never have started their company in Britain,". We, now, know why this is the case. It is because they would be forced to pay their tax as a small company. Now that they are a multinational, it is a different ball game for them.

Unfortunately it is not the first time this happens. In 2011, Vodafone made a deal to pay £1.25billion out of a potential £7billion tax bill. In the same year, Goldman Sachs did not pay £10 million interest on a failed tax avoidance scheme. Small companies would have been taken to court if it was them doing it. The Conservative government demonstrates time and time again a clear preference for big, multinational, companies over small, independent, UK-based ones.

This is consistent with the Conservatives' ingrained belief that tax is to be avoided. Boris Johnson yet again advocated for this position by stating that "It is the fiduciary duty of their finance directors to minimise tax exposure". A statement that is morally, financially and most importantly, legally wrong. There is no such provision in law yet this is what the Conservatives hope to do. Make tax avoidance the norm. Funnily enough, he based the whole argument on competition, when in fact, such deals stifle and hinder competition in favour of established players.

Osborne himself, offered ways to minimise the tax liabilities in 2003 on the Daily Politics programme. The incumbent Chancellor that currently advocates for firms to pay their tax, was offering advice only a few years earlier on how to avoid paying tax. It is another example in a long list, of the Conservatives' rhetoric being starkly different from what they are actually doing. On one hand they advocate for paying for more taxes and cracking down on tax avoidance, on the other hand, they close down 137 tax offices with thousands of job losses, the same people that ensure proper tax is paid and they go after tax avoiders. Only if they are small businesses, of course.

Every small business owner that pays his and her fair share of tax, now knows that the Conservative government is not here to foster and promote growth and competition. They are here to protect established and vested interests.

George Osborne hailed this deal as a "major success". It was. For Google.