This week I learnt that several of the big US brands in the UK that I use every day are having their cake and eating it. Apple, Google, MacDonalds, Amazon have a combined turnover between 2008 and 2011 of £116.4bn. They declared total profits before tax of £5bn - and paid taxes of £1.5bn. Incredible.
At the same time Deudil have reported many of the famous names have declared losses: Starbucks says it lost £32m in 2011, Google lost £20.7m and Facebook lost £13.9m.
We have not looked into other non-US members of this corporate club but some in the city tell me the problem is the same. We know about Boots, Vodafone and other British brands are up to these tricks we just don't know the details of the rest. These practices are no good for the economy, the recovery and they trash the brands of the companies involved.
This form of predatory capitalism is Romney economics at its premium. It is the toxic short termism of asset stripping, offshoring, weak wages and minimum tax paying for corporations. In many ways is it scorpion economics and the capitalists who pursue this methodology will in the end stinging and eat themselves. It is simply unsustainable. The question is will our political classes take any action at all?
Some might say what is actually wrong? No laws have been broken these companies have simply played the tax code to the max. Who are they trying to fool? These practices screw the business prospects, innovation and growth for the Adam Smith small and medium companies who drive the UK economy. (I shouldn't be writing this article - where are the Federation of Small Business, the CBI or the Institute of Directors who say they fight for our interests !)
In my new political incarceration as a 'striver' I am angry. I got out of bed this morning knowing that there is nothing that my company, the people I work with or many of our clients can do. I feel stupid in the knowledge that the decks are stacked against us, we are not on a level playing field and their is nothing we can do.
Last year millions of small businesses in the UK were hit with the changes in VAT where we had to rush to pay the HM Treasury VAT upfront. This put huge pressure on millions of businesses who were stopped from employing new staff as the focus was on trying to keep the cash flow going and staying in business.
This move was easy for the HM Treasury - they know where we are - we can't afford tax accountants or off-shore parts of our operation to take advantage of a leaking tax system. While all this is going on we are trying to find ways to give people the chance of apprenticeships and creating internships for others.
The situation is simple. If we have a system of commerce where the majority of enterprises are being bled by the taxman and are unable to increase salaries then the employees don't have the money to buy the burgers, the iPhones, the coffee and whatever else. The system stops house holds cut back we just spend on the necessities and shop in Lidl.
So what is the response of the political classes who must consider their response to the public outcry? We know the traditional establishment has been rocked by scandals, corporate malfeasance and failures of the police and judicial system. The public has lost faith in them and no longer trust their judgement. This latest round of corporate undermines undermines and blows a hole through the pithy statements of "we are all in this together', "One nation" slogans we have heard over the last few weeks.
The public and the electorate are not fools and we see through all this nonsense and the Westminster sound bite. We cling to some romantic belief that we elect our politicians to bat for us, our jobs, our families and our futures. The political classes can not on the one hand tell us we must attack welfare dependency, tax credits of the middle classes while they allow the corporate welfare bill balloon to make our economy uncompetitive. The two stories simply do not tally. We are not on a level playing field.
Its hard to see politicians in the Ayn Rand 'free enterprise', britannia unchained cabal on the right having any substantial response. They favour business over the state and profit over people. However there is a serious opportunity for the centre left to make a renewed attempt to tackle this attack on business and innovation. Some of us do think there is a role for the state in society and everything is not for sale or can be outsourced. Although many of us don't like it taxation is needed for our schools, hospitals, infrastructure and the operations of the state. The well is empty. The burden can not be allowed fall on those who are already shelling out.
We have seen corporations mask there tax misdemeanours by hiding behind the tax laws and with pointing to their CSR programs and the number of people they employ. Many companies have genuine people committed to social innovation on one side of the company they have the bean counters on the other side ripping off that same society. This does not make everything alright as it is completely imbalanced.
Any decent company delivers CSR and social innovation because they are part of the community. They pay a fair level of tax because that is what the rest of us as individuals do. They pay their tax because they want to see their customers and employees and the country the do business in succeed.
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