Huffpost UK Politics uk
The Blog

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors

Marcus Liddell Headshot

The Corporation Tax Conundrum

Posted: Updated:

Corporate tax avoidance is rapidly becoming a big political issue. To most right thinking people the idea that multinational giants like Amazon and Starbucks avoid paying their fair share of tax is unacceptable.

The government too has reason to be unhappy. The treasury desperately needs to increase tax receipts if it is to hit its borrowing targets. Just last week the ONS announced the government had borrowed more than expected in the previous month, meaning even with the help of some creative accounting George Osborne may not meet his Autumn Statement borrowing targets.

But what can be done? Despite avoiding millions of pounds in tax companies like Amazon, Google, Starbucks and Vodafone are not breaking the law.

At the moment the government's strategy seems to consist of little more than bullying senior company executives during select committee meetings. Which although entertaining achieves little but emit an anti-business message which the UK - desperate for investment and growth - could do without.

The only way the government can really tackle the problem is through proper international cooperation. Leading economies need to come together to shut down tax havens and create rules forcing companies to pay tax on their income where it is earned. But this is unlikely to happen anytime soon.

Perhaps then we should just accept the current situation. As many leading multinationals are quick to point out they already contribute a lot to the UK economy through employment, national insurance and VAT. In addition there are good economic reasons for lower corporation tax in order to attract business.

But these arguments hold little sway with most voters. After all if a mere individual tried to avoid income tax on the grounds that they pay a lot of VAT they would soon find themselves in court. Likewise although the rate may be too high that is not a reason to allow it to be flagrantly avoided.

And when it comes down to it are companies that make substantial profits here like Google really going to up and leave us all to use Bing just because they are forced to pay corporation tax?

Perhaps ultimately the responsibility falls on us as consumers to vote with our wallets, at least that is what Sainsbury's boss Justin King suggests. After all as convenient as it is no one is forced to buy their coffee from Starbucks.

But companies that do pay their tax in this country can also help. I recently contacted nearly 40 retailers and manufactures to comment on corporate tax, only four were willing to speak out on the issue. Perhaps if more followed the lead of John Lewis, Brompton Bikes, Morrisons, Fullers Brewery and Sainsbury's, there would be a clearer alternative for those who want to buy from businesses that pay their fair share.

Presented By Chivas Regal Scotch Whisky