Tax Injustice Is Systemic
COMMUNIST trade union leader Ken Gill famously referred to taxation as “the price we pay for civilisation.” If so last week gave further evidence of just how uncivilised a country Britain has become after decades of neoliberalism.
Google’s deal with HMRC has rightly prompted outrage and consternation at the sheer gall of the tech giant and its friends in government.
But the systematic manipulation of the tax system by transnational corporations is endemic and has been tacitly and actively encouraged by the Tories and New Labour governments alike.
Corporation tax has been consistently cut by neoliberal governments in Britain. At its historic peak it was set at 50 per cent for distributed profits but now the United Kingdom has one of the lowest rates in the developed world at just 20 per cent.
Only Ireland beats us to the punch with just 12.5 per cent — which is of course the reason Google chose it as the headquarters of its European operations.
The hypocrisy of Tory triumphalism in heralding the securing of any sort of tax deal with one of the most infamous of tax dodgers has been exposed by the Observer’s revelations that on six separate occasions Tory MEPs have been instructed to vote down proposals to tackle tax havens.
The Treasury has continually intervened in the European Commission to keep any attempt at any form of action on tax havens squarely off the agenda.
It’s not just a case of an ideological aversion to any form of control, the British capitalist class has a deep vested interest in blocking any international action on tax avoidance and evasion.
A third of those countries and territories listed on the EU’s “blacklist” are under British control.
It’s far from a contradiction. Britain’s government plays a vital role in defending the interests of capital, particularly finance capital, at the European level.
It’s an extension of the way our governments acts as a lobbying force within the EU for the City of London.
This has been part of a systematic and deliberate economic strategy which is a vital plank of neoliberalism designed to shift the burden of taxation away from corporations and onto the shoulders of individuals.
Last year just 7.7 per cent of total tax revenue came from corporations.
What’s more, right-wing economists and think tanks like the Adam Smith Institute are using the vitriol being directed at Google to advance an agenda which sees a further reduction in the ability to get corporations to pay their due.
Former chancellor Nigel Lawson, chairman of the accounting sub-committee of the Commission on Banking Standards and a key adviser to Chancellor George Osborne, claims: “While multinationals can artificially shift profits to whatever tax jurisdictions they choose, sales are where they are, and can’t be shifted.”
In fact this is one of the many loopholes already being exploited by Google and other transnationals.
What’s more, corporation tax doesn’t just cover profits on the sale of goods and services but on a wide range of economic activity. Interest, rents, capital gains, speculative market trading, derivatives, insurance premiums and much more.
But this is far from the first time there has been a popular outpouring of righteous and indignant anger. Any action on tax has to be part of a systematic programme to change the direction of the transfer of wealth.
As tax expert Richard Murphy puts it: “There is no doubt that the current arm’s length transfer pricing system that underpins international tax assists the transfer of wealth from ordinary people to the wealthy.
“Some politicians are dedicated to facilitating that process.”