The usually excellent Monbiot has brought to our attention yet another fascinating snippet of information: our trusted leaders in government are poised to make it far simpler for multi-national corporations to plunder British taxpayers’ pockets. Writing for the Guardian, and also posted on his website, Monbiot’s piece tells us of yet another iniquitous piece of legislation our trusted leaders are about to pass – and which, unsurprisingly, seems to have escaped the notice of the mainstream media.
The new law, called the Finance Bill 2011, will, amongst other things, provide for British-based companies with overseas operations to forego the tiresome business of having to pay any Corporation Tax on their foreign investments. As it stands at the moment, these companies must pay the difference between whatever the tax is due in the overseas country, and the modest 28% wholly British businesses must pay – for now (this same draft legislation includes proposals to reduce Corporation Tax each year for the next four years).
So say you had a business registered in London, Pirates-R-Us say, with a lucrative little operation in the well-known resort of Treasure Island. The annoying authorities on Treasure Island insist on you shelling out 10% corporation tax; but that’s the least of your problems because the British government requires you to cough up an additional 18% to bring you into line with other British businesses. But all that’s about to change.
There are eighteen sub-sections to that bit of the Finance Bill concerning Corporation Tax. On page 70, in the sub-section “Taxation of Foreign Branches” and under the heading “Proposed revisions”, we can read:
The legislation will… allow a company to make an irrevocable election for all its foreign branches, located anywhere in the world, to be exempt from UK CT [Corporation Tax] on their profits.
Now at the end of each sub-section is a table titled “Summary of Impacts”, which makes for moderately interesting reading in its very own right. The first part of the table is titled “Exchequer Impact”, and is supposed to indicate how the proposed changes will impact the public purse (we don’t learn how these numbers have been derived). However, page 70 tells us the new law is expected to have a “steady state cost [to the government presumably] of £100 million a year,” and that the “primary benefit of this proposal will arise in two sectors: banking… and general insurance.” Another bit of the table is headed “Impact on Individuals and Households”. Quite a few of these summary tables have a one line entry for this that reads: “The proposal is for CT, and does not impact on individuals or households.”
Whilst a mere £100 million a year loss to the nation is indeed smaller than other “steady state costs” listed in “Exchequer Impact” (such as the proposed “Reduction in the Small Profits Rate of Corporation Tax” for example, which is projected to be running at about a £1.4 billion a year loss by 2014 – see page 57 of the Finance Bill), it’s difficult to believe that this annual drain on the Treasury will have no “impact on individuals and households”. Most individuals and households, if given the choice, would far rather see a couple of billion pounds a year going into public services than into the offshore bank accounts of company executives who are not exactly short of a bob or two.
But that’s not all.
According to Monbiot, not content with saving multi-billion pound organisations the inconvenience of paying tax on foreign earnings, our government also permits these people to claim the cost of those overseas operations as a tax deduction on their domestic earnings.
Monbiot concludes his piece, as always, with a comprehensive list of the sources he’s used, two of which should come as no surprise to anyone who understands how government really works. They’re lists of “representatives from businesses” who helped the civil servants draft the new bill by providing “strategic oversight [to] the development of corporate tax policy”.
Nearly all the names that appear on these lists are either employees of banks, insurance companies or some other corporation. So one of the questions that keeps me up at night is this: with all these “experts” representing the business community to help the civil servants draft this no-doubt wonderful new legislation, who was representing the interests of the “individuals and households”? Who was it exactly who predicts with such confidence, and so often, that “The proposal is for CT, and does not impact on individuals or households”?
Appearing several times throughout this draft bill we see that the reason for its existence is to “simplify” the tax system. We also read an entire section on the fascinating subject of “Anti-avoidance” – no doubt to reflect the government’s deep concern for those naughty little accountants who earn their keep by saving their masters the trouble of paying anything to a government that seldom fails to miss an opportunity to bend over for those same masters and smile invitingly over its shoulder.
Although my life is fortunately not so sad that I’ve actually read the Finance Bill 2011 from cover to cover, I must say the overall impression I have is that the government has done a fairly good job of “simplifying” and “Anti-avoidance.” It’s whittled away at those tiresome laws to such an extent that accountants will no longer have to trouble themselves with the effort of avoiding them. Tax avoidance for these guys will no longer be illegal because there won’t be any legal requirement to pay any tax at all. Mission accomplished.
Not entirely unrelated to all this were two other pieces of “news” that have made the BBC’s six o’ clock show recently. The first was about some young Air Force cadets who have been told that they are being “let go” and will not be able to complete their training course (on how to plunder the taxpayer’s pockets on totally unnecessary and illegal wars for a foreign empire). The second piece of “news” was about thirty other long serving servicemen who have been told they too will be “let go” – in a year’s time. Both of these situations are, of course, because of the government’s cuts in public spending.
What we were not told, of course, was how many of these people would have lost those jobs as a completely normal part of military life. (When I was an army cadet doing my training, it was part of the process to start with about thirty trainees, fully expecting to finish the course with about ten. It was completely normal for trainees to be kicked off the course in the sacred cause of “pursuit of excellence”.) Neither were we told how many of the other servicemen were due to end their contracts fairly soon anyway.
All of this was, no doubt, another cynical manoeuvre intended to rally public support for “our heroes”, and public opposition for cuts to “defence”. The government could have just as easily (and more usefully) sacked a couple of dozen generals who do nothing more dangerous than idle their time away in their London clubs, and saved itself even more money – but that wouldn’t cause anywhere near as much public outrage against “defence” spending cuts as the gradual removal of ordinary service personnel who may have been on their way out anyway.