Not Your Bucks hands off the Vodafone windfall

I have been a trenchant opponent of multi-national corporations who see no need to pay UK corporation tax mainly because this behaviour is anti-competitive.  Amazon and Starbucks and other businesses have been free to grow their unprofitable companies to the detriment of our own domestic businesses.  I strongly believe that multi-national corporations must operate on a level playing field or be ‘red carded’.
This week we have a slightly different tax avoidance story that has got everyone excited.  Vodafone are about to realise a £84bn windfall on the sale of their 45% stake in Verizon Wireless, their US partner.  Not a bad return on the £20bn invested in 1999.  Our cash strapped government and specifically the House of Commons public accounts committee can’t wait to get their hands on some of the loot and ministers are already dreaming up ways of spending these unplanned revenues.  However, before they all get too excited there is a suspicion that the company is going to manipulating the rules to avoid capital gains tax.

Fair Tax - Kitemark Needed?

It happens in all great industrial upheavals, first there is a boom then a premature bust, followed by a period of consolidation, then we get the monopoly ‘robbery barron’ era, before settling down into a better regulated more consumer friendly state.  The evolution of train transport and telephony business followed this pattern as has the oil industry, all bringing untold benefits to society but at some cost!  The internet has followed the same pattern with the boom in 1997-2000, the bust in 2001-2003, the recovery and consolidation, and now we are in the robber-barron phase.  The evidence is all round us.  Business oligarchs have made undreamed of fortunes, The lack of enforceable regulation means a small number of companies have been able to secure and then operate virtual monopolies  (Google, Amazon, Apple) and a consequence of this crazy wealth creation is that they have become uncontrollable.  They have been aided by both the rise of the internet and the fact that we live in a global market.

Giant Squid on the menu

Up dated 16 Jan

 

Goldman's back down having been savaged by the Governor!

 

The damage done but belatedly Goldman Sachs has scrapped plans to delay paying bonuses to its bankers in Britain to exploit an income tax cut for top earners after Bank of England Governor Mervyn King criticised the move. Or was it pressure from Therichterscale!!!

 

This back down may well be because of the comments made by Mr George but a contributing factor will be the press coverage and importantly the social media noise around this scam.  Since the advent of Wikileaks all the big banks monitor the web for mentions and you can be sure the Goldman’s will have been unnerved by the ‘trending’ this bad decision was creating.

 

See below for original post!

 

 

 

 

You can’t make it up the Giant Squid a.k.a Goldman Sachs along with a number of other banks is considering delaying bonus payments until the new financial year.  This would allow their UK higher rate tax payers (that’s just about everyone)  to  pay 45% rather than 50% income tax on earnings in excess of £150,000 p.a. This kind of financial engineering will keep these organisations firmly in the sights of the Public, Government and Regulators.  With average pay of £260,000 per head and (i am guessing) 6,000 employees in the UK that about £33m of missing tax!   I for one will boycott Goldman Sachs coffee from now on!!

 

See my post on Starbucks - http://getwd50.blogspot.co.uk/2012/12/ourbucks-your-having-latte.html#!/2012/12/ourbucks-your-having-latte.html

 

 

 

Ourbucks, you're having a latte

According to the Reuters investigation, Starbucks generated £398m in UK sales last year but paid no corporation tax and it found Starbucks had made over £3bn in UK sales since 1998 but had paid less than 1% in corporation tax!  At 20% profit (not unreasonable) they have avoided over £100m in tax.  

Starbucks claim in the FT that they haven’t been as profitable as they would like is obviously a joke. If  it turns out that they have been subsidising the UK business with profits from abroad or dumping prises to grow market share that is anti-competitive activity, where the penalties will be worse that a little back tax 

 

http://www.ft.com/cms/s/0/22a13a2c-3c7e-11e2-a6b2-00144feabdc0.html#axzz2Dztie8QV

 

And the solution is: http://getwd50.blogspot.co.uk/2012/12/expresso-tax-agreement.html