The government's "patent box" is the tax avoidance package companies have been begging for

It might incentivise innovation, but it definitely incentivises paying far less tax.

The Conservative party back-benches are seething with rebellion. Not only do ministers deplore David Cameron for an un-Tory like attitude toward gay marriage, in recent weeks he has further upset them with a positively radical spiel directed against those super-corporations the conservative leader suspects of tax avoidance:

Any businesses who think that they can carry on dodging their fair share ... need to wake up and smell the coffee.

However. Refreshing though the rhetoric certainly is, the actions of the Government seem to tell a different story. Corporation tax will have fallen from 28 per cent to 21 per cent toward the end of the Government’s first term in 2014 — and this will translate into a loss of roughly £5 billion in tax revenues each year as those cuts are enacted (according to 2011 estimations by the Treasury).

The buck doesn’t stop there. In order to better facilitate corporate needs, HM Revenue and Customs is set to introduce a new form of tax relief for businesses due to begin in April this year. It’s called the Patent Box. Ostensibly, it means that a company which shows sufficient innovative nous by patenting innovations will be entitled to a tax break of 13 per cent, applied to the value of the product. In theory this should provide impetus for companies to conceive fabulous new technologies, and give a spurt to growth and development thereby. Right?

Well not quite. The first problem is that said companies are not actually required to own the patent themselves in order to attain the tax break. They can simply lease a patent from the original patent owner; consequently there is no real incentive to invent stuff creatively and in-house, so to speak. But the most salient fact about the Patent Box is that it does not apply to the patent in isolation. A company could, for instance, produce a tractor, and if that tractor was possessed of a patented right view mirror, the revenue from the whole vehicle itself — not only the mirror — would be subject to same overall and significantly larger cut in tax.

In other words, a measure which appears to contain a degree of legitimacy, in fact becomes yet another way for big corporations to achieve massive, unwarranted tax slashes on their products. And this is ironic. The Conservatives always pride themselves on encouraging small business development, perhaps because this provides a highly effective propaganda sheen — allowing their PR initiatives to be expressed in terms of hard working individuals and entrepreneurs rather than faceless corporate monoliths. But the Patent Box will only serve the latter. Small businesses do not have the purchasing power to buy in bulk the products which will benefit from the tax cut, nor can they afford to gamble with new technological innovations, nor can they divert money into buying up the patents of others.

Part of the whole problem lies in the way in which the government develops Controlled Foreign Companies (CFCs) regulations. One of the lead advisors who helped the government to devise the Patent Box was one Jonathan Bridges — a tax advisor for KPMG, an accountancy company which has no remit outside ensuring the lowest tax returns for its corporate clientèle; it has, therefore, no commitment to any notional "national interest".

The use of the representatives of corporate power to provide advice on the means by which that power should be channelled in socially effective ways makes about as much sense as employing a local war lord to advise on the committee of Amnesty International. But despite its connotations, the practise of employing huge corporations to help devise precisely the laws which are supposed to regulate them is one which both the current and the previous Government have engaged in. At the time of the transition to the coalition government, Labour had already set up working groups for consultations regarding CFC reforms; panels which included representatives of HSBC, Vodafone and Shell — all major multi-nationals and all involved in controversies regarding tax evasion.

The current Government has an objective rationale for its position which isn’t simply an expression of neo-liberal ideology and partisan politics. These super-companies have genuine power — and the ability to decamp to another country taking thousands of jobs with them. Like petulant, spoiled children, they are always on the verge of tantrum, should their desires not at once be met. In the midst of an economic crisis there is a cogent argument that any single Government must of necessity make their tax rates as favourable as possible in order to attract those companies and secure those jobs.

But the problem with such an argument lies in its generalisation. If every government follows suit, slashing corporate tax over and over in order to remain competitive, and if all governments adhere to the strictures of such competition, we are at once locked into a downward spiral, a race to the bottom in which the benefits gained from corporation tax are increasingly illusory.

And it is important to recognise that this is exactly the type of cycle which got us here in the first place. We were sold on the need to slash regulations in the finance industry, and look what happened. By playing this game the government are not responding pro-actively to the crisis, they are adopting the very logic which led to it.

How can these companies be regulated? By people putting pressure on their governments for sure. But also by directly targeting the companies themselves through grass-roots activity and customer boycotts. Following mass protest, Starbucks was recently "persuaded" to agree to pay £10m in corporation tax in the UK for each of the next two years. A drop in the ocean certainly. But nevertheless an indication that, ultimately, it is the consumer who has the ability to make or break a company.

Innovate on the mirror, profit on the tractor. Photograph: Getty Images
Photo: Getty
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At last, Jeremy Corbyn gets the biography he deserves

Liam Young reviews Richard Seymour's Corbyn: The Strange Rebirth of Radical Politics.

Corbyn: The Strange Rebirth of Radical Politics is the fullest and fairest account of Jeremy Corbyn’s rise released to date. In avoiding much of the rhetoric espoused in similar accounts focusing on Corbyn’s early career this book provides a frank account of how the unlikely leader took charge of the Labour party. It is a very readable account too. Richard Seymour writes plainly but effectively and his writing is both accessible and incredibly informative.

Seymour attempts two monumental tasks in this piece: first he attempts to account for Corbyn’s rise and then he attempts to predict where such a rise will take him, the Labour party and the wider left. Zoe Williams wrote that Rosa Prince’s Comrade Corbyn was an account of “ex-girlfriends, the state of his flat” and featured “very little ideological insight”. Seymour does the opposite. In simultaneously engaging with Marxist and Gramscian theory, Seymour provides readers with something of academic value in the place of such gossip.

For any supporter of Corbyn, the first few chapters are a trip down Memroy Lane. Reading of the last minute rush to get Corbyn on the ballot paper sends the heart beating once more. While perhaps a niche political event, supporters know where they were the minute Corbyn’s place on the ballot was confirmed. The fact that we know the outcome of the uncertainty that surrounded the leadership election makes for palpable reading.

Seymour’s work is not simply the polar-opposite of Prince’s hit-job though. It would be wrong to suggest that it is a positive, self-fulfilling account of Corbyn’s rise. In many ways it is a hard hitting and realistic look at what lies ahead. For supporters of the Labour leader much of Seymour’s analysis will be discomforting; indeed the writer concludes that it is likely “labourism” will outlive “Corbynism”.

Such a view is hardly surprising though. Seymour’s repertoire of anti-establishment work suggests that it was always unlikely he would find a comfortable home in an establishment party. In this sense it suffers from being an account written by an outsider looking in. While the Marxist analysis of the Labour party is thought-provoking it seems too lengthy and seems to fit with an orthodox view surrounding the inevitable death of the Labour party.

Seymour’s concentration on “movement-building” is pertinent though. Utilising Jeremy’s own words on such a phenomenon is an effective tool. In drawing this distinction Seymour pokes at an open wound on the left asking exactly where all of this fits. It is about time that frank discussion on this topic was had. While there is a range of different opinions on the matter, Seymour’s intervention is an important initial step. It is an awkward conversation that the left can put off no longer.

The criticism levelled at the media is also well founded and long overdue. Seymour’s take on long established journalists who refused to accept Corbynmania makes for entertaining reading. On a more important note the fact that he credits social media as a central part of Corbyn’s campaign is interesting. The importance of this often overlooked element has been a point of debate within “Team Corbyn” and Seymour is right to poke at it.

Seymour’s work is, on the whole, a refreshing take on the events of last summer and a thought-provoking piece on the future of the Labour party. It is important to note that rather than viewing this book as an account of Corbyn’s campaign it should be seen as a review of the context surrounding Corbyn’s victory. Given that context is open to interpretation it is only fair to add the caveat that it should be read with an understanding of Seymour’s ideological foundation. Though I disagree with his conclusion concerning the Labour party’s future, I found it an important read. With an accessible yet authoritative tone Seymour manages the task of providing an academic insight into Corbyn’s election. Such analysis is far more valuable than words wasted on rumour and gossip – Seymour does well to avoid this and should be proud to have done so.

Liam Young is a commentator for the IndependentNew Statesman, Mirror and others.