Don't hate the player... Google just plays it well

You can't blame companies for paying the smallest amount of tax they can.

 

Does tax avoidance count as evil? Stingy, yes. Tight fisted, certainly. Unfair, perhaps. Illegal, apparently not. But evil is a difficult word to define. Google’s unofficial strap line has always been “Don’t be evil” but this is getting harder and harder to take seriously.

Google’s executive chairman Eric Schmidt has defended his company’s meagre tax on its UK earnings by saying that Google's behaviour reflected the way all big international companies manage their taxes.

The question of whether our morality is decided by common practise is a question for another day and one with, arguably, no real answer. 

The problem that Google faces is whether or not it should be paying the smallest amount of tax it can. Ask any private person in UK if they would ever voluntarily pay more tax that they are required to do and they probably wouldn’t even understand the question, it’s that daft. You pay what you have to nothing more. Then you claim back everything you can and try and get some tax credits while you’re at it.

Google is doing the same. The problem here is that Google is having to defend its self when it’s the system that’s broken, not the company. Here’s (a very brief) explanation how Google, and for that matter any of the other multinationals who were criticised for supposed tax dodging, do business within the EU.

The company (which ever one it is) has offices all over the EU. Each of these offices carries out a particular role for the company. The sales of the company happen within one particular country (in Google’s case from Ireland) and the corporate tax is paid in the country where the sale takes place.

This is how the EU market is meant to work, making it as easy as possible for businesses to sell their products or services around the EU.

Anyone angry at Google for paying this amount of tax in the UK must consider how this legal form of tax avoidance came about. If the system allows for this to happen then it is not the fault of the people or companies within the system when it does. The system has to change; companies (especially multinational corporates) aren’t going to change on their own but will if the laws require them to.

As the saying goes: don’t hate the player, hate the game. Google is just playing it well.

Photograph: Getty Images

Billy Bambrough writes for Retail Banker International at VRL financial news.
 

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PMQs review: Theresa May shows how her confidence has grown

After her Brexit speech, the PM declared of Jeremy Corbyn: "I've got a plan - he doesn't have a clue". 

The woman derided as “Theresa Maybe” believes she has neutralised that charge. Following her Brexit speech, Theresa May cut a far more confident figure at today's PMQs. Jeremy Corbyn inevitably devoted all six of his questions to Europe but failed to land a definitive blow.

He began by denouncing May for “sidelining parliament” at the very moment the UK was supposedly reclaiming sovereignty (though he yesterday praised her for guaranteeing MPs would get a vote). “It’s not so much the Iron Lady as the irony lady,” he quipped. But May, who has sometimes faltered against Corbyn, had a ready retort. The Labour leader, she noted, had denounced the government for planning to leave the single market while simultaneously seeking “access” to it. Yet “access”, she went on, was precisely what Corbyn had demanded (seemingly having confused it with full membership). "I've got a plan - he doesn't have a clue,” she declared.

When Corbyn recalled May’s economic warnings during the referendum (“Does she now disagree with herself?”), the PM was able to reply: “I said if we voted to leave the EU the sky would not fall in and look at what has happened to our economic situation since we voted to leave the EU”.

Corbyn’s subsequent question on whether May would pay for single market access was less wounding than it might have been because she has consistently refused to rule out budget contributions (though yesterday emphasised that the days of “vast” payments were over).

When the Labour leader ended by rightly hailing the contribution immigrants made to public services (“The real pressure on public services comes from a government that slashed billions”), May took full opportunity of the chance to have the last word, launching a full-frontal attack on his leadership and a defence of hers. “There is indeed a difference - when I look at the issue of Brexit or any other issues like the NHS or social care, I consider the issue, I set out my plan and I stick to it. It's called leadership, he should try it some time.”

For May, life will soon get harder. Once Article 50 is triggered, it is the EU 27, not the UK, that will take back control (the withdrawal agreement must be approved by at least 72 per cent of member states). With MPs now guaranteed a vote on the final outcome, parliament will also reassert itself. But for now, May can reflect with satisfaction on her strengthened position.

George Eaton is political editor of the New Statesman.