Google tax: why there should be an inquiry

The "not evil" solution.

A committee of MPs have said that Google should face a comprehensive inquiry into its tax affairs, calling the internet company’s tax arrangements "deeply unconvincing" — which is quite an understatement. In the five years to 2011, Google enjoyed £11.5 billion in revenues and paid £10 million in corporation tax.

Google executives, of course, have always maintained that its tax arrangements are lawful — its brainy accountants probably follow the letter of the law with utmost care, their job depends on it. Whether they follow the spirit of the law — or indeed the spirit of Google’s own "don’t be evil" motto — is quite another matter. 

The government’s sweetheart tax deals admittedly send out mixed messages, but I’m quite sure that the dry wording of the UK’s corporate tax codes doesn’t exactly say: ‘The standard rate of corporation tax in the UK is 23-30 per cent, but if you want to employ some of this country's most expensive brains to set up super-complex networks of branches and shell companies to process profits on tropical islands (or indeed, in Ireland) that’s cool too!’

No other area of law offers such great rewards — or indeed makes so many allowances — for individuals to twist its meaning.

The figure that’s often circulated in this context is that the UK’s tax gap stands at £32 billion (which includes tax avoidance by individuals as well as companies.) This is high enough, but tax evasion or avoidance by big corporations has a second cost: it penalises smaller companies that aren’t able to employ genius accountants to set up complex international structures to avoid tax. How are small tech start-ups meant to compete with the likes of Apple, Google and Amazon when the latter are able to pay virtually no tax? 

You can be both pro-business and anti-corporate tax avoidance, especially if you’d like to see more innovative, exciting new firms challenge today’s internet giants, whose power has allowed them to show a casual disregard to the privacy and rights of the customers they purport to serve. 

The challenge MPs will face when trying to hold Google to account is that the tax affairs of international companies require international tax solutions — and these will take time and will need near-unprecedented international co-ordination. But that doesn’t mean we should take the pressure off the likes of Google.

This article first appeared on Spears magazine

Google CEO Larry Page. Photograph: Getty Images

Sophie McBain is a freelance writer based in Cairo. She was previously an assistant editor at the New Statesman.

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Voters are turning against Brexit but the Lib Dems aren't benefiting

Labour's pro-Brexit stance is not preventing it from winning the support of Remainers. Will that change?

More than a year after the UK voted for Brexit, there has been little sign of buyer's remorse. The public, including around a third of Remainers, are largely of the view that the government should "get on with it".

But as real wages are squeezed (owing to the Brexit-linked inflationary spike) there are tentative signs that the mood is changing. In the event of a second referendum, an Opinium/Observer poll found, 47 per cent would vote Remain, compared to 44 per cent for Leave. Support for a repeat vote is also increasing. Forty one per cent of the public now favour a second referendum (with 48 per cent opposed), compared to 33 per cent last December. 

The Liberal Democrats have made halting Brexit their raison d'être. But as public opinion turns, there is no sign they are benefiting. Since the election, Vince Cable's party has yet to exceed single figures in the polls, scoring a lowly 6 per cent in the Opinium survey (down from 7.4 per cent at the election). 

What accounts for this disparity? After their near-extinction in 2015, the Lib Dems remain either toxic or irrelevant to many voters. Labour, by contrast, despite its pro-Brexit stance, has hoovered up Remainers (55 per cent back Jeremy Corbyn's party). 

In some cases, this reflects voters' other priorities. Remainers are prepared to support Labour on account of the party's stances on austerity, housing and education. Corbyn, meanwhile, is a eurosceptic whose internationalism and pro-migration reputation endear him to EU supporters. Other Remainers rewarded Labour MPs who voted against Article 50, rebelling against the leadership's stance. 

But the trend also partly reflects ignorance. By saying little on the subject of Brexit, Corbyn and Labour allowed Remainers to assume the best. Though there is little evidence that voters will abandon Corbyn over his EU stance, the potential exists.

For this reason, the proposal of a new party will continue to recur. By challenging Labour over Brexit, without the toxicity of Lib Dems, it would sharpen the choice before voters. Though it would not win an election, a new party could force Corbyn to soften his stance on Brexit or to offer a second referendum (mirroring Ukip's effect on the Conservatives).

The greatest problem for the project is that it lacks support where it counts: among MPs. For reasons of tribalism and strategy, there is no emergent "Gang of Four" ready to helm a new party. In the absence of a new convulsion, the UK may turn against Brexit without the anti-Brexiteers benefiting. 

George Eaton is political editor of the New Statesman.