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.

Photo: Getty
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Like it or hate it, it doesn't matter: Brexit is happening, and we've got to make a success of it

It's time to stop complaining and start campaigning, says Stella Creasy.

A shortage of Marmite, arguments over exporting jam and angry Belgians. And that’s just this month.  As the Canadian trade deal stalls, and the government decides which cottage industry its will pick next as saviour for the nation, the British people are still no clearer getting an answer to what Brexit actually means. And they are also no clearer as to how they can have a say in how that question is answered.

To date there have been three stages to Brexit. The first was ideological: an ever-rising euroscepticism, rooted in a feeling that the costs the compromises working with others require were not comparable to the benefits. It oozed out, almost unnoticed, from its dormant home deep in the Labour left and the Tory right, stoked by Ukip to devastating effect.

The second stage was the campaign of that referendum itself: a focus on immigration over-riding a wider debate about free trade, and underpinned by the tempting and vague claim that, in an unstable, unfair world, control could be taken back. With any deal dependent on the agreement of twenty eight other countries, it has already proved a hollow victory.

For the last few months, these consequences of these two stages have dominated discussion, generating heat, but not light about what happens next. Neither has anything helped to bring back together those who feel their lives are increasingly at the mercy of a political and economic elite and those who fear Britain is retreating from being a world leader to a back water.

Little wonder the analogy most commonly and easily reached for by commentators has been that of a divorce. They speculate our coming separation from our EU partners is going to be messy, combative and rancorous. Trash talk from some - including those in charge of negotiating -  further feeds this perception. That’s why it is time for all sides to push onto Brexit part three: the practical stage. How and when is it actually going to happen?

A more constructive framework to use than marriage is one of a changing business, rather than a changing relationship. Whatever the solid economic benefits of EU membership, the British people decided the social and democratic costs had become too great. So now we must adapt.

Brexit should be as much about innovating in what we make and create as it is about seeking to renew our trading deals with the world. New products must be sought alongside new markets. This doesn’t have to mean cutting corners or cutting jobs, but it does mean being prepared to learn new skills and invest in helping those in industries that are struggling to make this leap to move on. The UK has an incredible and varied set of services and products to offer the world, but will need to focus on what we do well and uniquely here to thrive. This is easier said than done, but can also offer hope. Specialising and skilling up also means we can resist those who want us to jettison hard-won environmental and social protections as an alternative. 

Most accept such a transition will take time. But what is contested is that it will require openness. However, handing the public a done deal - however well mediated - will do little to address the division within our country. Ensuring the best deal in a way that can garner the public support it needs to work requires strong feedback channels. That is why transparency about the government's plans for Brexit is so important. Of course, a balance needs to be struck with the need to protect negotiating positions, but scrutiny by parliament- and by extension the public- will be vital. With so many differing factors at stake and choices to be made, MPs have to be able and willing to bring their constituents into the discussion not just about what Brexit actually entails, but also what kind of country Britain will be during and after the result - and their role in making it happen. 

Those who want to claim the engagement of parliament and the public undermines the referendum result are still in stages one and two of this debate, looking for someone to blame for past injustices, not building a better future for all. Our Marmite may be safe for the moment, but Brexit can’t remain a love it or hate it phenomenon. It’s time for everyone to get practical.