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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Air pollution: 5 steps to vanquishing an invisible killer

A new report looks at the economics of air pollution. 

110, 150, 520... These chilling statistics are the number of deaths attributable to particulate air pollution for the cities of Southampton, Nottingham and Birmingham in 2010 respectively. Or how about 40,000 - that is the total number of UK deaths per year that are attributable the combined effects of particulate matter (PM2.5) and Nitrogen Oxides (NOx).

This situation sucks, to say the very least. But while there are no dramatic images to stir up action, these deaths are preventable and we know their cause. Road traffic is the worst culprit. Traffic is responsible for 80 per cent of NOx on high pollution roads, with diesel engines contributing the bulk of the problem.

Now a new report by ResPublica has compiled a list of ways that city councils around the UK can help. The report argues that: “The onus is on cities to create plans that can meet the health and economic challenge within a short time-frame, and identify what they need from national government to do so.”

This is a diplomatic way of saying that current government action on the subject does not go far enough – and that cities must help prod them into gear. That includes poking holes in the government’s proposed plans for new “Clean Air Zones”.

Here are just five of the ways the report suggests letting the light in and the pollution out:

1. Clean up the draft Clean Air Zones framework

Last October, the government set out its draft plans for new Clean Air Zones in the UK’s five most polluted cities, Birmingham, Derby, Leeds, Nottingham and Southampton (excluding London - where other plans are afoot). These zones will charge “polluting” vehicles to enter and can be implemented with varying levels of intensity, with three options that include cars and one that does not.

But the report argues that there is still too much potential for polluters to play dirty with the rules. Car-charging zones must be mandatory for all cities that breach the current EU standards, the report argues (not just the suggested five). Otherwise national operators who own fleets of vehicles could simply relocate outdated buses or taxis to places where they don’t have to pay.  

Different vehicles should fall under the same rules, the report added. Otherwise, taking your car rather than the bus could suddenly seem like the cost-saving option.

2. Vouchers to vouch-safe the project’s success

The government is exploring a scrappage scheme for diesel cars, to help get the worst and oldest polluting vehicles off the road. But as the report points out, blanket scrappage could simply put a whole load of new fossil-fuel cars on the road.

Instead, ResPublica suggests using the revenue from the Clean Air Zone charges, plus hiked vehicle registration fees, to create “Pollution Reduction Vouchers”.

Low-income households with older cars, that would be liable to charging, could then use the vouchers to help secure alternative transport, buy a new and compliant car, or retrofit their existing vehicle with new technology.

3. Extend Vehicle Excise Duty

Vehicle Excise Duty is currently only tiered by how much CO2 pollution a car creates for the first year. After that it becomes a flat rate for all cars under £40,000. The report suggests changing this so that the most polluting vehicles for CO2, NOx and PM2.5 continue to pay higher rates throughout their life span.

For ClientEarth CEO James Thornton, changes to vehicle excise duty are key to moving people onto cleaner modes of transport: “We need a network of clean air zones to keep the most polluting diesel vehicles from the most polluted parts of our towns and cities and incentives such as a targeted scrappage scheme and changes to vehicle excise duty to move people onto cleaner modes of transport.”

4. Repurposed car parks

You would think city bosses would want less cars in the centre of town. But while less cars is good news for oxygen-breathers, it is bad news for city budgets reliant on parking charges. But using car parks to tap into new revenue from property development and joint ventures could help cities reverse this thinking.

5. Prioritise public awareness

Charge zones can be understandably unpopular. In 2008, a referendum in Manchester defeated the idea of congestion charging. So a big effort is needed to raise public awareness of the health crisis our roads have caused. Metro mayors should outline pollution plans in their manifestos, the report suggests. And cities can take advantage of their existing assets. For example in London there are plans to use electronics in the Underground to update travellers on the air pollution levels.

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Change is already in the air. Southampton has used money from the Local Sustainable Travel Fund to run a successful messaging campaign. And in 2011 Nottingham City Council became the first city to implement a Workplace Parking levy – a scheme which has raised £35.3m to help extend its tram system, upgrade the station and purchase electric buses.

But many more “air necessities” are needed before we can forget about pollution’s worry and its strife.  

 

India Bourke is an environment writer and editorial assistant at the New Statesman.