Multinational Scroungers and Tax Dodgers

Sunday, 10th February 2013
Just before Christmas the British media revealed some large up and coming multinational outfits had taken advantage of tax loopholes and the wonders of early 21st century globalised trade to evade taxes. Suddenly Labour supporters had a cause they could all rally behind and win support from hardworking voters rightly fed up with high taxes and shoddy services. Let's force evil Amazon and Starbucks to pay their taxes in the UK. For a fleeting second I thought we had returned to the early 1970s when the Trade Unions and Labour activists advocated import controls and high tax rates for the rich. Then as my mind returned this century, I remembered the spectre of a New Labour-appointed EU commissioner (Peter Mandelson) urging other European countries to open up their markets to competition from the Far East and elsewhere, to deregulate big business and banking and cut corporation tax. Under New Labour the financial services sector continued to grow as manufacturing shrunk even further.

While I sympathise with the various populist campaigns to force multinationals to pay more taxes (e.g. Ensure that international companies like Amazon UK, pay fair tax), much of the UK economy depends on tax evasion, money laundering and huge government handouts to myriad service sector agencies. Organisations like KPMG, Deloitte, Ernst & Young (EY) and PricewaterhouseCoopers specialise in corporate tax avoidance. Moreover. 95% of contract workers have their own limited company, yet to you or me, they just nurses, teachers, software developers, office workers etc. If they would lose their competitive edge they had to pay full UK income and corporation tax,

The trendy left's  newfound enthusiasm for local independent retailers seems rather perplexing, given the previous and current governments' track record. Retail chains and large agribusinesses have expanded to the detriment of independent traders and small farms as detailed in Joanna Blythman's excellent book Shopped. Small book shops are only a very small part of much larger picture. Paper books will inevitably suffer the same fate as typewriters. People will buy a few as collectables and for display purposes, but books are going electronic. Of course, it is very important that no one entity has control of something as important as literature, but oddly it is much easier to find "dissident" books on Kobo or Amazon than in Waterstones or specialist bookshops. Fortunately, as long as the Internet remains open, it is relatively easy to set up rival outlets for electronic books. We may wonder why some powerful lobbies would like to restrict this freedom in the name of questionable intellectual property rights.

Starbucks have been notorious not only for tax dodging, but also employing mainly newcomers to the detriment of young adults born and bred in the UK. Yet the politically correct left dare not mention this fact and have often suggested such progressive employers boost the economy through their smart branding of caffeinated froth. A casual visit to any Starbucks in London will soon reveal most customers are Guardian-readers, whose favouite newspaper is on sale before they part with at leasr £2.50 for your fair trade jug of flavoured hot milk. 

Considering the government's love affair with big business we may reasonably ask who benefits most from this negative publicity campaign. You guessed it, other multinationals who use a slightly different strategy to embezzle ordinary tax payers. Much of the left has been rather uncritical of the some of the worst quasi-monopolists and control freaks and Microsoft is a prime example. Amazon built its empire on open source software. Its servers run linux as do its now ubiquitous e-readers and tablets (Kindle Fire). Microsoft had successfully persuaded key policy makers that word processing, spreadsheets and presentations were their exclusive preserve. To suggest using a word-processor other than Microsoft Word in public sector IT departments not only attracted bewilderment and ridicule, but usually fell on deaf ears. As a result UK tax payers have transferred billions of pounds to one US Multinational, which has only ever spent a very small fraction of that of actual software development. Besides Microsoft Office and Windows licences, they earn hundreds of millions for SharePoint, Exchange and SQL Server. Now Apple, Amazon and Google have shown the public IT not just Microsoft. Software development is moving to the Web and Microsoft's desktop franchise is under threat. If you can knock up a diagram and Gantt chart online, why spend over £100 on a piece of desktop software that will be out of date soon anyway? Do we seriously want to entrust our digital future, including the internals of what was until recently the dominant desktop operating system and productivity software, to a US based multinational. By not releasing the source code to their ubiquitous products, Microsoft can spy on you (and they have a dismal security record too). In the open source world, you can view the human-readable source code to find any hidden backdoors. In my experience the UK tax and social welfare system penalises honest hard workers and rewards fraudsters the Banks! Hedge Funds. Some benefits cheats are just small time chancers and other others huge international operations with their tentacles in most government bodies. 

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