Politicians look indignantly at big business

17 May

By Chris Hansell

Photo by graziano88

Photo by graziano88, via Flickr

What happens when politicians are feeling particularly hated and scorned? They have a bash at a group even more disliked and reviled.

This seems to be what took place at a hearing of the Public Accounts Committee in Parliament on Thursday, with MPs taking the collective chance to look indignant at big business.

The issue is plainly stated in the Independent: Google have paid only ‘£6 m in UK corporation tax in 2011 despite generating more than £3bn in advertising revenue in this country’. Now to ensure  there’s no risk of me breaking defamation laws (don’t worry – probably not a strong possibility) I should clarify a few titbits. Google’s Northern Europe boss Matt Brittin says while UK staff are involved in encouraging advertises to buy ad space the actual transaction of buying ad space takes place in Ireland.

What seems to have been at issue at the committee on Thursday is just how much of the ad selling process took place in the UK. Committee chair Margaret Hodge repeatedly talked of whistleblowers who offered payslips showing ‘substantial bonuses’ based on ‘sales’. As Mr Brittin was quoted as saying in the Telegraph “’the UK team are selling, but they are not closing’”. Still, legally speaking it seems that if the ad transaction takes place in Ireland it cannot be taxed in the UK. I’m not a legal expert.

This is not to say it is morally right. If, as Mrs Hodge claims, much of the ad selling process takes place in the UK then I think it is fair that it be taxed here as well. If what Mr Brittin says about selling and closing is true I imagine it would be quite hard for Google to generate the amount of ad revenue without the UK team. This is where the circle closes itself because the only people who can make the tax system fairer and more comprehensive are the people sitting in Parliament and looking aggrieved at Mr Brittin.

On the 17th of June the Prime Minister will host G8 leaders in Northern Ireland. One of the key points of discussion David Cameron says he intends to pursue is the issue of international tax law. Perhaps it’s time Mr Cameron pulls his finger out.

Here’s some extra content I’ve produced relating to the whole tax issue.

Some other articles worth reading on the subject:

Amazon and corporation tax

Google boss to meet Prime Minister


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