Racing in potential levy windfall following debate

[Iron]

Finally, yes the companies have earned the money but why should they not pay tax on the profits in the country in which they earned it? They have taken advantage of that country in order to earn those profits.

They haven't taken advantage of anyone. That's Marxist thinking. It's a business transaction - pure and simple.

It's very trendy these days to be anti-big business, but you need to be careful about killing the geese that lay the golden eggs (because they aren't easily brought back to life)...

The argument is not to do with the excess of the public sector spending. That is a different topic.

No, it's completely relevant. Do we want a tax and spend government, or do we want a lean and efficient government, where as little wealth as possible is taken out of the productive economy?

What is your true idea of a free and fair market for the bookmakers Jeff? No tax?

Some tax is inevitable, but I've love it if the state were MUCH smaller, and people were free to make more of their own spending choices, rather than Big Government taking so much money from them by force and deciding what to spend it on.

I'd rather companies had money available with which to invest in new premises, plant and machinery, than them be unable to do because they've had to pay taxes to re-carpet the MOD offices or pay for a failed asylum seeker's tenth appeal hearing...

Jeff

[staker72]

Erm, we have a point of consumption tax, it's called VAT and raises nearly 100 billion or so. In any case everyone looks at Starbuck but small cafes etc. are probably below the VAT threshold and may pay reduced rates. Thats before we wonder if everything goes through the books whereas I would guess the likes of Starbucks are paying full whack and declaring everything

[Iron]

Erm, we have a point of consumption tax, it's called VAT and raises nearly 100 billion or so.

I think what Andy is proposing is that the cost of the VAT would be born by the retailer rather than automatically tagged onto the price in the shop. However, what will happen in practice is that the tax will still ultimately be borne by the customers. Starbucks will say, 'Joe Public has been willing to pay £x for a cup of coffee up till now. If it ain't broke...'

The only beneficiaries will the civil servants in the Inland Revenue who get loads of over-time to implement this major yet pointless tax overhaul...

Jeff

[hgodden]

They haven't taken advantage of anyone. That's Marxist thinking. It's a business transaction - pure and simple.

It's very trendy these days to be anti-big business, but you need to be careful about killing the geese that lay the golden eggs (because they aren't easily brought back to life)...

The trouble is we don't really live in a Capitalist society any more though Jeff, it's more like a Corporatist society with giant protection rackets at the top which, ironically, wouldn't be out of place in, dare I say it, a Marxist society!

Society could function perfectly well by properly regulating big (and small) businesses and keeping money and influence away from the political institutions who are supposed to be working for the people that elect them in a democracy.

It doesn't need to go the other way and become some sort of Marxist 'paradise', it just needs balance and to check back the power of self interest groups.

[Iron]

Hi HGodden

I don't buy into the 'checks and balances' type argument. When you have government bureaucrats running things, then business can get bogged down in red tape.

Just as business owners have an agenda, so do civil service bureaucrats (i.e. introducing measures to justify their continued employment, whether or not those measures are beneficial to society).

Jeff

[hgodden]

I'm not talking about bureaucrats running everything. I'm saying that people who are supposed to set and enforce the rules on behalf of the public should be doing just that and not working for their chums in big business.

If there was better regulation of the financial industry then the crash of 2008 would not have happened. In almost every walk of life / industry there are examples of self interest groups getting away with acting in ways that are completely detrimental to the wider public.

Business may benefit wider society but that doesn't mean that it can just be left to do whatever it wants with the world. There has to be some policing of things or these businesses will just get away with murder. Last time I checked this was still a country full of people and not just a local countrywide subsidiary factory farm / shopping mall.

[Iron]

I disagree.

I think Milton Friedmann had it right:

'Government has three primary functions. It should provide for military defense of the nation. It should enforce contracts between individuals. It should protect citizens from crimes against themselves or their property.'

This is the kind of nonsense you get when you give public sector bureaucrats too much power: http://www.bbc.co.uk/news/technology-26452778#FBM346174

Jeff

[hgodden]

Thats the kind of nonesense that happens when you give jobs to stupid people!

[andyfuller]

Erm, we have a point of consumption tax, it's called VAT and raises nearly 100 billion or so.

As I said earlier, VAT applies to the end consumer. A point of consumption tax as is being proposed for betting is a tax on gross profits of the bookmakers.

I think what Andy is proposing is that the cost of the VAT would be born by the retailer rather than automatically tagged onto the price in the shop.

You mis-understand me. The POCT is upon the company profits only.

A simple explanation:

I, based in the UK Buy a widget for £1.20 from Company XYZ currently based offshore. £0.20 of that goes to the Government in the form of VAT. Company XYZ makes £0.50 profit and pays no tax to the UK Government, they are based in a Country paying 5% tax on profits. So pay £0.025 in tax in their offshore company.

The POCT would say that they have to pay 20% tax on profits from sales made to UK customers.

So now the Government gets the £0.20 in VAT and £0.10 POCT from the companies profits. They would also have to pay tax in the country they are based in. So the Tax revenue goes up, the price of the item may go up and/or they may take a lower profit to account for the tax. Also they now have more of an incentive to move their operations back to the UK.

[staker72]

I am not sure what you are suggesting, that a company should pay a tax on it's gross margin ignoring it's operational costs? (Which I believe is how the bookies levy works)
For companies that have multinational operations that would push then to reduce margins in the UK and increase margins in overseas operations that supply them. In any case costing is a complicated processs at the best of time!

[CaerMyrddin]

Great topic, sorry to catch it latter.

Sorry to disagree with you when you say:

It's their money to do with what they wish. They earned it. They have no moral obligation to fund Britain's rampant public sector spending.

Wouldn't like to pick any particular companies or countries so I don't offend anyone, but will have to eventually.
If you take any modern society and if you look at it as a market, there's great opportunity for big companies to take profits. Now, that societies have to charge those companies for running their business there, as they are profiting from their organizations, education, etc. So, when Amazon (nothing against them, I'm a regular costumer) set up their business in a country like the UK, they are taking money because that society has the resources to steer up their business. If a company like Metro Bank sets up a bunch of branches there, they will have to hire educated individuals to various positions. And that education costs money. So, especially the big companies (that are the biggest tax evaders) have particular responsibility in paying taxes.

Companies rely on countries. Do you think that a country like, just say, Bangladesh would ever come up with a company like Microsoft?

[steven1976]

It would be very naieve to think they couldn't!

[andyfuller]

These two posts from Mark Davies blog are worth a read for anyone interested in the Levy debate:

1. http://www.markxdavies.com/2014/03/19/lipsey-speech/

2. (A classic speech): http://www.markxdavies.com/2014/03/19/wading-in/

[Euler]

Beat me to it.