Tag Archives: Tax evaders

It won’t be Cadbury’s this Christmas

Because their corporate tax dodgers…

Kraft the company that took over Cadbury’s last year are moving some of their operations to Switzerland which will reduce their UK corporation tax bill from £200 million a year to £60 million (and we won’t mention the job losses here either). The daily mail are actually running a bouycott Kraft campaign.

But Kraft is just the tip of the cheesy- chocolate coated iceberg – this issue of corporate tax avoidance is costing the UK government billions in lost tax revenue every year. This fortnight’s Private Eye has an interesting article on this…

tax-dodgersVodaphone is the most notorious example – which recently came under pressure from protestors for tax avoidance – they had basically transferred a huge chunk of their profits into a subsidiary company registered in a tax haven abroad – Now under British Law, the Treasury currently has the flexibility to either tax such profits (at the current corporate tax rate of 28%), or not, and in this case the Treasury decided to let Vodaphone off. If the treasury had pursued the company, it would have netted £6 billion in tax revenues.  

Now obviously Vodaphone isn’t the only company or individual to try and avoid paying their taxes – David Davis points out that there are currently 190 ongoing tax dispute over the same tax law. There are now loads of companies using Vodaphone as a case study to try and get off paying their millions in taxes too.

Now if all this sounds a bit obscure – don’t worry – the Treasury’s ‘business forum on tax and competitiveness group’ – which comprises financial directors from leading companies such as Shell (I LISTED THEM BELOW THIS IS WORTH A LOOK)– has come to the rescue to clarify the issue – Tax law is changing – the UK government is to maintain the right to tax the offshore millions of international tax avoiders – but at a maximum of 8%, rather than the current corporate tax rate in the UK of just 28% (actually due to fall to 24%)

So future Vodaphones will have a choice – either run your revenues through a British registered company and pay 24% tax on profits – or run them through a tax haven company based abroad and pay just 8%.

Boots the Chemists are well ahead of the game on this – it’s as if they’re some kind of test case trying out the new law before it’s law (?!)– to illustrate the figures – ten years ago Boots paid roughly one third of its profits in UK tax – generating around £120- £150 million a year in tax revenue. Following their move to Switzerland in 2008 – tax revenue to the UK last year was £14 million – just 3% of profits.

A list of Members of the Treasury’s ‘business forum on tax and competitiveness group’ – the people who just convinced the government that it would good for Britain if they allow Corporations pay 8% Corporation tax rather than 28%

  • Andy Halford, Chief Financial Officer, Vodafone Group plc
  • Deirdre Mahlan, Chief Financial Officer designate, Diageo plc
  • George Culmer, Chief Financial Officer, RSA Insurance Group plc
  • Richard Lambert,  Director-General, The Confederation of British Industry
  • Julian Heslop, Chief Financial Officer, GlaxoSmithKline plc
  • Andrew Shilston, Finance Director, Rolls-Royce plc
  • Mark Elborne, President and CEO, UK, Ireland and Benelux, General Electric Company
  • Joe Greenwell, Chairman, Ford of Britain, Ford Motor Company
  • Andew Nelson, Finance Director, Amey plc
  • Mike Devereux,  Director, Oxford University Centre for Business Taxation
  • Simon Henry, Chief Financial Officer, Royal Dutch Shell plc

A few arguments against taxing the rich less (off the top of my head I may do a more systematic account later)

  • Firstly, and most importantly, it doesn’t guarantee long term, stable economic growth, as the case of Ireland demonstrates. What it enables Corporations to do  is to increase their short term profit margins.
  • Secondly, letting Corporation keep their profits would be more pallatable  if we knew those profits were distributed amongst the workers who actually generated those profits – but in reality they are not – much of it will go to the CEOs of the companies  who don’t actually earn their millions in profits through hard work – a lot of it is due to luck. (See Polly Toynbe – Unjust Rewards)
  • Thirdly, in the case of Philip Green (Top Shop) , Vodaphone and Boots – I imagine that a lot of their profit comes through overt exploitation of people in the developing world – letting them keep it is morally appalling. At least if the UK government taxes this some of this will get spent in development aid – and some poor people in Britain will benefit – although I am aware of the arguments against AID – it would be far better to have some kind of international tax regime in place to make sure profit gets redistributed much more fairly on a global scale.
  • Fourthly, Allowing CEOs to get richer through allowing their companies to avoid tax is highly unlikely to lead to social progress – I imagine a lot of that wealth will be used to buy up property – thus pushing up basic cost of living expensese for ordinary people – and on executive toys like yachts and jets – wasting scarce resources to flatter executive egos.

Dolce and Gabbana – tax evaders and sweat shop entrepeneurs – not that you’d know

Dolce and Gabbana - a sick, amoral  pair of self obsessed posers
Dolce and Gabbana - a pair of self obsessed amoral posers

A Milan prosecutor has requested that Dolce and Gabbana be put on trial for alleged tax evasion amounting to one billion Euros. What they have basically done is funnelled royalties on their brands through a sister company in Luxembourg, paying a much lower tax rate of tax in that country and avoiding paying the higher rate of tax in Italy.

Despite this being the ‘tax evasion case of the century’ This article from the guardian points out the Media in Italy have barely mentioned the case, so those who rely on the mainstream media in Italy for their information would be blissfully unaware of D and G’s aversion to paying their fair share. The article speculates that this is because D and G spend considerable amounts advertising in the mainstream media and because they are very well networked in Italian high society.

This is a good example of how those with money and social networks can use them to distort media reporting to keep information that is harmful to them outside of the mainstream media.

Something else Dolce and Gabbana probably wouldn’t want you know – you know it’s coming – yes – some of their stuff is made in sweat shop conditions – despite the fact that their clothes sell for ludicrous amounts and the tax evasion….

One subcrontractor comments – “They send me the materials and my team stitch, glue and finish the bags. I pay my 100 workers £2 an hour, but they are happy. They sleep in a dormitory above the workshop and I feed them. D&G sell the bags for up to £1,000 a time.”

However, while D and G take steps to hide the true extent of their class exploitation, they seem to be much happier expressing their contempt for women – as their use of  anorexic models suggests (not that it matters because fashion doesn’t encourage anorexia according to DG) as does that notorious rape fantasy add from 2007.

Then again, is it realistic to expect people working in the fashion industry to have a social conscience? They make their money out of producing socially useless products that encourage self -obsession after all.