“Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
David Cameron apparently thinks that the Beatles celebrated the taxman:
The world’s most powerful leaders must mount a concerted effort to prevent multinational companies such as Starbucks and Amazon legally avoid large corporation tax bills, David Cameron will urge in his role as president of the G8.
The Prime Minister vowed to make “damn sure” that multinational firms paid their fair share of tax on their UK operations.
He is to use Britain’s presidency of the G8 group of the most industrialised nations, which began this week, to discuss ways of stopping global companies moving their money through different jurisdictions to minimise tax payments.
HM Revenue & Customs has been accused of being “too lenient” towards big businesses that indulge in aggressive tax planning. The credibility of HMRC and the tax system rests on it becoming “more aggressive and assertive in confronting corporate tax avoidance”, the chair of the Public Accounts Committee, Margaret Hodge, said last month.
Mr Cameron says a crackdown can only be effective if countries around the world act collectively to tackle abuses. Britain, along with Germany and France, has asked the Organisation for Economic Cooperation and Development to investigate whether tax loopholes can be closed.
He signalled his determination to confront global corporations during an appearance in Lancashire before business leaders and entrepreneurs. Asked why “Starbucks and Amazon” were allowed to avoid paying large corporation tax bills despite their extensive British presence, he replied: “We have got to crack that, you’re absolutely right.
I’m sure that this kind of bluster makes Britons happy, but a smart government would look at the efforts being expended by large companies to avoid paying corporation taxes and wonder whether perhaps that kind of behavior is a sign that corporation taxes are too high. A smart government might consider lowering corporation taxes so as to remove incentives for companies to go through Rube Goldbergesque machinations in order to lessen their tax liabilities, thus possibly attracting the presence of more companies—and coincidentally, more jobs—into the country being governed by that smart government. A smart government might be struck by the idea that lowering corporation taxes could make it less necessary for that government to spend so much time, money and resources in enforcing the tax laws, because if taxes are lowered to a reasonable level, companies will find it easier and cheaper to pay the taxes instead of trying to find ways around the tax laws.
Can companies abuse tax laws? Certainly. Should pro-free market governments be instinctively pro-corporation/company/big business? Of course not; we don’t want government to enable corporate subsidies and rent-seeking on the part of business. But that doesn’t lessen the burden on Cameron’s government—and on other governments for that matter *coughObamaadministrationcough*—to be smart in how they craft and implement tax laws.