to think that you need to stop what you're doing right now and read this article. And I mean need.

[granted]

I posted this on the Politics section but it deserves a much wider audience:

www.guardian.co.uk/commentisfree/2011/feb/07/tax-city-heist-of-century?commentpage=last#end-of-comments

Quite possibly the best newspaper article I've ever read.

Monbiot's may have everyone here up in arms but Her Majesty's Opposition - in particular the Shadow Chancellor who's supposed to be quite clued up about economics - strangely silent on the matter.... why do we all suppose that is? Suspect Portofino is absolutely correct, in other words

I really, really really hope you're right - but the fact that article was written with the help of a tax expert who also writes for Private Eye may suggest otherwise - whilst Monbiot is clearly no tax expert, his co-author is.

But like I said, I would like nothing more than this article to be wrong - it's one of the most depressing things I've ever read, if true.

But a few anonymous comments do not = proof, in my opinion.

The co author of this piece has a reputation to protect - anonymous commenters may just dislike the political implications.

I'd like a rather more authoritative refutation before I'll agree the article is basically making it all up.

there now - that's the sort of title I needed - I started a thread on this in In The News and got very little response.
Knew I should have just gone for "Cunting Tory Bastards let the Banks off taxes!"

Title is all.

Eire was criticised by Germany and France for having an extremely low rate of corporation tax (12.5%) as it gave them an unfair advantage in attracting inward investment. But, they are keeping the low rate, despite their immense debt problem and presumably the growing tax burden on the population.

Seems pretty clear that they see encouraging inward investment as a better way to tackle their financial black hole then simply raising taxes for companies, risking them either moving somewhere with lower taxation, or deciding not to move to Eire in the first place.

If lower corporation tax means more businesses coming to the UK, creating jobs and paying that 24% corporation tax (and from what timetomove suggested, the companies can't just avoid it by putting costs of overseas branches against profits) then that sounds like a good idea to me.

o&w, good point that this is just what Eire did a few years ago. That'll be the Eire that's now rolling in wealth, with full employment and understretched services ...?

ccpccp:

Multinational companies can relocate to low tax countries with little effort and there is fuk all the government of any colour can do about it. Tax shopping has become very easy.

Not if they are tied to a particular location by a highly skilled workforce and developed, specialised supply chain.

Look at German manufacturing for a start: BMW, VAG, Daimler, Siemens etc. Sure, they have a worldwide manufacturing base, but they remain firmly rooted in their home country, supporting millions of jobs, apprenticeships, technical colleges and thousands of smaller, often family-owned firms in their supply chain.

Itsgrace - well it did help to fuel the Irish Tiger boom... not sure you can blame it for the bust.

I still don't see how cutting taxes for some of the richest companies in the UK is going to help to fill the coffers! Why are they getting tax breaks when everyone at the bottom end of the income scale is being hammered? Yes, yes, standard Tory policy, I know - but aside of that, WHY? It just doesn't make sense.

Yes. If we were offering foreign multinationals tax breaks for using wholly UK-based suppliers, that'd be more likely to feed back into our economy. As things stand, they seem to be incentivised for owning property here

Selling cheap has never been a good strategy for quality suppliers to adopt, at any scale. When Rolex have a sale, they don't drop their prices to the same as a Swatch, do they?

It's very hard to climb back up from the bargain basement, as Japan succeeded in doing. India's still struggling with it.

That's true, Grace - look at the damage Mercedes did to their rep when they introduced the 190E back in the 1980s - a suddenly affordable merc for the masses - - devalued the brand enormously. Took them quite a while to recover from that.

err I posted basically what that guardian comment said on your other thread granted and you seemed to understand it then

not sure why you wanted to rake it up a bit further!

it's a very misleading article about something that was exactly designed to bring into line tax rules on branches and subsidiaries

and all of this reform was originally triggered off by a need to stop companies moving their headquarters offshore thus meaning the UK lost very precious tax revenue from doing so (and was started, I believe, when Labour were in power)

As much as I know people on mumsnet like to dance up and down and point the finger at the Tories, in this case, it was a process already begun under another government and is actually eminently sensible to try and bring similar pieces of legislation in line with one another

and the only reason Ireland are keeping that rate low is because they know if they didn't, corporations would just relocate and then they really would be up shit creek without a paddle

That sounds much better to me than the article foxinsocks

yes :-)

look, the thing is, any piece of legislation can get taken to pieces like this

we need to keep corporations here now - I don't really think lowering the corporation tax rate is the way to do it, and I can't see how it will make a huge difference (though of course it's welcome and I suppose it's a sign to businesses of their intentions).

We need to be more business friendly in the UK. The UK has a very un business friendly reputation - it's dogged down by massives of legislation and administration, a fairly aggressive tax regime (though this will change I suspect) that means setting up and running businesses in this country is not a simple process.

They need to cut through a lot of that red tape, make it easy for people to set up businesses in this country and employ people, and believe me, the businesses will come. We have a very stable economy that will attract people here but not while it is a huge bloody nightmare to run them when they come!

Shame they apparently didn't choose to apply this tax cut to small businesses as well then, Foxinsocks - businesses don't start big!

"Not if they are tied to a particular location by a highly skilled workforce and developed, specialised supply chain." - hogsback

We are talking about the same country hogsback? The UK?

Weve been losing industry abroad for years and its only getting worse. There is very little that we can still do that they cant do in India, China or eastern europe for a third of the cost.

Right now the UK worker is overvalued, overpaid and overprotected. Thats half the problem.

If tax adjustments will stop companies jumping ship, then we need to do it.

well I think they dropped the small companies rate (small profits or whatever it's called now!) to 20% but yes, I agree with you tbh

I think you have to be very careful dropping corporation tax rates when you are upping things like National Insurance which hit employees hard (even if the personal allowance has gone up)

This is known as the race to the bottom, where countries compete so hard to attract businesses that they end up with little benefit from those businesses' presence.

The country can suffer an opportunity loss, if the business would have been located there anyway and put up with the greater taxes, minimum wages, safety regs, etc.

Or an actual loss, if a company makes good on its threat to move out, after the country has spent hard cash on infrastructure to service the company.

It was one of the big arguments against globalisation by less rich nations, who understood this was exactly what would happen when trade barriers were removed. And were proven correct.

No idea whether this is a continuation of somthing Labour did - doesn't make it OK if it is per se, as Labour did a hell of a lot of crap too.

So far, no-one has actually refuted on the crux of the matter as stated here:

"At the moment tax law ensures that companies based here, with branches in other countries, don't get taxed twice on the same money. They have to pay only the difference between our rate and that of the other country. If, for example, Dirty Oil plc pays 10% corporation tax on its profits in Oblivia, then shifts the money over here, it should pay a further 18% in the UK, to match our rate of 28%. But under the new proposals, companies will pay nothing at all in this country on money made by their foreign branches.

Foreign means anywhere. If these proposals go ahead, the UK will be only the second country in the world to allow money that has passed through tax havens to remain untaxed when it gets here. The other is Switzerland. The exemption applies solely to "large and medium companies": it is not available for smaller firms. The government says it expects "large financial services companies to make the greatest use of the exemption regime". The main beneficiaries, in other words, will be the banks.

But that's not the end of it. While big business will be exempt from tax on its foreign branch earnings, it will, amazingly, still be able to claim the expense of funding its foreign branches against tax it pays in the UK. No other country does this. The new measures will, as we already know, accompany a rapid reduction in the official rate of corporation tax: from 28% to 24% by 2014. This, a Treasury minister has boasted, will be the lowest rate "of any major western economy". By the time this government is done, we'll be lucky if the banks and corporations pay anything at all. In the Sunday Telegraph, David Cameron said: "What I want is tax revenue from the banks into the exchequer, so we can help rebuild this economy." He's doing just the opposite.

These measures will drain not only wealth but also jobs from the UK. The new legislation will create a powerful incentive to shift business out of this country and into nations with lower corporate tax rates. Any UK business that doesn't outsource its staff or funnel its earnings through a tax haven will find itself with an extra competitive disadvantage. "

Sorry to repeat it, but it seems people have been basing recent posts on an anymous contribution from a mumsnetter a page or two back, which provides no proof at all and just makes vague assertions that everything's going to be just fine.

I have yet to see proof of this.

Foxinsocks - no idea what comment you're referring to on anothe thread - I did post this on Politics first, but there is no contribution there from you, so not clear what you think I agree with there.

I have a teeny suspicion you're making this up. I wonder what the going rate for trolling on political forums is these days?

If it's written by George Monbiot, I wouldn't worry too much about it. Isn't he the chap that writes about the catastrophe of global warming? Who takes him seriously?

Why didn't wise minds like Alan Johnson bring it up in the media? Did no one tell him?

claig: lots of people who don't happen to share your world view take him seriously. But you already knew that. No doubt you call them 'loons' or 'envirofascists' or some other dreary epithet.