Vodafone's £12bn Tax Avoidance & The Disgusting Truth About The Class War

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While the poor and disabled are tagged as benefit scroungers the big corporations are allowed to carry or regardless...

Politics increasingly throws up bizarre contrasts. Or, as most would correctly see things, breathtaking examples of brazen hypocrisy. In this regard, these past two weeks have been particularly instructive.

On the one hand, the Tories announce a series of measures to deal with the latest spin on the old cash-for-questions scandal by? attacking the Trade Unions? financial support for Labour. Even their own backbenchers appeared visibly embarrassed because, as everyone knows, there isn?t a single example of political funding, anywhere across the UK spectrum, that is as open, democratic and accountable as this. The strings, checks, balances and scrutiny and red-tape surrounding Labour?s financial support is simply unequalled in any other area (quite why the Unions continue to shovel cash into the coffers of Blue Labour while they consistently adopt Tory polices that are in direct opposition to their members? interests, is a question for another time).

On the other hand, contrast that with Tory ministers? privatising the NHS while sitting on boards of companies and owning shares in those ?service providers? directly benefitting from such a move and, well, that?s precisely the kind of hypocrisy that could make a person sick

Let?s be even-handed, though, and not just indulge in gratuitous Tory-bashing. Miliband?s disgusting spinelessness and complete capitulation to neoliberalism spawns equally nauseating examples of hypocrisy. Just the other day, for instance, UK capitalism?s second eleven announced its intention to retain Tory caps on benefit spending; buying wholesale into the despicable ?scroungers versus strivers? narrative.

For the ignorant, lazy-thinking and just plain nasty, this makes sense. After all, why should families who feature generations stretching all the way back to the Bronze Age who haven?t worked a single day between them, enjoy luxurious life-styles in ten-bedroom council houses with mile-wide plasma TV screens and a private jet parked next to the out-door spa? Just not on, is it?

One wonders, then, what Blue Labour might be thinking of doing in terms of really cracking down on these offenders. You see, If you?re a top executive with Goldman Sachs it seems you can arrange a cozy lunch-date with Her Majesty?s head tax bod and amicably agree to waive the £20 million in tax you owe the UK exchequer. Mind you, that?s just chump change compared to the £7 billion, yes, you read that correctly, that Her Maj?s generous tax officials decided last year to write off so those poor Vodafone execs could sleep a wee bit easier in their beds of a cold, winter?s eve. After all, struggling along on their multi-million pound salaries and bonuses, share options and gold-plated pension-plans must be hard enough without having the stress of worrying about such trifles as legal obligations, the law and tax. To pile insult upon nausea, it?s just been reported that the communications giant has avoided paying any corporation tax for a second year running.

So this company makes use of British infrastructure; roads, comms, transport, NHS, cheap labour and a great deal more but dodges the £12 billion it owes over the last two years? That?s some seriously impressive scrounging right there. Still, let?s be fair here; it?s not as though these worthies are grubby, sink-estate chavs cleaning a few windows on the side so the poor tax-payer is ripped off for an extra thirty or forty quid a week now is it? And at least these fellas are, mostly, white. It?s not as if they?re shifty Pakistanis or predatory Poles flocking over here in their millions and emptying the nation?s purse of those oh-so generous benefits, is it?

The Department of Work and Pensions estimates benefit fraud at around 0.07 per cent from a total benefits bill of £5.5 billion. Let us be brutally clear, here; it?s absolute chump-change compared to tax avoidance (immoral but legal) which, along with corporate fraud, swindles, con-jobs and tax evasion (all illegal and still immoral) costs us a significantly larger £150 billion per year. One rule for the rich and one rule for the poor. A carrot for those at the top and a big shitty stick for those at the bottom. That?s the reality of class war.

RMT President, Bob Crow, on Thursday?s This Week, pithily observed, ?You pay tax and you buy civilisation? and he?s absolutely right. While we have thousands of terminally-ill and disabled people scapegoated as scroungers and then witch-hunted off benefits by ATOS to die like dogs, we badly need some civilisation. While the poorest and most vulnerable in our society are subjected to an obscene and hysterical propaganda offensive as ?shirkers? we need, more than ever, some civilisation in our increasingly mean-spirited and vicious nation.

So let?s crack down hard on the real scroungers and shirkers. Yes, Vodafone et al; we?re looking at you.

Harry Paterson

www.dorseteye.com/north/articles/vodafone-s-12bn-tax-avoidance-and-the-disgusting-truth-about-the-class-war

I don't know about anyone else but if HMRC asks me for £2000 that's the size of cheque I send.... I don't add a few extra thou just out of the goodness of my heart. If I have spare cash to donate, I pick a charity. If the tax laws are bad, change the laws. Don't blame the companies (or individuals) that comply with the laws.

The rich get richer and richer. It makes me sick.

There's the whole argument about management have a legal obligation to minimise costs and whether it is moral or not to do so.

There's a line at which most reasonable people would say you cross between moral and immoral. That line though will vary from person to person.

But morals are relative, laws should be absolute. If the government can't write decent laws then we shouldn't blame others for taking advantage. As Cogito says, how many of us have thought "Oooh, I can afford it. I should pay more tax. I'll write them a cheque." Why hold others to a higher standard than you hold yourself to?

And case in point:

Labour tax avoidance

After all Miliband's posturing on immoral tax avoidance, it seems he's not above a bit of it himself. As someone on MN once said, tax avoidance is only immoral when someone else is doing it.

Niceguy - Vodafone are scroungers, plain and simple. They feed off the stuff British taxpayers fund - law and order, roads and transport infrastructure, an educated workforce and an NHS that generally keeps people of working age healthy enough to work for and buy the products of Vodafone. Yet they pay precisely nothing in taxes.

I think we can blame them for being shit as well as the government and especially HMRC for not cracking down - wasn't it the dear departed Dave Harnett, former head of HMRC, who was accepting corporate hospitality and having cosy lunches with Vodafone while coincidentally letting them off their tax bill?

Aggressive tax avoidance so you can do billions of pounds worth of business without paying a penny in corporation tax is clearly wrong.

Don't get me wrong...i've no love for Vodafone. They are the first company I've ever felt the need to send a snottogram to the CEO to complain about shit service.

But at the same time they do employ a lot of UK staff who in turn pay taxes and of course generate more business.

According to BBC News, Vodafone's £0 corporation tax is because they've offset the interest payments paid for 3G against their liabilities. I think every company has the same rules and doesn't strike me as particularly 'aggressive tax avoidance' We all know the 3G spectrum was eye wateringly expensive and the government got quite a windfall from that sale.

The sale of Verizon Wireless I'm less sure about. But again from this article (link) it seems there may be some specific rules exempting sales of subsidiaries after owning them for 12 months. If that's the case then I can't see how we can accuse Voda of blatantly tax avoiding. I mean if the government tell me if I put money in an ISA then my money is tax exempt, do I say "No no, I'll write you a cheque...."?

But like I say, on the latter there may be more in it. Happy to be corrected.

It is misleading I think to fixate on Corporation Tax. This is paid on profits. Companies - even sometimes big companies such as Amazon - may not make massive profits. If it is legal to move profits to lower tax regimes then why on earth would they not do it?

If we don't like this then one thing we could do would be to lower our corporation tax (as is actually starting to happen).

But CT is only one of a number of taxes that businesses pay. Other important ones are VAT, NI and Business Rates - the last especially onerous for retail businesses. All of these have risen markedly in recent years.

A recent PriceWaterhouseCoopers report found that the total taxes paid by retailers had risen by 65% in the last 7 years.

Yeah, because they are harder to avoid. Amazon do make massive profits, they just don't pay UK tax on business they carry out in the UK. They pay their warehouse staff minimum wage and employ them through agencies so they can drop them at a moment's notice. Just before Christmas, they got agency supervisors to sack agency staff at the end of the shift - no notice to supervisor or staff. Only then had to re-employ them all again two days' later.

Just like Google which makes all those ad sales in the UK, recruits sales staff in the UK, but who claim all those sales are actually processed in Eire so they can avoid UK tax.

Under EU law any country trading within the EU must have a registered office within the EU, and must pay corporation tax in only one country within the EU.

Corporations are following EU law. And, sensibly, they pick the countries with the lowest tax rates.

Not only is that EU law, it is one of the founding principles of the single market.

So complaining that Amazon & Google are not paying UK corporation taxes is simply ridiculous. They not only are operating exactly as the politician's designed, they cannot register more than one HQ in the EU even if they wanted to.

So given the disparity in tax rates, where would you set up? UK where corporation taxes used to be 30%+ or Ireland/Luxembourg where they'll do you a special near 0% deal?

edam Last year Amazon made a loss of $39 million on sales of $61 billion.

It works on very small profit margins and doesn't make much profit as it invests so much in growth.

No point in joining the EU and then whinging about the rules. As the prison officer said in "Porridge", "If you don't like the rules, you shouldn't have joined". As indeed we shouldn't.

I'm afraid I am not going to get het-up or outraged that a corporation is using legal and legitimate measures to minimise its tax bill. Why on earth would a company choose to domicile its HQ in a jurisdiction that would take more of its profit in the form of taxes? Companies are there to make money, not to demonstrate any moral code.

Either the taxation legislation needs re-drafting so that any grey areas or ambiguous interpretations are removed (obviously, though, this must be done within the remit of EU law, something that a lot of people conveniently put to one side), or people should focus their wrath on something else.

I think this is an important point which the current economic climate is starting to clearly show.

And that is you cannot have a fair economic union without very similar economic policies.

So it's not going to be a big deal if our corporation tax rate was similar to our EU neighbours. But right now we have several countries who seem to be bending over backwards to do dodgy special deals where tax rates are both secret and near 0%.

Our ire should be directed at them, not the businesses who understandably have chosen to locate there instead.

Lawful tax avoidance is a moral good.

Xenia, what rubbish. Tax avoidance on this grand scale costs the country billions at a time when the politicians keep telling us we need every penny. It places a massive burden on ordinary taxpayers, who are having to pay extra to make up for the missing billions. It means companies are benefiting from all the things other people are paying taxes for - infrastructure, law and order, education, the NHS, just for starters - without contributing a penny, in some cases.

If you don't believe a large state is a moral good then tax payers only paying the tax they owe is a very good thing. If you think tax payers should over pay then are all those of that view on the thread going to pay double the tax they need to? There is nothing to s top you writing a cheque to HMRC for double your normal tax today if you want to.

We have one of the biggest states ever which is very expensive and a ridiculous social system which does not at the end of the day benefit the poor as it just traps people in poverty who have no incentive to help themselves.

The state should keep out of morality and if they want tax laws different they should change them.

If Vodafone isn't paying taxes, that's the government's fault.

That's like saying if someone is killed by a drunk driver it's the government's fault for allowing the sale of alcohol. The government could very probably do more to prevent drunk driving but drunk drivers are morally responsible for their own actions. Just as Vodafone is responsible for being a parasite.

But it's annoying that once they have taken out any competition, like Amazon has, they then rig things so they don't pay tax where they make their money. I wouldn't mind if there was an alternative that I could use in preference but it's too late now.

But they also, Amazon I think it was, somehow only paid 1% tax in Ireland - dirty tricks in my view.

Edam that's not a good analogy. It would be more like blaming the government for drunk driving because they set the BAC too high, which would in fact be a pretty sound argument against the government.

Are you proposing that Vodafone pays more taxes than they are legally obliged to pay?

Again, competition - that's the government's role to police. If there's no competition, that's because the anti-trust laws are too lax or not enforced.

It's just silly to expect corporations to act in any way other than maximizing self-interest. They answer to their shareholders.

Answering to their shareholders is a pretty interesting concept given the behaviour of many corporations over the past decade or so. If you look at the financial crisis and the actions of big companies, in the UK certainly many of them seem to be serving the interests of their highly-paid execs, not necessarily shareholders. Executives who damage the company are rewarded, instead of penalised.

Even if companies did serve their shareholders before all others, you've still got the issue of corporate citizenship - which German and Scandinavian companies take far more seriously. How long would Vodafone last if there was no state education? What sort of market would they have and what sort of potential employees? How would they get their goods to customers without a road infrastructure, shipping, airports and the rest?

Companies must be made to contribute to the costs their businesses impose on the rest of us, not just grab the gains and leave everyone else to shoulder their burden.

There is nothing to stop Vodafone, Barclays, Amazon and Google from moving their operations to a more tax friendly jurisdiction, so jumping on them like a ton of bricks tax-wise is a bit of an own goal.

The drunk driver analogy is deeply flawed.

Edam, given your opinion, have you voluntarily paid more taxes than you are legally obliged to? Have you rang up HMRC and suggested they take more because the country needs it more than you? Maybe your council to suggest they may benefit from the extra you'd be willing to pay in your council tax?

Have you accused your friends & family of being tax dodgers because they've put their savings in an ISA?

If tomorrow you learned of a tax loophole that say you'd not pay income tax if you got paid on a Friday, would you get your payment date changed? Or would you insist the company continue to pay you as-is 'for the greater good'?

If not, why hold someone else to a higher standard than yourself?

DIdnt the £7billion Vodafone paid for airspace licences and which they ar now offsetting against tax go straight to the government to spend as it feels fit?

And don't those interest payments go to bond holders and other institutions who will pay tax on the receipts?

Anyone who owns a pension probably owns shares in Vodafone too indirectly.