The current coalition government, aided by the Press are undoubtedly the most anti business government in living memory. Having made a complete dogs breakfast of the legislation, they have chosen to firstly pick on celebs and small businesses, before turning their attention on multinationals like 'Starbucks' and 'Amazon'. What appears to be overlooked, is that all of the tax planning attacked is entirely legal and in many cases is fairly mainstream. In my experience almost everyone wants to minimise their tax liability and if this is done legally this is their right, more attention should be paid to those who choose to act dishonestly.
How can morality be invoked when talking about tax planning? Is it immoral to make a large pension contribution or purchase plant to reduce your tax bill? if not where do you draw the line? In my view you draw the line at the law. Directors are employed to maximise shareholder value, by maximising income and minimising business costs. Tax is a business cost, therefore they have a duty to legally minimise it. I was always taught that people in glass houses shouldn't throw stones, so for the Murdoch Press or politicians to invoke morality, is a bit rich with their recent history on phone hacking and expense claims!
Another aspect of the one sided coverage of this issue that seems to have been missed, is the huge contribution that the multinationals being attacked make to the UK economy and Exchequer. How many jobs do they create? how much VAT do they pay? how much PAYE do they deduct? This country would undoubtedly be a much poorer place without them. Would any foreign company, even a French one, invest in this country at the moment in the midst of this witch hunt?
The politicians are keen on the phrase 'everyone should pay their fair share' but what is your fair share? The current tax system certainly isn't fair, as an example, if as a family, we choose that I should work and my wife stay at home to look after our three children, then my effective rate of tax on the household income between £50,000 and £60,000 is 70%, as we begin to lose our family allowance. If on the other hand both, I and my wife go out to work and we earn £50,000 each, we still retain all of our family allowance. This creates a ludicrous situation, where one family earning £60,000 gets no family allowance and another earning £100,000 retains all of theirs. Family friendly government!!
In conclusion my view is quite simple, if the law is not working, let the politicians change it, alternatively, we could do something really radical and pro business like introducing a competitiive Corporation Tax rate, so that the multinationals would syphon profits into the country instead of out of it!
