Whilst residents and workers in Barking and Dagenham and other towns and cities across the country face swinging cuts to services, benefits and jobs, many companies and individuals are using tax avoidance schemes to deprive the treasury of enough money to pay off the estimated £119 billion government deficit and still leave some to spare.
Corporation tax (the tax paid by companies on their profits in the United Kingdom) is currently 24% but recent research shows that many well known companies are avoiding paying most or all of this. Apple was found to have avoided £550 million on profits of more than £2 billion pound. This is over 6 times the amount of money that Barking and Dagenham is cutting from its budget during a 4 year period. The coffee chain Starbucks is reported to have paid no corporation tax in Britain for the last 4 years.
It is estimated that as well as Apple and Starbucks, 17 other US owned multinational companies, including Google, Facebook and Amazon are paying a combined total of just 3% corporation tax on their British profits. Various schemes are used to avoid paying the tax including siphoning off the British profits through countries with a lower rate of corporation tax and tax havens like The Cayman Islands.
Many individuals are also involved such as the comedian Jimmy Carr who was recently in the headlines for taking part in a tax avoidance scheme. Questions have also been asked about the tax affairs of the former Prime Minister Tony Blair who operates a number of different companies and whose income includes around £3 million a year as an advisor to JP Morgan, the US investment bank and the Swiss based insurer, Zurich International.
Many of these tax scams remain legal because successive governments have refused to take action and introduce legislation to stop the loopholes that exist which allows tax avoidance and evasion to continue. In addition, the number of tax inspectors is currently being cut which will inevitably lead to less tax being collected from those who can well afford to pay it.
So next time you hear a politician say that “we are all in this together” or that “there is no alternative”, remind them about the tax avoiders who far out number the so called ‘benefit scroungers‘.