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Why companies should pay a reasonable amount of tax in the countries they profit from (that includes you Amazon and Starbucks)

23. October 2012 by Dave Hawes 257 Comments

I have been surprised by the strength of my repulsion when I learnt that successful companies that I regularly spend money with are not paying any UK Corporation Tax on profits made in the UK. Creative accounting practices move the UK profits to their offices in countries with lower tax rates, which is legal but in my opinion wrong and short-sighted. So I thought I would jot a few of my thoughts down on why I think these things.

Why are they in business in the UK

The reason these companies have services and products in the UK is because they can make money here at a relatively low risk. We have a strong and stable country, good infrastructure, an advanced economy with people and other companies looking to spend money on stuff.

This has not happened by accident. The country has spent an enormous amount of money on creating this economic eco-system over a long period of time. I’m not saying it has all been spent very well but these vast projects are things which have been deemed to be for the good of the country as a whole. It would not make sense for any private company to spend money on these projects as they would not make money. So How do we get funding for these projects ‘for the greater good’? Taxes, the money goes to the government of the day to spend on stuff that the country voted them into power for.

My assertion is that over the decades UK governments have done a good enough job to develop an environment for businesses to make money and in return businesses should pay a reasonable amount of tax back to the government so they can maintain the existing system and improve it where they can. If this does not happen things will start to go wrong and everyone looses.

Why it is short sighted not to contribute

We need something bigger than international corporations to keep them in check. In this era of Globalisation and technology more power and influence is being concentrated in a relatively small number of global companies and we need systems in place to ensure that some kind of balance is kept in the market to keep a certain level of honesty.

In the UK we have things like the Competition Commission to investigate the UK markets to make sure there are enough players to keep each other honest. That is paid for through taxes and is very important to ensure that it is possible for new companies to be able to setup businesses in the UK. I cannot see companies like Amazon and Starbucks paying for this off their own back (turkeys voting for xmas springs to mind), but they must recognise that in the long run this type of service has make the UK an attractive place to do business and setup business in, which they have ultimately benefited from.

We also have other publicly funded bodies which keep this delicate economic eco system in balance. For example consumer rights, this allows individuals to feel comfortable they can spend money with any business in the UK and not get ripped off without a robust way to get recourse. There was a shocking example just yesterday of Amazon deleting someone's account, including all the Kindle books they had purchased, without any reasonable explanation. The lady in question is based in Norway so I don’t know what options she has available, but In the UK we have consumer rights and it would be relatively easy for the consumer to have their voice heard. Perhaps claiming her money back by the Small Claims court or raising it with the Office of Fair Trading (both publically funded) would be the first steps.

By having public funded bodies that try and maintain the right balance to create an economic eco-system where business can be done is extremely important and it needs to be funded. It is very short sighted of any business not to recognise the long term benefits of doing this. This is why I feel it is very important for companies to pay a reasonable amount of tax in countries where they operate and make money to enable the maintenance and development of the very environment they make money in..

What I have done about it

I have done what I practically can and voted with my wallet and try not to use parasite companies that take profits from the host economy but does not contribute to it. Now I get my coffee at Costa if possible and purchase Dyson vacuum cleaners and fans. I have cancelled my pre-ordered Kindle Fire HD and set my Amazon Prime account not to renew, I don’t use Amazon, Starbuck, eBay or PayPal if possible. I doubt it will change the world and I do find myself using these services from time to time when there is no other sensible option. It would be useful to know which companies did pay a reasonable amount of UK Corporation tax to make my decisions easier!

Oh, I’ve also written this blog post! So thank you for reading :)

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