Category Archives: Politics

Britain, G8, Google, Government, Politics

Google’s tax ploys criticised by MPs…

GOOGLE has been accused of ‘relying on deeply unconvincing arguments’ to avoid paying millions of pounds in British taxes.

The online search engine was described as ‘brazen’ for denying ‘clear evidence’ that it made millions from selling advertising in the UK, a powerful body of MPs found.

Last year, Google paid just £7.3 million in corporation tax on sales of £3 billion. Tax analysts say the figure should have been at least £200 million higher.

The shortfall deprives Her Majesty’s Revenue and Customs (HMRC) of money to fund public services, leaving ordinary taxpayers in Britain to make up the difference.

Matt Brittin, former Managing Director of Google in the UK and current Vice President of the company, last year told MPs all of its sales were made from its European HQ in Dublin, and its British subsidiary was merely a ‘service company’. This allows it to pay tax in Ireland, which has a corporation tax rate of just 12.5 per cent compared with Britain’s 23 per cent.

But Google was hauled back in front of MPs last month after fresh evidence emerged UK staff were involved in selling.

In its report published this week, the Public Accounts Committee found Google’s arrangements were ‘manifestly artificial’ and ‘have no purpose other than tax to enable it to avoid UK corporation tax’.

Margaret Hodge MP, who chairs the committee, said:

… Google brazenly argued before this committee that its tax arrangements in the UK are defensible and lawful… This argument is deeply unconvincing and has been undermined by information from whistleblowers, including ex-employees of Google, who told us that UK-based staff are engaged in selling.

She previously said that, contrary to its corporate motto, Google ‘does do evil’ by avoiding taxes in the UK.

Her comments come ahead of the G8 meeting next week hosted by Britain, where global leaders will come under pressure to crack down on tax havens and tax dodging by multinational corporations.

Google openly admits using Bermuda to lower its global tax bill, and last year funnelled more than £6 billion into the offshore haven.

There were ‘clear discrepancies with the claims made to us by Mr Brittin in November 2012’, the report said. It found 70 per cent of Google’s sales involve UK staff as well as Irish workers, and its UK workers are largely paid by commission and have monthly sales targets.

Evidence also emerged of Google invoices sent out bearing British addresses, and Mr Brittin admitted ‘a lot of the aspects of selling’ did take place in the UK.

Mrs Hodge also criticised HMRC, saying:

… It is extraordinary that the department did not challenge Google over the complete mismatch between the company’s supposed structure and the substance of its activities. We could not understand how a few journalists, whistleblowers and MPs have uncovered what the department could not.

Google has said that it complies with all the tax rules in the UK, and it is politicians who make those rules. It added:

… It’s clear from this report the Public Accounts Committee wants to see international companies paying more tax where their customers are located, but that’s not how the rules operate today. We welcome the call to make the current system simpler and more transparent.

David Cameron, the British Prime Minister, said he would use the G8 summit to try to broker a deal on tax avoidance. Mr Cameron said that in a globalised world, no one country can on their own effectively stamp out either tax evasion or aggressive tax avoidance and this is exactly the sort of issue the leaders of the eight major economies should be addressing.

Conservative MP Stewart Jackson, who sits on the committee, said:

… The Government must look again at multilateral and bilateral tax protocols via the chairmanship of the G8, strengthen capacity at HMRC and look at simplified tax legislation as a matter of urgency.

Mr Jackson’s colleague, Steve Barclay MP, said there’s clear evidence Google is conducting sales operations and making astronomical profits in the UK – to suggest otherwise is plain fantasy.

A statement from the Treasury has said that the Government remains committed to creating the most competitive corporate tax system in the G20, but says this goes hand in hand with our call for strong international standards to make sure global companies, like everyone else, pay the taxes they owe.

HMRC says that, since 2010, it has collected over £23 billion in extra tax through challenging large businesses’ tax arrangements. It insists it will relentlessly pursue businesses that don’t play by the rules.

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Government, Politics, Turkey

Turkey protests, little sign of compromise…

Turkey’s Prime Minister, Recep Tayyip Erdogan, should listen to the vibes all around him. Mr Erdogan is not Hosni Mubarak, the former deposed and ousted Egyptian leader, and Turkey is not Egypt, a country that went through root and branch upheaval during the revolt of the Arab Spring. Whilst disturbances in Turkey will not amount to a ‘Turkish Spring’, Mr Erdogan should listen to those who elected him: by reigning in his hubris and his divisive politics.

Erdogan still has a choice between rising to the heights of statesmanship of former French President Charles de Gaulle or by spending his remaining political life as a Turkish likeness of Russian President Vladimir Putin.

The questions being asked of Mr Erdogan is whether he has the political determination to accept the demands of the initial protestors, which started in the occupied Gezi Park. Those frustrations are being asked, too, in Turkey’s capital Ankara, on Istanbul’s Taksim Square.

For Mr Erdogan to concede to those demands would mean giving up on his personal dream to build the Ottoman barracks on the park and turn it into a shopping mall. But his track record would suggest this is highly unlikely.

Arguably, the single most important trigger for the rapid spread of events was the prime minister’s inability and unwillingness to listen to reasoned critique and disagreement. This inability has manifested itself over the last few years.

Erdogan’s rhetoric has been spiralling out of control and has ranged from lecturing women on how many children to bear to calling everyone who enjoys drinking a beer in a sidewalk café an alcoholic.

What is more, the country has used an excessively violent policing strategy, with which the government has oppressed almost all legitimate protest by trade unions, political movements and student groups.

Such extreme use of force looks awkward in a country where the government was re-elected with almost 50% of the vote just two years ago and where, remarkably, its macroeconomic development indicators tell a story of unfettered progress.

Mr Erdogan’s government still enjoys such popular support, but one should wonder why it is unable to tolerate a few protests here and there and why it appears incapable of giving into what are very reasonable demands against the excesses of environmental degradation and rent-based urban renewal policies.

And why would an elected prime minister, who has, until now, been respected abroad and at home, use the force of his security apparatus to crush so brutally any popular dissent? Such protests are far from threatening Mr Erdogan’s place at the top of Turkey’s political system.

Part of the answer lies in Turkey’s recent record of undemocratic manipulations to bring the government down. Kemalist elites, the military, the judiciary and the so-called ‘deep state’ rogue elements acting within the visible state structures, conspired to terminate the Justice and Development Party’s (AKP)  government from the very moment of its first election in 2002.

Ever since, the AKP has faced several attempts at power grab – from an ultra-nationalist conspiracy in the mid- 2000s (based on unresolved assassinations of Christian missionaries) to the so-called Republican Marches against the election as President of Abdullah Gul to the Constitutional Court’s only narrowly averted closure case against the ruling party in 2008.

These experiences have led the AKP government to look at Turkish politics through the prism of conspiracy theories, and the blame for this paradigm shift does not lie just with the AKP.

More significantly, however, is the manipulations the Erdogan government has faced from the judiciary and the military. This led to the AKP government filling both institutions with sympathisers, adding to an already weak system of checks and balances in Turkey.

The confluence of both the conspiratorial mind-set and a lack of checks and balances has created the ground for Erdogan’s unhealthy mix of extreme self-confidence on the one side and his insecurity vis-à-vis public criticism on the other.

The shopping mall in Gezi Park, the third bridge over the Bosporus, the new airport and a canal project that is supposed to connect the Marmara and the Black Sea have been devised and planned without any public debate or consultation.

That the prime minister sees any criticism of these projects as manipulations by domestic and external enemies is a sure sign of his insecurity. That he failed to grasp that the Taksim protests were not started by undercover military agents, Kemalists, Iranian agents or Syrian provocateurs may yet mark the beginning of his undoing.

What is needed is for Mr Erdogan to be able to arrive at a sober consideration of the situation by giving-in to the demands of the protestors in Gezi Park, by calling an impartial review of recent police brutality, and by giving some thought to his heavy policing strategies, all of which have turned Turkey into a police state.

If he did that, Mr Erdogan would still have a chance to enter Turkish history as a statesman who carried his country into the 21st century, disassembled the military’s tutelage, ended the Kurdish War and granted long-fought-for rights to the country’s largest minority, the Kurds.

If he fails, and drags the country towards polarisation and political unrest, his government, the economy, and the people of Turkey will lose.

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Britain, Economic, Government, Politics

Labour’s vision for welfare reform…

Ed Miliband, the Labour leader, has outlined his vision for the future of welfare reform and aims to give councils a role to play in getting people back into work.

He also pledged to give councils power to negotiate rents for housing benefit tenants – giving them cash back on the savings to put into house building.

Other proposals included scraping winter fuel allowance for pensioners, maintaining the current Government’s cap on child benefit for families on more than £50,000, and a three-year structural pay cap on social security spending to keep the welfare bill in check.

Mr Miliband made his welfare reform speech in Newham, where he paid tribute to the local Mayor, Sir Robin Wales, for his plans to tackle worklessness locally. Mr Miliband acknowledged the current system would need to be reformed in a bid to cut costs.

He said:

… We must change our economy, so that welfare is not a substitute for good employment and decent jobs.

He outlined four key cornerstones of Labour plans for reform including:

  •  overcoming worklessness
  • rewarding work and tackling low pay
  • investing in the future
  • recognising contribution

Outlining his plans for the future of welfare reform under Labour, Mr Miliband said: ‘For every young man and woman who has been out of work for more than a year, we would say to every business in the country, we will pay the wages for 25 hours a week, on at least the minimum wage.

‘Fully funded by a tax on bankers’ bonuses. The business would provide the training of at least 10 hours a week. And because it is a compulsory jobs guarantee, young people will have an obligation to take a job after a year or lose their benefits.

’And we will do the same for everyone over 25 unemployed for more than two years.’

The Labour leader also outlined his plans to make this happen through ‘local action’, with the kind of work he had seen in Newham.

‘Devolving power and resources to local communities so there can be advice and support suitable for the individual who is looking for work and tailored to the particular needs of businesses in the area.’

He added:

… And we will do everything in our power to promote the living wage. If local councils can say if you want a contract with the council then you need to pay the living wage, then central government should look at doing that too.

He also outlined plans to tackle the housing benefit bill which continues to rise because ‘we have built too few homes in this country’.

Mr Miliband said: ‘Any attempt to control housing benefit costs which fails to build more homes is destined to fail.’ He pledged to put house building as a key priority for the next labour government and added: ‘We will need every local authority in Britain to be part of this effort.’

Under Labour plans, local authorities would be given the ability to negotiate rents on behalf of tenants on housing benefit to get a better deal for taxpayers in a ‘radical devolution’ of power.

In return, they would be able to keep some of the savings to invest in building new homes. ‘This is the way we can start to bring about the shift from benefits to building. Bringing the housing benefit bill down for the long-term too.’

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