Tag Archives: John Milton

Taxation Lost, John Milestone

High on a Throne of Royal State, which far outshone the wealth of Ormus and of Ind,
Or where the gorgeous East with richest hand showers on her Kings Barbaric Pearl and Gold,

This is pretty much the beginning of book 2 by John Milton where Satan debates whether another battle should be waged on the recovery of heaven. I would state, that if I was back in his employ at his right side (and no longer medicated), then heaven would no longer exist, such is the folly of man!

In that same light we could see the article that sky News showed today at http://news.sky.com/story/1181132/govt-losing-a-staggering-55bn-a-year-in-taxes. It’s title “Govt Losing A ‘Staggering’ £55bn A Year In Taxes“. It seems nice that someone is waking up, but let us not forget that this is something that had been going on for some time. It is nice to bring up Stemcor at times like these. Especially as this company is in hands of the family of labour MP Margaret Hodge who is chairman of the Public Accounts Committee.

Let’s not forget, before we nail her to some cross, that WE (actually you Britons) enabled all this. She and her family broke no laws. Has there been an abundance of letters to the MP’s of local voters demanding a stop to tax evasion? No there were not!

So it is nice to read in that article the following “PAC chairman Margaret Hodge said: ‘It is staggering that, in one year, the public sector was defrauded of over £20bn and the tax gap rose to £35bn.’” Is it truly so staggering? Her own company paid less than 0.1% in taxation. It boiled down to 14 million pounds over 2.1 billion generated business (as suggested by the Telegraph, which is not the best of sources). The Stemcor website had this to say (http://www.stemcor.com/Response%20to%20further%20allegations%20of%20tax%20avoidance%20in%20the%20UK%20press.aspx).
I can go with that! I accept that turnover is not a sign of profit, the numbers in my mind do not seem to add up, but I lack the data to confirm or deny this, so for now, let’s move on.

This is because the reasoning I hold is in play as we read the next quote “However, the committee said its credibility had been undermined by the ‘poor quality’ of some of the data and the Treasury needed to do more to explain the discrepancies between some of the figures in the WGA and those produced by the Office for National Statistics.

I reckon that the quality of data from some of these sources have been in question for some time. That is a side I do have knowledge on. You see, these views always involve several parties talking (discussing and disagreeing) and in retrospect, when we take a look at the numbers and the data that was needed, we all end up wondering why certain data was never collected. When you play the game in only submitting what was ‘exactly’ asked, we end up looking at three iterations of ‘miscommunication’ and we end up with results that do not help to the degree it should; there is little doubt that certain numbers are not available. So, when we consider the Stemcor answer in regards to their 1% of profit in consideration of turnover versus profit, then we should take a look at a random example.

Let us take a software company. They have a program for sale at $1000. The customer wants it, they need training and they need some assistance (read: consultancy). So a package deal is made. The training and consultancy add to almost $750, so the salesperson makes that $1500 package deal as he gave a 25% discount on the program. Yet, their HQ abroad states that $1000 goes to their HQ and the rest is for the local office (which is $500 at this point). Now, $500 does not pay for all the costs, but for the local office it does not matter, they get paid and they never notice it, the CFO makes it all match and that office has close to 0% profit as the turnover and the costs cancel each other out. So, yes! We understand that some places have little turnover, but how are the costs and the deals managed and registered? At no point any laws were broken, yet when we consider this, tax is still evaded.

This is part of the game that the corporate icons play. It is all legal and no laws are broken. Yet, who benefits from all those millions? I remain on the fence in many cases. I believe that the hard worker should make more, that the innovator deserves to get rich, however we all do have to pay our taxes (even though it hurts in many cases). It is that part that is so lacking. Weirdly enough, the tax office seem to hunt down the little people, whilst chunks of corporate city London (and New York and LA and…) seem to push it all across borders and attend sales conferences in 5 star luxury resorts. Google, Amazon and Apple are the visible players, but that list is long and very distinguished. How about those dozens of software vendors (and companies with such a setup) with offices all over the place? How much gets pushed to other places?

That part needs to be dealt with and it is nice that Margaret Hodge is fighting this battle, yet is she getting it done? This is not about her, but I am questioning the data collectors who should have been on top of this LONG BEFORE Miss Hodge got the visibility. Who is guiding them to collect and sift through the data that is collected? Who decides on the questions that need to be asked? To me, that seems to be the gravy train that many wants to board and no one wants to rock, because those corporate supporters get a taste of the real sweet life. They are not in the limelight, but they get access to the real VIP events, get access to the best schools for their kids and life in the places many only dream of. They are the people behind the curtains. Perhaps MP Hodge needs to take a second look and rip away certain curtains, it might be quite a revealing view and a show the press would love to behold.


Leave a comment

Filed under Finance, Law, Politics