UK Chancellor Confirms Introduction of 'Google Tax'

mrspoonsi sends this report from the BBC: Companies that move their profits overseas to avoid tax will be subject to a "diverted profits tax" from April, the chancellor has said. In his final Budget before the election, George Osborne said firms that aid tax evasion will also face new penalties and criminal prosecutions. The so-called "Google Tax" is designed to discourage large companies diverting profits out of the the UK to avoid tax. "Let the message go out: this country's tolerance for those who will not pay their fair share of taxes has come to an end," Mr. Osborne said. In 2012 it emerged that internet giant Google avoided tax on £10bn UK revenue in 2011 by doubling the amount of money put into a shell company in Bermuda. Doing so helped it avoid £1bn in corporation tax. Under the new tax regime, companies with an annual turnover of £10m will have to tell HM Revenue & Customs (HMRC) if they think their company structure could make them liable for diverted profit tax. Once HMRC has assessed the structures, and decided how much profit has been artificially diverted from the UK, multinationals will have only 30 days to object to the 25% tax.

Comments

meanwhile

[hjf]

This is going to put many a libertarian in a hissy fit.

You know, your typical 100K/yr libertarian that has no chance of ever getting hit by a tax like this.

The typical libertarian who wants complete deregulation of *everything* but complains when Comcast is their only broadband choice.

Re:meanwhile

[ShanghaiBill]

You realize that almost always the reason there's only one cable company is because of regulation, don't you?

Not true. In a competitive market, costs tend to approach the marginal cost. That means that fixed costs (like the cost of trenching and laying cable) are sunk costs, and may not be recovered. So once one company has run cable into an area, there is little incentive for another company to do the same. Competition will just ensure they both lose. So cable service is a natural monopoly, where the first mover has a huge advantage.

An unregulated market will NOT fix this problem. It will make it worse, either through explicit or tacit collusion. One solution is to decrease the fixed cost, by trenching just once, and installing a wide, publicly owned, conduit. Then allow any bonded company to pull cable through the conduit. This can cost less than 1% of the cost or retrenching, and greatly reduce the barriers to entry.

It is very important to understand that an "unregulated" market, and a "competitive" market are not the same thing, and are often opposites. The government should promote competition, and sometimes that means more regulation, not less.

Re:meanwhile

[Orange Crush]

A consumption tax is inherently regressive. Those with smaller incomes must use a larger proportion of it on consumption. The wealthy will spend a comparatively tiny fraction of their income on tax and continue to amass vast piles of money.

I'd prefer to see an approach where the corporate income tax is abolished and replaced by higher capital-gains and dividend taxes on the owners

Re:meanwhile

[causality]

It is very important to understand that an "unregulated" market, and a "competitive" market are not the same thing, and are often opposites. The government should promote competition, and sometimes that means more regulation, not less.

The real problem is regulatory capture and the revolving door between the regulating agencies and the industries they're supposed to be overseeing. I think we need laws stating that anyone who has ever worked for an industry, and their immediate families and their known business associates, is not allowed to work in any capacity for a regulating agency, and vice-versa. The penalty should be ten years imprisonment with the general prison population, and the law should include a $50,000 bounty for the police officers, prosecutors, and any informants who successfully convict anyone guilty of this crime.

If that sounds harsh, consider the harshness of living under a government that no longer represents its people.

Re:meanwhile

[Bonzoli]

Because my kids goto war and die to protect the rich persons money. You know the one that has an untaxed Trust fund, no tax on inherited wealth, hidden accounts around the world, and never really pay's their fair share while telling me, I didn't pay enough.

Flat tax is a fail, consumption tax is a fail, not taxing inherited wealth is a fail. When you get drafted to protect their money, let me know how you feel in the trenches, and when you get out and can't find a job.
Perhaps your one of the many that believe you will be filthy rich someday so you dont want to be taxed. Good luck, go back and learn some math in school, because you forgot how to do percentage chances.

Re:meanwhile

[Opportunist]

No, Libertarians piss off both the left and the right. That's how we know we are correct.

By that definition, Scientology and ISIS sure got everything right, too.

Re:meanwhile

[hjf]

OK, I'll try to put this in simple terms and math for ya.

Let's assume you're making $1000/mo and you need $900 to live. If you pay a 10% tax, you're left with just $900, which means:
* barely affording enough to live, and most important:
* no money left for "consumption"

Which is bad, because that extra money is what drives tourism, hobbies, and all other sorts of activities you do to "enjoy your life". "Barely affording enough to live" is basically the same as communism.

Now let's take Mr. CEO making $1M/mo and needing $100K/mo to live. Take 10% off him and he still has $800K at the end of the month. Which he will, most likely, put in the bank (or stock market) for even more money (probably money they will loan to Average Joe who can't afford a new car).

You see: not everyone is equal. A wealthy person has *more* spending at the end of the month (bigger house, more power, employees), but still has money to spend. Barely Living Joe has much less spending, has to sacrifice a lot of luxuries. And yet, they both are paying "10% tax".

In other words: a flat tax "hurts" the poor much more than it hurts the rich.

A simple image to put it as an example: http://ctworkingmoms.com/wp-co...

Now, again, why do you want Average Joe to have more cash in hand at the end of the month? Because Average Joe is much more likely to *spend* that money, which drives the economy, rather that putting it in a bank.