Tax.... what is everyone’s problem with it?

[FoxEye]

No, but it's the law as it stands. A company has a duty of care to its shareholders first and foremost, in accordance with company law (a UK company, at least). So to not conduct business in a way that is beneficial to shareholders is illegal.

To be honest, I wonder if the concept of shareholders has had its day.

Every time I hear of something I think is awful, so many times shareholders are the root cause.

Whether its businesses cutting costs and degrading their products; whether it's companies being split up and asset stripped; whether it's pension funds being emptied...

...so many times it's being driven by a desire to increase shareholder profits.

I'm genuinely concerned that the very concept of shareholders is actually ruining the future. They seem to function much like a cancerous tumour on a business.

 

[Seearbe]

There is some silliness dong the rounds on Facebook where people are pointing out that say a 5% tax increase on high earners is "only" 5p for an extra £1 earned etc... well duh. The thing is they'd forward that same empty argument if it were say an increase from 45% to 50% or from 50% to 55% and so on... "but it's only 5p" it's only [cost of a Netflix subscription] per month for X amount earned etc..etc..

The 50% tax rate that was introduced back in 2010-11 was only meant to be a temporary tax in just this manner. However here it remains albeit now at 45%. I don't like any talk of temporary increases!

Total tax take actually decreased whilst the 50% rate was in force. It seems the 45% (or 47% once NIC is included) is more of a sweet spot.

 

[dowie]

To be honest, I wonder if the concept of shareholders has had its day.
[...]
I'm genuinely concerned that the very concept of shareholders is actually ruining the future. They seem to function much like a cancerous tumour on a business.

Eh?

You mean people owning stuff?

How do you expect large businesses to exist/innovation to occur if people aren't allowed to set up and own companies and raise capital?

Should only sole traders and partnerships exist or are you against them too?

 

[Seearbe]

To be honest, I wonder if the concept of shareholders has had its day.

Every time I hear of something I think is awful, so many times shareholders are the root cause.

Whether its businesses cutting costs and degrading their products; whether it's companies being split up and asset stripped; whether it's pension funds being emptied...

...so many times it's being driven by a desire to increase shareholder profits.

I'm genuinely concerned that the very concept of shareholders is actually ruining the future. They seem to function much like a cancerous tumour on a business.

I wouldn't be surprised if some of this chat about environment leads to a change in view because I think governments will realise that in this day-and-age, things are not as simple as when company law first made its appearance. And so we may see companies need to make disclosures about who all their stakeholders are and they extent to which their interests are protected too. It's not far enough up the agenda though as I suspect most countries feel that other laws provide ample protections.

 

[Kemik]

So you're saying the UK is powerless to take a greater share of tax revenue than the US, on products sold in the UK. And presumably that applies to Amazon too. Even for products that never entered the US.

And that's fine? You think that's fine?

**** it. Why not just set corp tax to zero and be done with it. All that time and effort chasing them and they aren't compelled to pay more than a derisory token amount anyhow.

I just find it sad how everybody cheers when companies and individuals pay little or no tax. Like it's a) clever and b) something to applauded.

These are companies making billions (combined) in profits from the UK market. Why shouldn't they give something back?

No one is saying the tax system is perfect, or that the American MNEs haven't pulled some very interesting structures off to take advantage of historical holes in the way different countries tax companies, but it isn't as easy as saying every pound of profit on sales made in the UK should sit in the UK.

Why should all of the money Apple makes on selling an iPhone to a UK consumer sit in the UK when they invest billions in the US on R&D? This is completely ignoring the historic Irish setup they had going on for licensing.

You want the UK to earn more of the pie? Attract headquarters and keep them. Attract physical manufacturing companies.

 

[Seearbe]

You want the UK to earn more of the pie? Attract headquarters and keep them. Attract physical manufacturing companies.

But that would mean lower tax rates and people don't like that...

Edit: And it's not just about attracting physical manufacture. Anything in the tertiary sector is good too. Sadly for some, that means financial services! Low-tax on financial services. Corbyn will be having a seizure.

 

[VincentHanna]

Yep, I'm going with the stupid argument I'm afraid. Because that's exactly what happens sadly.

Not when I do pricing.

I factor in costs and labour and all sorts of things, but I don't think to myself - "I Better cover the 19% corporation tax i'll be paying"

 

[Kenai]

Not when I do pricing.

I factor in costs and labour and all sorts of things, but I don't think to myself - "I Better cover the 19% corporation tax i'll be paying"

I bet you would if someone told you your tax liability was doubling though, rather than just swallow it.

 

[Kemik]

Edit: And it's not just about attracting physical manufacture. Anything in the tertiary sector is good too. Sadly for some, that means financial services! Low-tax on financial services. Corbyn will be having a seizure.

Physical manufacturing is harder to shift That's why you see a lot more business in France and Germany - they have strong labour unions that make it impossible to shift factories.

 

[dowie]

Why should all of the money Apple makes on selling an iPhone to a UK consumer sit in the UK when they invest billions in the US on R&D? This is completely ignoring the historic Irish setup they had going on for licensing.

On the subject of R&D it seems Comrade Corbyn is targeting R&D tax credits thus hoping to provide a disincentive for companies to invest here.

He's also hoping to raise billions from a financial transaction tax... it's as though he thinks that this money can be raised from thin air with no consequences.

 

[Pudney]

Ok, but it's still a pathetic amount: https://www.theguardian.com/technol...t-in-corporation-tax-despite-tripling-payment

11 billion pounds worth of sales in the UK alone and they are paying £20 million quid corporation tax? It's not right.

You've been answered elsewhere, but just to add a point or two that may (or may not) have been mentioned by others.

Amazon in their primary trade in the UK runs on very low profit margins. We know this, it's why the website is popular, because the items cost less than elsewhere. To think somehow that £1.1bn of sales (and for completeness, in 2017 it was actually £2bn) should equate to some level of tax payable is crazy without more data on the actual business.

Prime (lol) example:

• Amazon UK Services (i.e. the distribution arm) reported £4.6m tax on £2bn sales, approximately 0.23% of income paid as tax.
• Amazon Data Services (I think AWS) reported £1.8m tax on £64m sales, approximately 2.81% of income paid as tax.

To try and look at turnover and say that must mean CT should be a certain level would completely destroy low margin businesses.

 

[Pudney]

On the subject of R&D it seems Comrade Corbyn is targeting R&D tax credits thus hoping to provide a disincentive for companies to invest here.

He's also hoping to raise billions from a financial transaction tax... it's as though he thinks that this money can be raised from thin air with no consequences.

Labour have been targeting R&D for years, and the FTT is also quite an old idea of theirs.

Not really sure what the point of my post is right now, I just saw yours after posting and thought I'd add to it

 

[VincentHanna]

You've been answered elsewhere, but just to add a point or two that may (or may not) have been mentioned by others.

Amazon in their primary trade in the UK runs on very low profit margins. We know this, it's why the website is popular, because the items cost less than elsewhere. To think somehow that £1.1bn of sales (and for completeness, in 2017 it was actually £2bn) should equate to some level of tax payable is crazy without more data on the actual business.

Prime (lol) example:

• Amazon UK Services (i.e. the distribution arm) reported £4.6m tax on £2bn sales, approximately 0.23% of income paid as tax.
• Amazon Data Services (I think AWS) reported £1.8m tax on £64m sales, approximately 2.81% of income paid as tax.

To try and look at turnover and say that must mean CT should be a certain level would completely destroy low margin businesses.

Amazon UK total sales were £11 billion, not £2 billion.

 

[dowie]

Amazon UK total sales were £11 billion, not £2 billion.

You're not reading what he wrote - he was referring to a specific part of their business. Note the "i.e. the distribution arm".

 

[Seearbe]

the FTT is also quite an old idea of theirs.

Not theirs. It's an EU idea but very few countries wanted to ratify it so it never became a directive. A couple of countries have introduced it, e.g. France, but financial transactions doesn't make up a great deal of their economy. It would be pretty nasty in a country like UK, Germany or Ireland with strong financial services sectors - enough to drive businesses away.

 

[Pudney]

Amazon UK total sales were £11 billion, not £2 billion.

Amazon UK Services Limited reported 2017 sales of £1,987,697,000 and current tax of £4,673,000 (rounded figures) in their accounts. I'm not sure where your figures are derived from.

Not theirs. It's an EU idea but very few countries wanted to ratify it so it never became a directive. A couple of countries have introduced it, e.g. France, but financial transactions doesn't make up a great deal of their economy. It would be pretty nasty in a country like UK, Germany or Ireland with strong financial services sectors - enough to drive businesses away.

I wasn't really trying to give a history of the FTT, more that it isn't a new proposal by Labour. The counter to the issue is leading a global push to all countries having some form of a FTT.

 

[Seearbe]

I wasn't really trying to give a history of the FTT, more that it isn't a new proposal by Labour. The counter to the issue is leading a global push to all countries having some form of a FTT.

Oh, I wasn't calling you out for inaccuracies. I just didn't want anyone to think that a) FTT was a good idea or, more importantly, b) it is Corbyn's idea. It is neither.

 

[dowie]

Labour have been targeting R&D for years, and the FTT is also quite an old idea of theirs.

Not really sure what the point of my post is right now, I just saw yours after posting and thought I'd add to it

Yeah there has been some naive nonsense about a "Robin Hood tax" for some time now.

This just seems very silly:

https://www.ft.com/content/a32a4e5c-d48b-11e9-a0bd-ab8ec6435630

Labour’s current policy is to raise £4.7bn a year by expanding the existing 0.5 per cent stamp duty on share transactions to apply to market makers and other asset classes including share options and derivatives. The stamp duty on share trading raised £3.5bn in 2017/18. Now Mr McDonnell has endorsed a recommendation to expand the tax to transactions of foreign exchange and commodities as well as related derivatives such as foreign exchange swaps. The proposed tax would apply to interbank foreign exchange deals, but not retail purchases of foreign currency by members of the public. The proposal would see a tax imposed on UK tax residents who make the trades — rather than taxing the location of the trades — to avoid the risk of capital flight. The new policy was put forward by a group called Intelligence Capital in a report by Keval Bharadia, former head of derivatives product development at the London Stock Exchange, and Laurey Boughey, policy officer at Stamp Out Poverty.

If you expanded a 0.5% stamp duty on transactions to market makers you'd not have any market makers... and why would any banks want want to transact an FX deal in London if this tax were to be applied?

I did wonder what sort of utter **** wits would think up something like this... apparently one of them worked for the London Stock Exchange... though checking linkedin he's got a BSc in "Business and IT" from London Met and was in some account exec then product development type roles. The other one seems to be a professional campaigner with no relevant financial markets experience.

But of course the Shadow Chancellor loves it.

 

[VincentHanna]

Amazon UK Services Limited reported 2017 sales of £1,987,697,000 and current tax of £4,673,000 (rounded figures) in their accounts. I'm not sure where your figures are derived from.

https://www.statista.com/statistics/1035592/net-sales-amazon-united-kingdom-uk/

 

[Bear]

For some reason, people who are earning fairly decent salaries have been brainwashed hating people who need a bit of extra help from society.

And so it is from the other side, where the poor hate on the wealthy and think they are some sort of money loaded pinata they can whack for more money, only they are too blind to see it