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

Soldato
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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.

Think he's looking at the geographical split reported in their 10-K.
 
Associate
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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



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.

Pfft, who needs a stock exchange.
 
Soldato
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I read this analogy on taxation, and quite liked it.

Suppose that every day, ten men go out for beer and the bill for all ten comes to £100...

If they paid their bill the way we pay our taxes, it would go something like this...


The first four men (the poorest) would pay nothing.

The fifth would pay £1.

The sixth would pay £3.

The seventh would pay £7..

The eighth would pay £12.

The ninth would pay £18.

The tenth man (the richest) would pay £59.


So, that's what they decided to do..


The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball.


"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by £20". Drinks for the ten men would now cost just £80.


The group still wanted to pay their bill the way we pay our taxes.


So the first four men were unaffected.


They would still drink for free. But what about the other six men?

The paying customers?


How could they divide the £20 windfall so that everyone would get his fair share?


They realised that £20 divided by six is £3.33. But if they

subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.


So, the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.


And so the fifth man, like the first four, now paid nothing (100% saving).


The sixth now paid £2 instead of £3 (33% saving).


The seventh now paid £5 instead of £7 (28% saving).

The eighth now paid £9 instead of £12 (25% saving).


The ninth now paid £14 instead of £18 (22% saving).


The tenth now paid £49 instead of £59 (16% saving).


Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.


"I only got a pound out of the £20 saving," declared the sixth man.


He pointed to the tenth man,"but he got £10!"


"Yeah, that's right," exclaimed the fifth man. "I only saved a pound too. It's unfair that he got ten times more benefit than me!"


"That's true!" shouted the seventh man. "Why should he get £10 back, when I got only £2? The wealthy get all the breaks!"


"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!"


The nine men surrounded the tenth and beat him up.


The next night the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!


And that, boys and girls, journalists and government ministers, is how our tax system works.


The people who already pay the highest taxes will naturally get the most benefit from a tax reduction.


Tax them too much, attack them for being wealthy, and they just may not show up anymore.


In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.


David R. Kamerschen, Ph.D.

Professor of Economics.
 
Soldato
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Think he's looking at the geographical split reported in their 10-K.

Apparently so!


Unfortunately you can't compare these sales to the tax payable figures. E.g. Amazon EU SARL (which has UK sales) reported €24.9bn in sales and some(?, don't really know as there's no disclosure of current/deferred tax and geographical splits) amount of tax paid, but you can't say how much is UK income from there and how much tax has been paid in the UK.

Ultimately, whatever way you look at it, comparing Amazon UK Services Ltd tax payable to global Amazon sales in the UK is absolutely comparing apples and oranges.
 
Associate
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Which kind of hits the point that all the sources you're throwing out don't even tie up so how can you know what to believe?

Starting point might be HMRC who have Amazon's accounts and tax returns. I'm sure HMRC would have noticed the possible discrepancy between UK sales and UK profits and actually checked. They wouldn't allow Amazon to reduce their tax bill beyond what they're legally obliged to pay (they got their fingers burned with Vodafone).

Or you could believe the journalists of course.
 
Soldato
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Starting point might be HMRC who have Amazon's accounts and tax returns. I'm sure HMRC would have noticed the possible discrepancy between UK sales and UK profits and actually checked. They wouldn't allow Amazon to reduce their tax bill beyond what they're legally obliged to pay (they got their fingers burned with Vodafone).

Or you could believe the journalists of course.

To be honest, my understanding is that there was very little guidance given internally within HMRC on the Tories Diverted Profits Tax. HMRC sent out loads of information requests and sat on them. They even used mechanisms to keep the queries open that you would only normally use when dealing with a difficult and protracted audit rather than a fishing exercise.

Wouldn't be surprised if all of the big US inbounds had open inquiries.
 
Associate
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To be honest, my understanding is that there was very little guidance given internally within HMRC on the Tories Diverted Profits Tax. HMRC sent out loads of information requests and sat on them. They even used mechanisms to keep the queries open that you would only normally use when dealing with a difficult and protracted audit rather than a fishing exercise.

Wouldn't be surprised if all of the big US inbounds had open inquiries.

That would make sense actually given they've launched the "Profits Diversion Compliance Facility". They tend to launch these things when they have a load of information that will take them some time to sift through, so get people to fess up to any issues rather than risk massive penalties in the future.
 
Soldato
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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.

Income Tax was a temporary measure to pay for the Napoleonic Wars! Doesn't seem likely that'll be rescinded anytime soon either.

The other one seems to be a professional campaigner with no relevant financial markets experience.

But of course the Shadow Chancellor loves it.

That about sums up the leadership of the current Labour Party. No real world experience at all.
 
Associate
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Where does my tax go?

Infrastructure yet most roads are full of pot holes and are constantly being dug up (so the budget is spent and not lost)?

Health service thats being cut, staff are underpaid and takes 3 weeks to see a gp (by which time youre already dead)?

Public transport, buses and trains that are always late?

Lazy bums welfare?

Defense, thats being cut and assets removed yet taxes going up?

Education yet so many schools are closing and staff are underpaid? Yet uni fees are increasing? Yet non-uk students have to pay 8-20k year?

Jails, so people can get free gym and xbox?

MPs bonuses and 10k monthly spending allowance on cups of coffee?

The royals upkeep, yet they would still rather stay at a sex offenders over a 5*hotel?

Etc
 
Caporegime
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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?
The problem is simple.

A lot of companies end up being run solely for the benefit of the shareholders (often pursuing short-term returns) than their customers, or even the long-term interests of business itself.

This is causing not only businesses to make terrible anti-consumer decisions, but is also causing products and services to visibly get worse over the years, due to cost-cutting, etc. It can and does lead to staff being treated poorly.

There is no doubt that shareholders end up being the most (only) important thing. More important than the business; the product; the staff.. everything.

You can pretend that shareholders are win/win for everyone, but reality is they often behave like a cancer the business can't cut out. The pursuit of shareholder returns becomes the sole focus of the business.
 
Associate
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The royals upkeep, yet they would still rather stay at a sex offenders over a 5*hotel?

You leave the queen out of this. She costs each taxpayer less than £1 on average. Plus they bring in tourist revenue etc.

And staying with a friend is better than staying in a hotel, surely?
 
Associate
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The problem is simple.

A lot of companies end up being run solely for the benefit of the shareholders (often pursuing short-term returns) than their customers, or even the long-term interests of business itself.

This is causing not only businesses to make terrible anti-consumer decisions, but is also causing products and services to visibly get worse over the years, due to cost-cutting, etc. It can and does lead to staff being treated poorly.

There is no doubt that shareholders end up being the most (only) important thing. More important than the business; the product; the staff.. everything.

You can pretend that shareholders are win/win for everyone, but reality is they often behave like a cancer the business can't cut out. The pursuit of shareholder returns becomes the sole focus of the business.

Not quite though. The interests of the shareholders is not always short-term profit. The long-term survival of the company is likely to be more important.

And shareholders are the means that companies raise the money to expand and grow, thus employing more people etc. etc. And the majority of equity in UK companies is owned by pension funds (which incidentally don't pay tax themselves) so not maximising shareholder returns (including paying less tax) is like punching old ladies.

Another example of why it's not a company that bears the cost of corporation tax.
 
Associate
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You leave the queen out of this. She costs each taxpayer less than £1 on average. Plus they bring in tourist revenue etc.

And staying with a friend is better than staying in a hotel, surely?

That is very true about the queen, but what is the revenue intake, and how much of it is taxed?

The other comment, im surprised the man didnt say that in his interview train crash lol
 
Caporegime
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Not quite though. The interests of the shareholders is not always short-term profit. The long-term survival of the company is likely to be more important.

And shareholders are the means that companies raise the money to expand and grow, thus employing more people etc. etc. And the majority of equity in UK companies is owned by pension funds (which incidentally don't pay tax themselves) so not maximising shareholder returns (including paying less tax) is like punching old ladies.

Another example of why it's not a company that bears the cost of corporation tax.
Yeah we've engineered a system that to my mind is fairly broken. Linking everything to pension funds is just the icing on the cake, really. Or the tip of the iceberg.

There are countless examples of shareholders putting short term returns (and maximising returns) ahead of the customer, the business or the staff.

Sure it might not happen every single time but it happens enough to be (imho) an issue. Companies that used to deliver great products and treat their staff well end up producing inferior (by their own standards) products and treating their staff like dirt. But it's good for shareholder returns. The problem is since everyone is doing it you can't just find an alternative supplier of higher quality. Numerous things have degraded in quality over the years. Numerous businesses have been asset stripped. It's not all roses and free money.
 
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