Crocodile tears at the Treasury Department

The UK Treasury Department are getting intio a tizz about firms with UK operations like Google, Facebook and Apple (among many more) which have been able to evade large tranches of corporation taxes (though the firms pay National Insurance and personal income taxes). We (the tax-paying public) are supposed to infer that the directors of these businesses suffer from a moral lapse.

The UK Treasury Department could stop such tax evasion quite easily by writing clear law in the first place. One reason why it won’t is that it needs to establish some ‘escape routes’ for those firms the government actually want to favour (usually including defence companies. Another reason is that all Treasury Departments are competing with others in other countries and can’t afford to make their taxation schedules too easy to understand because they’ll be directly undermined by others. Yet another reason is that, increasingly in recent years, senior Treasury personnel have been retiring early and thus taking their knowledge of the current hyper-complex taxation system and its escape routes with them. Many of these personnel then become consultants to many of the largest companies which have continuing issues with their Treasury Departments.

Will the present type of taxation system ever end? No. It’s too convenient to Treasury Departments and, more recently, their most senior personnel who will no doubt retire at the first opportunity. As long as countries tax incomes of individuals and businesses and not expenditures then taxation will become increasingly complex and thus evadable so long as there are experts on tap.

Keith Hudson

Post-retirement cleverness

Among those who are presently saying that Google, Apple and Starbucks (among many others) are “immoral” because they evade corporation taxes which they don’t strictly need to pay, I would like to know of a single individual who actually does pays more than he needs to. A few exceptions who may want to remain anonymous may exist but I rather think it’s very doubtful.

In principle there’s a simple solution. The UK Treasury (and all other national Treasuries which also complain of “immoral” behaviour by business) have only got to alter their taxation legislation. In practice, though, this is already impossible because tax law in all countries is by now already close to the limit of comprehension, even by Treasuries’ own accountants and lawyers. Besides, if the UK (or another) Treasury Department were to devise totally foolproof legislation then where would early-retiring civil servants go to in order to earn even higher salaries than previously?

And, on top of all that, all Treasury Departments of advanced countries are also engaged in trying to undercut the taxation demands of other countries as they apply to the world-wide operations of corporations such as Google, etc. The plain fact is that whatever clever schemes senior personnel of Treasury Departments may devise, cleverer ones will always be possible once their progenitors take up their new “consultancy” occupations with the likes of Google, etc.

Keith Hudson