Tough on tax, tough on the causes of tax by BERNARD TRAFFORD

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I laughed at yesterday’s Times headline: Italy shows Britain how to get tough with Google. HMRC was trumpeting the £130 million it had twisted out of Google: critics point out it represents a mere 3% tax rate. By contrast, Italy has agreed £113m, equating to 15% of Google’s turnover there, making the UK settlement look pretty abject.

Well, up to a point. The thought of Italy getting tough on taxes is laughable. I’m a life-long Italophile: my Italian friends describe the cradle of Western civilisation as tax-averse. Lawyers spend their time helping corporations and wealthy individuals to avoid paying it. Italians try to avoid admitting to any income or profit As soon as they declare a house-sale or inheritance, the tax authorities descend like vultures: it’s the only chance they get. Italy’s deal with Google is thus impressive.

Italy: leaning towards tax enforcement

So what are we to make of HMRC’s paltry 3%? Not much, in truth: but here it’s par for the course. In this country there are rich individuals and corporations who routinely do everything they can to minimise the tax they pay: they argue with HMRC, delay and wriggle until it eventually agrees a settlement sum which is usually derisory.

I don’t complain about the eye-watering amount of tax I pay: partly out of my sense of duty as a citizen. Additionally, though, governments (and I’m not partisan in this) generally use taxpayers’ money so profligately that to become angry about perceived injustices in terms of taxation would simply take me down the road to madness.

Finding a way of living with constant government ineffectuality is like coping with being a Newcastle United fan (or, for me for 27 years in the Midlands, Wolverhampton Wanderers). If you don’t get your hopes up, you’re not disappointed when your football team fails.
Governments seldom achieving anything lasting. They’re good neither at coping with crises (think flooding), nor at foreseeing or heading them off (think flooding again). Yesterday morning BBC Radio 4’s Today programme announced that we lack the resources to cope with mental health problems suffered by victims of child sexual abuse. True: we don’t. But my wife reminded me yesterday that 20 years ago she had recognised that we were facing huge increases in youth mental health problems, without resources to address them. Right then: still right yesterday. Time-bombs tick: governments fail to act.
Politicians and policymakers genuinely want to bring about change: but government itself is invariably sprawling, messy, inefficient and hopeless. Tony Blair invented a Delivery Unit to combat this problem: to those of us working in education, at any rate, that body seemed to give rise more than anything to additional bureaucracy and what we in schools came to term “initiative overload”.
I’m not writing this in despair, nor entirely cynically. I just think we shouldn’t trust to the massive mechanism of government to effect real change. People power can create change.
If we disapprove of the absurd salaries paid to Premiership footballers, we could choose not to buy those expensive season tickets: but we don’t, because we still want to watch the football – or the doped athletics or fixed tennis-match.
I despise multinationals who stick two fingers up at any obligation (legal or moral) to pay tax. But do I boycott Google? Of course I don’t. It’s the most user-friendly search-engine: besides, it’s the one that always pops up on my computer.
I was discussing such moral issues with a few of my students the other day. I said, “I guess we shouldn’t use Amazon, since they don’t pay UK tax”.
“No,” replied one, “But we do: it’s just too inconvenient not to.”
I had to agree, and confessed to maintaining my Amazon Prime account.
Let’s by all means berate HMRC for being spineless with Google. But we shouldn’t judge too harshly: at least until we get off our own backsides and seriously hurt these firms in the way we can as individuals, in their pockets.
Nonetheless, as my student said, worldly-wise for his age, “It’s not going to happen”.

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