George Osborne’s promise to crack down on multinational companies’ avoidance of UK taxes by the use of impenetrable devices such as the ‘Double Irish’ and the ‘Dutch Sandwich’ certainly has the support of this column. I have long argued that the ‘fiduciary duty’ (identified by Google chairman Eric Schmidt) to minimise tax bills within the law for the benefit of shareholders has to be balanced against a moral duty to pay at least a modicum of tax in every profitable territory. Google, Apple, Amazon and eBay, as well as Starbucks and big names of the pharmaceutical sector, are among those known to use smart schemes which variously involve sales bookings in low-tax Ireland or Luxembourg, transfers in and out of the Netherlands, and ‘royalty’ payments (for the use of Starbucks branding, for instance) in any other direction that saves a few tax dollars.
Those dollars add up to billions at stake for Osborne’s deficit-laden Treasury. But like so many party conference pledges, this one will be hard to enforce, not least because it could conflict with EU ‘single market’ rules that encourage selling from one member state to another and decree that tax liabilities should fall in the domicile of the seller, not the buyer. Given that British consumers will still want to buy the products and use the services of the multinationals concerned, Ukip can argue that it would be far easier to tax them properly, and no great discouragement to their trade, if Britain was outside the EU. Osborne should be careful he’s not offering Nigel Farage another open goal.
Foundation demolished
The irony of the demutualisation of the Northern Rock building society in 1997 was that it gave birth not only to one of Britain’s most reckless banks, but also to one of the country’s most competent regional charities.
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