There is a debate underway at the moment about the UK’s Corporation Tax regime.
Well, when I say ‘debate’, I guess I really mean ‘argument’. And when I say that it’s ‘about’ the UK’s Corporation Tax regime, I suppose that what I really mean is that the CT regime sort of features in the argument, somewhere.
Which is rather unfortunate really, because a good rational debate about the effectiveness of the UK’s Corporation Tax regime in the 21st century global economy would be a great idea right now.
So why aren’t we having that debate? Because, regrettably, the agenda is being set by the media and MPs who, between them, are whipping up a feeding frenzy of irrational nonsense.
The first problem is in trying to bring woolly concepts such as ‘fairness’ and ‘morality’ into a debate on tax. Let’s be clear, tax is not about ‘fairness’, it is about taking money off citizens and giving it to the State to fund spending on our behalf. The issue of ‘fairness’ is really only relevant when it comes to how the State spends that money. Taxation is about rules created by laws. The results of those laws may not be ‘fair’ but they are the results determined by those laws and that way everyone knows where they stand.
Morality is another woolly term often bandied around in this argument. The problem is, whose morals should we be using to judge whether something is ‘moral’ or not?
The other problem is that some of the protagonists don’t really seem to be that clear about what their argument is. I watched the argument on Newsnight last night – and it was an argument, unfortunately – on this subject. I won’t bother analysing the whole thing but I do recommend having a quick look at it on iPlayer. What was particularly disturbing was the performance of the ‘tax campaigner’ Ellie Mae O’Hagan. At one point, she stated that the “legal liable tax is the corporation tax rate of Britain (sic) and if you’re not paying at that rate then you are avoiding tax.”
Well that’s ok then, because all of these companies that are currently being targeted will be paying tax at the “corporation tax rate of Britain” on their taxable profits. The fact that a ‘tax campaigner’ does not realise this is quite worrying for the quality of the debate. It is also unfortunate that none of the other guests on Newsnight picked her up on this point.
The BBC News website later ran with the same story, under the headline “Tui Travel admits it did not pay any corporation tax“. Er, that’s right, because it had brought forward losses. This type of loss relief is a basic part of the UK’s CT regime. Unfortunately, using the word “admits” in this way makes it sound as though the company has been caught out doing something wrong.
I do believe that many of those involved in one way or another with the UK’s CT regime would welcome a sensible debate as to how it can be improved for the benefit of the economy as a whole.
Regrettably, I fear that we won’t get that sensible debate all the while the argument is being fuelled by ill informed comment from those who probably should know better.