The UK tax gap is currently estimated to stand at £120 billion. This is seriously undermining public services and the development of a more equal society – this has an impact not just in the UK but also globally in respect of international development.
This is due in no small part to swingeing cuts in HM Revenue and Customs. Since 2005 HMRC has shed half its staff and is set to lose over 10,000 more workers over the next three years. Tax justice campaigning has been in the headlines repeatedly in the last 12 months, most recently in November 2012 as public pressure forced multinational coffee chain Starbucks to pay £20 million in corporation tax over the next two years. But while this is a step in the right direction, PCS and other campaigners including UK Uncut believe it is not enough and other global concerns such as Google continue to not only avoid paying tax but proudly claim finding a way round it is all part of big business.
PCS’s message is clear – a properly resourced, fair tax system will support quality public services and go a long way to eradicating poverty.
Starbucks is one of a number of companies exposed as exploiting the UK tax system, robbing our economy of much needed-revenue for vital public services. The company has paid only £8.5m in corporation tax since it launched in the UK in 1998 despite £3bn profits.
The cash Starbucks may end up paying “voluntarily” is £5m less than that paid by its nearest competitor Costa Coffee.
Starbucks continues only to be willing to pay royalty fees to a subsidiary in the Netherlands where the company has a low-rate tax deal, and buys coffee beans through the well-known tax haven of Switzerland.
Changing the debate
PCS backed the protests by anti-cuts group UK Uncut against Starbucks in December 2012 which highlighted the fact that if large companies like Starbucks paid their fair share it would change the debate about public spending overnight. The union encouraged members to join one of more than 40 UK protests at the chain’s branches.
MPs have condemned a number of companies for avoiding paying tax. Although not illegal, Labour MP Margaret Hodge, chair of the Commons public accounts committee, accused the firms of being “immoral”.
Amazon, Google and Starbucks were some of the most high-profile companies questioned by the public accounts committee but there are many more.
Research shows Amazon, the biggest online retailer, generated sales of £3.3bn in the UK last year alone, and paid no corporation tax by channelling its transactions through Luxembourg.
Google uses an offshore network to reduce its tax bill, so it paid only £6m in tax last year on a turnover of £2.6bn.
Other figures revealed to MPs showed Facebook paid £238,000 in UK tax despite making £175m.
Although tax avoidance isn’t a crime, it is causing misery as we see our jobs and essential services cut because not enough tax is paid.
You can help by:
- Emailing your MP calling on them to close tax loopholes that allow large companies to avoid paying tax and to employ enough HMRC staff to combat avoidance
- Supporting local UK Uncut activity on your high street aimed at putting pressure on corporations who avoid tax – ukuncut.org.uk
Keeping informed
Our website campaign page has the latest information but we also recommend you keep an eye on Richard Murphy’s blog at taxresearch.org.uk Get involved in supporting the Robin Hood Tax campaign that calls for a financial transaction tax that would raise billions to help the poor – robinhoodtax.org.uk/get-involved Find out more at: pcs.org.uk/taxjustice
This information was provided by PCS HQ.
