Coffee House

George Osborne urged to drop Google boss as business adviser

29 January 2013

Starbucks had a go at David Cameron on Sunday for his ‘cheap shots’ at the coffee chain’s tax arrangements in the UK. The company felt it was being unfairly singled out in comments about companies legally avoiding tax needing to ‘wake up and smell the coffee’. So what about other firms known to be avoiding tax?

Coffee House has learned that the former Lib Dem Treasury spokesman Lord Oakeshott is writing a rather scathing pair of letters to David Cameron and George Osborne about the government’s dealings with Google, which paid only £6 million in corporation tax in the UK in 2012 by funnelling £6 billion worth of transactions through the tax haven of Bermuda. Google’s executive chairman, Eric Schmidt, currently sits on the government’s Business Advisory Group.

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Oakeshott’s letter says that while he strongly supports Osborne’s condemnation in last year’s Budget of aggressive tax avoidance as ‘morally repugnant’, the government is undermining its own campaign by retaining Schmidt on the advisory panel. He argues that Cameron and Osborne are leaving themselves ‘wide open to a charge of selective indignation on tax dodging’ and that every meeting with Schmidt ‘sends the worst possible message that aggressive tax avoidance is acceptable in high places’. His letter to the Chancellor adds:

‘Will you also ensure that before Google are considered for any government contracts, they prove that full British tax will be payable on the money they receive from British taxpayers?’

This is not dissimilar to the campaigns from MPs on the Conservative and Labour benches, particularly Charlie Elphicke and Jim Sheridan, as reported on Coffee House earlier this month.

The problem with singling out certain firms as the Prime Minister has done is that name-calling is a weak way of doing politics, whether you’re talking about multinational companies or benefit claimants. Starbucks were grumpy about being the focus of the Prime Minister’s comments because they felt they were already doing their bit with a voluntary agreement to pay more tax. But it is far more convenient to make villains out of those in a system who aren’t even breaking its rules than it is to make clear that the real villain is the system itself.

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Show comments
  • discustard

    Message to Google – No representation without taxation!

  • Dadad1

    When will everybody, and I mean everybody, accept that tax avoidance is absolutely legal, and because of that is morally perfectly ok as well. It is only tax evasion which is illegal and therefore morally unacceptable too.

    If anybody doesn’t like tax avoidance, the answer is perfectly simple; just change the law. Isn’t that what the MPs are there for ?

    To rabbit on about indiviual companies which are acting perfectly legally with their avoidance only tells us how stupid the the critics really are.

    • HooksLaw

      Laws are full of loopholes. The govt close the loopholes as soon as they find them.

      Take Jimmy Carr – he was paying no tax at all on 15 million income.

      I refuse to believe that that level of avoidance is classed as legitimate fair arrangement of tax affairs. It is cheating plain and simple.

      it is the same with the BBC who connive with staff to pretend they are self employed when they are not. This is lying and cheating and I would suggest to you illegal.

      • Dadad1

        You use the terms legitimate, fair, lying, and cheating; this is all just beating about the bush. The question is, are J Carr’s and the BBC’s arrangements. legal. If yes, and you don’t like it ( and I don’t either), then just change the law to stop them doing it. Talking of morals is completely irrelevant.

  • Tom Tom

    So not because Google deactivated security on Safari browsers to spy and track iPhone and iPad customers using their browser ? No doubt Rachel Whetstone will tell Georgie not to upset Google – she is godmother to Cameron’s offspring isn’t she ?

    • Victor168

      As well as having an affair with Mrs Cameron’s stepfather (if wiki’s to
      be believed) and being Mrs Steven Hilton (Dave’s blue sky thinker). Ohh
      noo, no conflict of interest there…

      • HooksLaw

        The govt inherited the chairman of google from Browns business advisory group.

        • Tom Tom

          and Rachel Whetstone is there to ensure continuity

  • Theodoxia

    Would that Nick Clegg could be persuaded to drop Lord Oakeshott, who sends the worst possible message on tax efficiency and productivity every time he opens his mouth.

    • telemaque

      Everyones problem with Oakeshott is that he asks the right questions–which just happen to be politically inconvenient.

      • HooksLaw

        The argument for dropping the chairman of Google is that he was favoured by Gordon Brown.

        • Tom Tom

          So was Jeremy Heywood……of whom Peter Oborne opined..””a perfect manifestation of everything that has gone so very wrong with
          the British civil service over the past 15 years.”

  • HooksLaw

    So Osborne is doing the right thing and Oakshot complains? The two issues are not mutually exclusive.
    Dyson is on the group and he has outsourced his manufacturing.
    To listen to Oakshott there would be no viable ‘business advisors’. The govt inherited the Google Chairman from Gordon Brown’s advisory panel.

    • Tom Tom

      No he has not. He manufactures nearer his markets

      • HooksLaw

        ‘but in 2002
        controversially moved the firm’s factory to Malaysia to cut costs’

        The same article points out his success in exporting to the USA and Japan and points to growth in Germany.
        USA Gemany UK – markets that are really close to Malaysia. Yeah.

        He is welcome to do that as far as i am concerned, but by Oakshott’s standards he should not be offering business advice to the govt.

        • Tom Tom

          Funnily enough exporting from Malaysia to those markets is TARIFF FREE but exporting from Britain is not

  • In2minds

    Ah! Google and the ghost of Steve Hilton?

  • HooksLaw

    The correct train of events I think was a question by Margaret Hodge at PMQs in October (?) –
    “Apple, Google, Facebook, eBay and Starbucks have avoided nearly £900m. Will the prime minister now take this opportunity to condemn their behaviour as morally wrong?”
    She apparently did not like Jimmy Carr taking all the flak.
    The PM did not mention names of any companies the govt was looking into.
    The issue was then taken up by the public accounts committee.

    I suppose its asking too much for Starbucks to
    a – put the blame for their bad publicity where it belongs
    b – pay their reasonable and legitimate taxes in the first place.

    So the whole basis for Starbucks complaint is bogus.
    Some 5 billion is being avoided – so I think its clear whose side we ought to be on in this catfight.

    • Noa

      “ their reasonable and legitimate taxes in the first place.”

      But Google has done. And no amount of mischief making by the tax avoider Hodge will distract from the facts; which are that:

      -Tax avoidance is legal, whereas tax evasion is not. (So get lost Mr Cameron, its pure hypocrisy on your part, unless you and your accountants have given up all your personal and business tax allowances and mitigation opportunities.)

      – Labour created the sclerotic mess that the tax system now is. And Ian Walker comments cogently elsewhere on the lack of progress in its reform.

      – Government’s or more precisely, HMRC knows that it’s desire to impose transactions taxation on Google, e-Bay and other internet giants is doomed to failure for practical and political reasons. It would be virtually impossible to legislate or enforce and deeply unpopular with consumers.

      • Tom Tom

        Luxembourg introduced 1.5% VAT on eBooks in breach of EU Law so Amazon can center Kindle servers there……..

        • Noa

          Thank you. So much then for single markets and level playing fields.

        • HooksLaw

          Its 3% and 7% in France.
          Both France and Luxenbourg are being investigated by the EU.
          It has already been decided that VAT will be charged on where the buyer resides rather than where the content is sold from.

          VAT rules are likely to be changes such that ‘similar goods and services should be subject to the same VAT rate and progress in technology should be taken into account in this respect, so that the challenge of convergence between the on-line and the physical
          environment is addressed’

          Currently of course there is no VAT on a book, so no loss of revenue in that sense. It looks like the move will be to harmonise VAT on electronic books and for the tax to go to the local state.

          I would like to see electronic books zero rated like paper ones.

          • Tom Tom

            the commission itself is pushing for the kind of change the two
            countries have already put in place. In 2013 it will put forward
            proposals aimed at equalising the rate of VAT applied on traditional
            books and digital books, following general recognition that the current
            situation is an anomaly: under current law e-books are regarded as a
            service supplied electronically, which is not included in this list and
            cannot therefore be taxed at the reduced rate. A further change is
            scheduled for 2015, when VAT on e-books will be paid based on where the
            purchaser is, not where the company that sells those e-books is based…………………CLEARLY VAT on Books and Newspapers is on the way

      • George_Arseborne

        If Labour created such sclerotic mess what are the Tories doing? Just look at Osborne advisers. Jumping the cheap blame game band wagon. We are tired lazy excuses. Wake up and smell the coffee

        • Noa

          Sighs heavily. Re- read my post. Refer to Ian Walker’s post above.

          By the way what does that asinine cliche actually mean? That you’re unable to think until you’ve shoved a styrofoam cupful of Starbucks latte under your nose? Do you appreciate the irony in feeding the beast you would destroy?

        • Colonel Mustard

          I’m pleased that you now recognise that Labour created a sclerotic mess – nice way to describe it.

    • Tom Tom

      Yes – “we” should be supporting Vodafone, Barclays, HSBC because British tax-dodgers are Best !

      • HooksLaw

        All tax dodging should be stopped. The govt I read at the time were horrified at the level of avoidance going on under labour. If everyone pays their share then the rate for all of us could come down.
        This article (by a tory) in the New Statesman explains the swindles

        The article points out as well what a sham browns 50p tax rate was and how easily it is avoided.
        I would like to see low tax – but everyone paying it.

        (NB. I have to say given her great wealth I do wonder exactly about how much tax JK Rowling has paid)

        • Tom Tom

          She probably doesn’t have a large income simply capital

  • Dicky14

    I seem to remember a tax simplification office and a Great Repeal Act but then I am a gibbering idiot.

    • Ian Walker

      The OTS got hijacked by HMRC, who changed the remit from “simplify the tax system” to “simplify the tax collection system”
      It’s not really surprising given that everyone involved has a vested interest – HMRC (or the Civil Service unions to be precise) don’t want a simple tax system because that means fewer staff are required. The tax accountancy industry certainly doesn’t want a simple system that can be navigated without paying their fees. And the mega-wealthy individuals and companies who benefit from their advice end up paying a smaller percentage than most middle-income workers – giving them nice deep pockets for keeping the politicians sweet.
      The best hope if for a principled politician with a decent simplification plan and the force of will to push it through. Again, this is not something to hold ones breath for.

      • Colonel Mustard

        I do wish there were more people like you posting comments here.

        • Noa

          I agree.

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