This Affects YOU | Where Did all The Money Go?

While you work and pay your taxes, there are others who mooch off the rest of us. They enjoy the use of the infrastructure and services our taxes pay for, and never contribute.

What did image did the paragraph above conjure up in your mind?

A lazy benefits scrounger, lounging around all day watching their big-ass TV while shoveling grotesque amounts of Cheetos into their face hole?

Perhaps it was a criminal immigrant who’s fled jail time in their own country to come and live a life of luxury in ours, enjoying free food, a new flat and shiny car, while the rest of us break our backs working all the hours that god sends?

What if I told you that both of these images are false. That they are merely phantoms cooked up by the media to propagate the illusion that the reason our government doesn’t have any money is because of poor people.

Furthermore, how would you feel if I told you that it is in fact the richest entities in our society who are actually bleeding us dry?

In the first of my This Affects YOU series, I’m going to tell you about how the most affluent 1 percent are literally stealing your money.

Remember last year when companies like Google, Facebook and Apple were in the news because they had avoided paying corporation tax?

If, like me, you’re relatively comfortable financially, stories such as this don’t really mean anything. Because these events don’t immediately appear to impact on your day-to-day existence, it doesn’t hold any personal relevance and is quickly forgotten when the next big story hits our screens. But I’m here to tell you that this does affect you. It affects everyone.

Why should I care if big companies are avoiding corporate tax?

At the time of writing, the UK government is approximately £1.185 BILLION in debt. Because of this debt, they can not afford to spend on public infrastructure and services such as roads, hospitals, schools, emergency services or care.

Our current income tax and national insurance sits at around 26% for the average person. This means that nearly three months salary out of every twelve you earn goes to the government to pay for this infrastructure.

So, where is my tax money going?

Because the government is running at such a massive deficit, your taxes are mainly being spent trying to pay off this huge debt, with very little left over for the very infrastructure and services you are paying for.

I am not an economist, so I’m not even going to attempt to explain the origin of the debt. I don’t have the eloquence to adequately describe the current financial system and how debt is inevitable. So, assuming you are interested, I’d recommend watching this:

What has this got to do with big companies not paying their taxes?

Let’s take a company we all know and love (maybe) – Starbucks. It’s a running joke that there’s a Starbucks on every street corner and last year their UK sales exceeded £400 million. How much tax do you think they paid our government on all of that?

None.

How does that affect you? Let’s recap.

Say you work a five day week, for £30,000 per annum. You lose around a third of that in tax and national insurance. This is meant to be used for public services and infrastructure which our government is forced to cut back on because the country is running at a loss. This means you are paying for something and you are not receiving it. Also known as theft.

Companies like Starbucks use the public infrastructure you are working to pay for in order to operate their very lucrative businesses. They make billions per annum and they do not pay any taxes therefore are getting to operate in the UK for free. You are working to pay for these companies to operate while they get to stash all the lovely profit.

Surely that’s illegal?

Nope. There’s nothing illegal about what they are doing. They can afford teams of accounting consultants and financial geniuses to advise them on how to get out of paying taxes and they exploit these loopholes to increase their profits.

If Starbucks alone had paid their corporate tax last year, that would have meant a cash injection of over £80 million. If you multiply this by the hundreds of massive corporations who do business in the UK, you’ll quickly see how our government debt could swiftly be dealt with, and all of our hard earned taxes could be poured once again into creating a healthy and prosperous society for us all to enjoy.

Feeling angry yet?

Damn right you should be angry. Just because something can be made legal, doesn’t mean it’s right. We need strong governments to force big business to exercise corporate responsibility. The 99 percent of society shouldn’t be forced to work for less than they are worth for services they don’t receive so that already obscenely rich multinational corporations can drain even more of our already scarce resources.

What can I do?

You can hit them where it hurts.

Starbucks’ original press release stated that they couldn’t afford to pay any tax, but the company has since conceded to pay a tiny fraction of what they owe. This is because when the public found out what they were doing, many customers boycotted their stores, forcing Starbucks to cough up or face collapse.

Your power is in your pound. If you only do business with companies who operate in a fair and ethical way, that’s where the profit will be and these companies will be forced to change their policies in order to stay in the competition.

Don’t spend the money you have left after paying for tax dodgers to operate here buying their goods and services. That’s like paying for your mugger’s taxi fare.

Next time… Genetically Modified Life

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2 thoughts on “This Affects YOU | Where Did all The Money Go?

  1. For what it’s worth, Starbucks DID pay $674 MILLION USD in taxes for FY12 for an effective tax rate above 30% (*) and $563 million in FY11. They did get a net tax benefit of $239 million for FY13. If you look at the detail most of it goes to the US, which makes sense because most of their revenue and net income is made in the US. So it’s not as if they pay no taxes.

    Couple of things going on –

    1) Tax paid is not based on revenues (the sales figure you mentioned). Tax is based on net income (revenues minus allowable expenses). For FY13 they had negative net income. So no taxes.
    2) It doesn’t take an army of accountants and lawyers not to pay taxes in a certain country. I’m not familiar with the details of how it works exactly, but there is something called “transfer pricing” to move revenues / expenses into more favorable tax zones. I wouldn’t know off-hand whether the US is a more “favorable” tax zone than the UK, but it seems to me that with so much of their operations in the US, paying the bulk of their tax in the US is at least unavoidable.
    3) They did pay ~$95 million USD for taxes in “foreign” areas, but it doesn’t look like they broke it down more than that. If you say that none of that made it to the UK, I don’t see anything that contradicts that.

    (*) Page 53 of FY13 annual report and p. 69 for the footnote disclosure. Link – http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-reportsAnnual

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