Thursday, 6 December 2012

Starbucks and lower prices

I had this idea the other day over lunch, a frothing at the mouth libertarian Ayn Rand kind of thought about multinational companies and tax, and the sanction of the victim.

The idea was that Starbucks, instead of giving the government a voluntary donation of £10 million, should instead reduce their prices by whatever the amount that they are being accused of avoiding. So the money stays in their customers pockets and the HMRC, the taxman is cut out of the equation. I thought it was a fine idea.

Besides, don't businesses usually expect something in return when they give the government voluntary donations? It seems a bit corrupt if you ask me, there should be no place for it in government.

Elsewhere, a Times journalist called Alexi Mostrous claimed that it was "One Reuters story yields £10m to UK taxpayer..." somehow equating paying money to the tax man was the same as paying money to the taxpayer. I had a bit of a rant at him, the taxpayer is the complete opposite of the taxman. Alexi has it completely the wrong way round, money that goes to the taxman is explicitly not the taxpayers, it ceases to be the taxpayer's money as soon as it is paid. That's what tax is, money that no longer belongs to the taxpayer.

Anyhoo, cast your mind back to my second paragraph, maybe this is what businesses already do, they keep their prices as low as possible, to keep money in people's pockets as any excess money, profits, would go to the taxman, and thus be of no use to the business.

Businesses strive for perfect balance between prices, turnover, profits and tax. If any of these things chance then the business becomes unbalanced.

Anyhoo, just to very carefully remove any doubt from the reader's mind, I believe that businesses (and people) should pay the exact amount of tax they owe, and not a penny more, nor a penny less.

And there hangs a problem.

For personal banking I don't have an ISA savings account, I just have a regular savings account. So I pay tax on any interest I receive. If I moved my money into an ISA then I could avoid some tax, but that would be morally wrong.

I have a free choice here, and I choose to pay all the tax that I owe.

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