Lower Corporation Tax – Government blame tax avoidance

Lower Corporation Tax
Lower Corporation Tax

Lower Corporation Tax

Tax avoidance gets Lower corporation tax blame.

In a debate in the House of Commons on January 8th on Tax Avoidance the Government blamed much lower than expected Corporation Tax income on multinationals. They also blamed high net worth individuals avoiding Corporation Tax.

It meant that the Government borrowed more than predicted in October. So the deficit went up rather than down – even with all the austerity measures.

Said LibDem MP, Aina Swales ‘There’s a threat to our political system. We can’t expect all those who pay their taxes fully and fairly to keep on tolerating these abuses indefinitely.’

Conservative MP, Karl McCartney said , “Tax should be a matter of law, not moral persuasion. If any government wants Starbucks – or any other corporation, for that matter – to pay more tax, pass an appropriate piece of legislation. Otherwise, tax-paying will become a matter of public image.”

Not wanting to be left out when multinationals and rich individuals are being attacked, Labour MP Frank Filed said “taking us and the government for fools”.

Convenient for Government

This is all very convenient for the Government.

Are they going to blame the multinationals and rich individuals too for the fact that Government spending went up by about as much as Corporation Tax receipts went down?

Of course not – that‘s the fault of scroungers and dole cheats – though why there should suddenly be a lot more of them now than before is an unanswered question.

Lower Corporation Tax Receipts

The attacks on both panders to the public and takes the heat off the main cause for lower Corporation Tax receipts and greater Government spending. Indded, that is the Government‘s policies.

Austerity policies have never worked anywhere.

They have two effects.

Firstly they lower Corporation Tax receipts.

The reason is that all those Government workers they have laid off can‘t spend so much.

As Keynes said ‘Civil Servants are consumers too’.

So, companies make less profit and pay lower Corporation Tax.

Higher Government Spending

They also lay off workers and both those and the civil servants that the Government lay off then claim benefit. So, this increase Government spending.

Other countries like the US and China are successfully growing their economy through the Government kick starting their economies by spending.

The newly elected Japanese Government have promised to do the same.

Even Europe is toying with the idea.

The only ones left pursuing full blown austerity are the UK Government.

Multinations Avoiding Tax

So, while it is true that multinationals are avoiding tax and we should force them to pay more, the figures show that they didn‘t just start doing it in October.

They have been doing it for years.

Also, while dole scroungers should be caught and punished, there wasn‘t a sudden rush of them in October.

Studies previously have shown that, although there are some people who abuse the system, those that do consist of only 2% of the entire spend on benefits.

Opportunity for Government

It‘s a great opportunity for the Government to be able to blame the rich for lower Corporation Tax receipts and the poor for the rise in benefits.

However, the main blame for both lies at their very own door for pursuing austerity policies. They have never worked anywhere at any time and which cause the Great Depression.

We are now into our triple dip in the economy.

IT Contractors are now earning £18,000 a year less on average than they did at the last election according to ITJobswatch.

How many more dips do we need before they see the light, as the rest of the world are now doing?