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December 14, 2012 / politicsbitesize

Tax avoidance is just capitalism

GoogleThe boss of Google, Eric Schmidt, said on Thursday that he is ‘proud’ of his company’s multimillion-pound tax avoidance scheme. Google currently engages in a scheme that allows the company to cut its UK tax bill by around £2.5bn, which Schmidt has described as just ‘capitalism’.

The chairman outlined in an interview in New York that Google has no intention of paying more tax to the UK exchequer. He has claimed, and rightly so, that tax avoidance schemes are legitimate and that the company paid taxes ‘in the legally prescribed ways’. It has been revealed that in 2011 the Californian based Internet giant sheltered around $10bn of its revenue in Bermuda, which allows it to avoid paying $2bn of its worldwide income in taxes.

Mr Schmidt stated that he is ‘very proud of the structure that we set up. We did it based on the incentives that the governments offered to us to operate’. His statement highlights the attitudes of both companies and governments alike toward the paying of taxes by such large organisations.

A change to the whole capitalist system is needed because the only way the economic crisis will ever begin to ease is if everyone pays his or her fair share. Margaret Hodge, the chairman of the House of Commons Public Accounts Committee, said that ‘for Eric Schmidt to say that he is ‘proud’ of his company’s approach to paying tax is arrogant, out of touch and an insult to his customers here in the UK. Ordinary people who pay their taxes unquestioningly are sick and tired of seeing hugely profitable global companies like Google use every trick in the book to get out of contributing their fair share‘. Clearly, it is time for the book to be rewritten.

The issue is to be raised by George Osborne when Britain takes over the chairmanship of the G8 next year. The Chancellor said in his Autumn Statement last week that the UK government are committed to closing the loopholes that allow tax avoidance schemes to operate.

The statement by Google’s chairman has angered governments on both sides of the Atlantic who are trying to find ways to force huge ‘stateless’ Internet companies to pay more tax. Let us hope that the anger felt by governments toward Schmidt’s comments, and at the exposure of their endorsement of tax avoidance schemes, provides the impetus to prevent this practice from continuing.

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One Comment

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  1. killaprostitute / Dec 17 2012 4:45 pm

    It is insulting that he could say such a thing. I don’t know if you read Private Eye – but the first column this week is about Cameron investing ~£50m in a new ‘Tech Cluster’ which will feature, surprise surprise, his good friend Eric Schmidt (and Amazon).

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