Google: It’s Just Not Cricket!

The UK Leader of the Opposition, Ed Miliband plans on running head long into Eric Schmidt today during a conference in which he will clearly point out that he doesn’t agree with Google Inc.’s lack of fair play. It’s just not cricket, Eric! In an interview given to The Observer he said that Google wasn’t “living up to their responsibilities”. He went on to add that if everybody went around flouting HM Treasury laws and using loopholes to get around paying tax then the British Health Service wouldn’t exist. Has somebody actually told him that the British Health Service doesn’t exist already and that was long before Google was around and we turned it into the search engine on everyone’s lips?

Tax havens cost the world something in the region of $100 billion a year. Google Inc. has been using the loophole in the double Irish as it has become known. Around 88% of sales go through Google Ireland and Google Ireland Holdings. Tax dodgers? Or just using the loopholes that we allowed to be set up around the world? In just three years, Google Inc. has managed to exploit the rules and avoid taxation to the tune of $6 billion.

Miliband plans on telling Schmidt face to face in a conference today in London that Google is being unethical. He will go on to add that when (and if) he gets into number 10, he’ll clamp down on them. David Cameron, the Prime Minister, and current President of the G8 summit will be bringing tax avoidance to the top of the agenda at the next summit meeting. The “Don’t be evil” slogan coined by Google might have been quietly dropped, but it looks like it’s living up to part of that according to some in politics. But, just how effective will Cameron be at the G8 summit? Will Britain go it alone in tax reforms? It seems unlikely that they will. Out on a limb, alone, fighting against tax avoidance loopholes means that they will suffer heavy losses as companies go elsewhere. In these troubled economic times. It’s not the politicians that are calling the tune. Of course companies are going to avoid tax and if we aren’t good enough to get lawmakers to stop them doing that, then that’s hardly their fault.

But, yes, it is questionable today. Many businesses are going under. Many are struggling to keep their heads above water. Forty five companies are going bankrupt every day in the UK at the moment and households are struggling to make ends meet. But international tax-hopping is big business. Revenue from income tax and VAT returns in the UK alone rose by over 6% compared with last year. But, corporate tax fell by 10%. Something’s amiss!

But, Ed, listen up, it’s not only Google, you know. Starbucks only paid tax once in the past 15 years and Amazon wrote off all its tax in the UK (despite making over $3 billion in sales). Starbucks goes through what’s known as the ‘Dutch sandwich’. Amazon uses the ‘Luxembourg sandwich’. But, if we carry on like this, there won’t be any more dough to make the bread, will there?

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