There is nothing anti-business about wanting Boots to pay tax

Tax avoidance is the real catastrophe for Britain

It has been well reported by the right-wing press that Stefano Pessina, the chief executive of high street retailer Boots, told the Sunday Telegraph that a Labour government would be a “catastrophe” for Britain.

But it’s safe to say that his intervention, intended to cast doubts over Labour’s business credentials, hasn’t been a complete success. This is because much of the reaction to his comments has centred on the issue of tax avoidance, following scrutiny of his own company’s tax arrangements.

One of the first things the Monaco-based billionaire did after taking over Boots in 2007 was move its headquarters from Nottingham to a low-tax region of Switzerland. Anti-poverty charity War on Want claim this has helped Boots to dodge £1.1bn in taxes over the last seven years – enough to fund 78,000 NHS nurses for a year.

What makes this a particularly galling example of tax avoidance is the fact that a large proportion of Boots’ UK revenue – War on Want estimates 40 per cent – comes from the taxpayer, through its expanding service contracts in the NHS.

While it may be legal, tax avoidance is morally indefensible, especially at a time of economic hardship. And it is endemic, costing the UK £3.1bn in 2012/13, according to HMRC figures. And this is almost certainly a significant underestimate, as analysis by tax researcher Richard Murphy has shown.

There is cross-party consensus on the need to tackle tax avoidance, and there has been no shortage of politicians calling for action to be taken. In 2012, chancellor George Osborne labelled aggressive tax avoidance “morally repugnant”.

Unfortunately, his rhetoric hasn’t been matched by action. In the 2010 Spending Review he cut HMRC’s budget by £2bn, including 10,000 job losses, which has limited their ability to collect taxes. This is not the act of someone serious about getting to grips with tax avoidance.

Shadow chancellor Ed Balls said in November that a Labour government would double the fines that can be levied on people who avoid tax. This should be welcomed, but Labour could (and should) go further.

Companies engaged in tax avoidance should be denied public sector contracts. A simplified tax code would make it harder for avoiders to find loopholes. Greater international cooperation is required to ensure that companies cannot move profits across national borders to avoid paying tax, in the way Boots has. And we need to invest in HMRC to ensure it is properly staffed.

Getting tough on tax avoidance chimes with Labour’s pledge to stand up to big business. Of course, the Tories and right-wing media will claim it is indicative of an anti-business agenda.

But there is nothing anti-business about levelling the playing field on which businesses operate. If Boots can lower its prices because it doesn’t pay all the tax they owe, it forces the local pharmacist down the street out of business because they can’t compete.

And there is an electoral prize that awaits those committing to take meaningful action on this. There are few things in politics that resonate with the public more than pledging to clamp down on tax loopholes. Four in five Britons say that tax avoidance makes them feel angry.

At a time when the welfare state is being cut for the vulnerable and public sector workers enter their fifth year of a pay freeze, it offends a basic sense of fairness that wealthy individuals and multinationals get away with avoiding tax.

Mr Pessina believes Ed Miliband in number 10 would be a catastrophe. A Labour government should ensure that it is indeed a catastrophe – for those who avoid paying their fair share, because tax avoidance is a catastrophe for Britain.

Matthew Whittley is a recent graduate and Labour Party member and works as a researcher for a Midlands-based housing association. Follow him on Twitter

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145 Responses to “There is nothing anti-business about wanting Boots to pay tax”

  1. Kevin Stall

    Your not a tax Dover if you pay what is legally owed. Taxes are not voluntarily, if they were no one would pay them. If you think they should pay more than they are required that is foolish. But perhaps you think parliament should change the law. They would if they could but you are talking international agreements that are outside parliament s pervue. It is EU law that allows this and you can’t change that.

  2. Kevin Stall

    It is criminal to not pay taxes owed. But they don’t owe any. It is personal opinion that they should pay and that has no. Legal standing. That’s the same as the right thinking every low income person should pay tax so they contribute to the government. Just cause you wish it so does not make the law or a fact.

  3. Kevin Stall

    It’s not criminal to legally hide it in another country. It is criminal for a Corp to pay tax that it doesn’t owe. Or at least a civil court case. The executives could be taken to court if they make unwise decisions by the stockholders. That is one reason they get paid such large salaries. They can be held responsible for not only what they do and not do. Are you willing to do that for an average wage? Plenty of executives have been tossed out for costing a company money.

  4. Kevin Stall

    Audit me and you would find my only income is my government salary. No investments and currently do not own any stock. But do own a economics degree and lived 24 years with a tax accountant. If you don’t owe it You don’t pay it.

  5. Guest

    Oh, you’re a Tory MP. Explains it!

    And yes, I’m sure you think your economic incompetence is a degree, as you talk about how you live with an anti-British tax zealot…

  6. Guest

    Of course not paying tax is in your world fine and dandy, You, I am sure, want the low-paid to pay tax as you justify high poverty to yourself.

  7. Guest

    Keep justifying paying high salaries for the Lads.

    There is, in reality, little comeback in British law for malfeasance and OHNOES they’ll have to take a better paid job the next month,

  8. Guest

    “Dover”. Ah, a white cliffs man (Freudian Slips are always so telling!)

    You keep demanding that the law not be changed, so you can keep not paying tax.

  9. Guest

    So you’re not aware, of course, of long-standing opposition to them from the left.

    Blair is not a left winger. And you’re ignorant of history, too. Keep justifying not paying tax, American, as you try and pump up your pension.

    Unethical companies don’t have ethical investments.

  10. Guest

    Note, everyone, Kevin’s claims elsewhere to be an (incompetent) contractor.

  11. Kevin Stall

    Where have I ever said I was a contractor? I did do a contract job 12 years ago. But I am a full time civil servant.

  12. Kevin Stall

    I wish. Would like to make that much and have a second house paid for.

  13. Kevin Stall

    Not paying taxes that you don’t legally owe is fine. Sorry but the goal of everyone is to pay as little as you have to. Do you pay more than you have to? Do you pay at all?

  14. Kevin Stall

    Labour controlled parliament for years and could have changed these lawsuit they wanted to or is it EU law you object to?

    The problem is they do not legally owe this money to the UK. They can not be tried in court and forced to pay it, so you resort to the court of the media. Hmrc cannot get the money out of them because they do not actually owe it. They are well within EU law to have their corporations in other countries where the tax rate is lower. Countries like Luxembourg and Ireland have made it their selling point for getting new businesses. Even Jersey and Guernsey have been doing it for years.

  15. Kevin Stall

    Try predictive text.

  16. Guest

    That’s an excuse.

  17. Guest

    Unlike you, I pay the tax due. I don’t go for complex evasion vessels, either.

  18. Guest

    And what do Labour have to do with anything again? They’re good Neoliberals like you on economic policy!

    You keep claiming that you can make hige profits in the UK and don’t owe any tax. And yes, you’re very proud of the non-EU tax havens the UK controls (including Jersey and Guernsey, yes) and which the UK could end the tax haven status of tomorrow if there was political will.

  19. Kevin Stall

    The left was in control (socialists) for 12 years and did nothing to change it. what makes you think they want to? Or better yet what makes you think the UK can change it? It’s EU law.

  20. Kevin Stall

    You assume I am rich. Of course I would be surprised if you had an income at all.

  21. sarntcrip

    so why does that mean the tories should do nothing for the last 5 years during which time the tories have closed precisely zero tax loopholes for both businesses and wealthy individuals sorting the problem would almost completely exponge the requirement for austerity

  22. Kevin Stall

    It is EU law that prevents the UK from eliminating the tax havens. As long as the business is registered in a EU country. The business has a right to follow that countries tax laws. We are not allowed to treat them different or make them pay here. There is not a way to close the loopholes. Otherwise wouldn’t Labour have done it? So the only thing you can blame Labour and the Tories for is supporting th EU.

  23. Kevin Stall

    And how is the letting the spending flow working in Europe? Not as well as austerity. Problem with spending and borrowing is you have to pay it back. And until you do that debt is on now only you but future generations. Help, they just finally paid off WWI.

  24. Kevin Stall

    Actually it means they can’t do it. You are talking EU law. The UK doesn’t control it. We are a member state and must obey their tax laws and business laws. We gave up our control.

  25. Kryten2k35

    You pay it back when there is a boom. In times of bust, you spend like there is no tomorrow.

  26. Kevin Stall

    Problem is they never pay it back. In fact spending does nothing but increase until it gets out of hand. The government becomes like a person with several credit cards maxed out just paying minimum payments and every time an balance becomes available they spend back up to the limit. Then the debt is left to the children to service and keep up the payments, while earning minimum wage. 70% of all taxes is already paid by the top 5%. How much more can you get out of them in the long run before then leave and abandon the country?

  27. Kevin Stall

    All of which is totally legal. The only way you can change that is to leave the EU. boots does not owe any money to the UK. Otherwise HMRC would go after them. If they paid money to the UK the stockholders could have the board members sent to jail. for giving away money that wasn’t there’s to give.

  28. Kevin Stall

    Which is all totally legal. There is no law that says a corporation has to be based where the operate.

  29. Kevin Stall

    They can do nothing. These tax havens are EU law based. Uk can not change them, any more than Italy can change theirs.

  30. Kryten2k35

    We’re never going to pay it back. We will always be in a perpetual state of debt and there is nothing we can do about it.

  31. Kevin Stall

    In the past it has been paid back. Because you can not continually pay minimum amount due.

  32. Kryten2k35

    Yeah, you can. This is country, not a credit card. We’ve borrowed ~35% of GDP for years and continue to do so. Borrowing this year is 35% of GDP, it will continue to be.

  33. Kevin Stall

    They did just finish paying for WWI. That debt has now been cleared. So 35% of the tax dollars are wasted paying for past debt. How soon will it become 50% of the GDP is required to service the debt. You can only have so much debt before you are insolvent like Greece. Spending must be cut.

  34. Kryten2k35

    The UK has never serviced it’s WW1 debt. We supposedly finished paying for WW2 at the turn of the century.

    The current level of debt as a percentage of GDP has been 33-35% for years. Decades.

    Spending does not have to be cut. At all. Levels of public spending are fine as they are. Where else should public money be spent if not on the public?

  35. Kevin Stall

    They issued a press release and there were stories in the Papers about paying off the WW1 debt.

  36. Kevin Stall

    And if the interest rates go up it could easily become 60-70% of GDP, especially with record low interest rates at the moment. And every increase in spending or new program will drive it up. Use of the credit card analogy is to make it simple for liberals to understand. That you can not just cover your debt with interest payments. It doesn’t work for individuals or governments.

  37. Kevin Stall

    Sure there is you can stop spending and pay it off. My wife and I have no debt at all. If we buy anything on credit it is paid off at the end of the month. No interest is ever paid. There are people who do this, and countries that do it also. You just have to watch your spending and only commit to the things you can afford and pay for in cash.

  38. Kryten2k35

    The WW1 debt has never been paid off. We’ve never paid a single penny.

  39. Kryten2k35

    That’s me and you, with our annual salaries/monthly wages, not a country with a large economy. We could lose our jobs tomorrow, this country will not see it’s revenue dry up as fast, and without warning.

    Our entire financial system is base don debt. If we stop borrowing money, the system collapses.

  40. Kevin Stall

    The financial system is not based on long term continuous borrowing. If it was we would be doomed in the long run. Labour may base there economics on debt but the country doesn’t. Who would loan continually in that situation? That is the equivalent of just printing money. Right now there are several countries in danger of defaulting on their debt. See if any one wants to loan them money. They are in that position partially because they had your view to debt. You can’t continually borrow and always expect that someone will loan you money.

  41. Kevin Stall

    http://www.theguardian.com/money/2014/dec/03/treasury-repay-war-debts-bonds-uk
    Is just one of the articles available about the debt repayment.

    And here is the ww2 information.http://news.bbc.co.uk/1/hi/uk/6215847.stm

  42. Kryten2k35

    Fair enough.

  43. Kryten2k35

    The world economy is based on borrowing and debt. You are not grasping this fact at all, but it is a fact.

    The UK’s central bank, the Bank of England, literally prints money form nothing. There wasn’t been a value (gold, silver, bronze) backing the pound for decades.

    Those countries are not in that position because of my view on debt. They’re in that position because Germany, and the European Central Bank, cannot risk devaluing the Euro even further by printing more money to give to these countries.

    This world is run on debt. Without it, the financial system collapses. This is EXACTLY what happened in 2007. Banks stopped lending to each other, because they were unsure of their ability to collect their debt from their customers (because the banks were lending money to people who cannot pay it back). When the flow of debt stopped, panic ensued and the markets went crazy.

    The UK has borrowed money every year for over 100 years and more, and will continue to do so:

    http://www.economicshelp.org/wp-content/uploads/blog-uploads/2012/09/national-debt-percent-1900-12.png

  44. Kevin Stall

    Yes they print fiat money, but that isn’t necessarily debt. Money based on gold is an out of date concept that fixes it value to a stone. Governments have more assets of value beyond the gold reserve. And if a country prints too much money it becomes worthless. Look at the Weimar republic in the 20’s. Or the continental dollar of the 1780’s. Just printing paper does not create money. The system of currency is more complicated than borrowing money. The money that government spends over the receipts is borrowed. And interest must be paid on it. The GDP is the total the people of the country has generated (a simplified description). We currently barrow a significant portion of what everyone earns in operation to run the government at the current austerity level. Countries like Greece and Italy shave to borrow more than the entire country earns in a year. And they have to have countries forced to hold their debt in order to stop it from going into receivership. They have to pay the interest on it and that is more money than Greece has. Do you want the UK to get in a similar position? More debt can lead to that situation. Look at the US, they have been cutting the spending less since Obama came into office but the amount owed has increase almost 8 trillion dollars. Just to service the debt.

  45. Kevin Stall

    Countries in the past have had it happen. A major depression, a time when the people really need a government, can cause a total collapse. It has happened to many lesser countries and nothing says it couldn’t happen here. If the banks had collapsed in 2007, that could have led to such a collapse under the right conditions.

    If people will not buy our debt the collapse will happen, no matter what we do. And the larger the world’s debt is the more we have to pay to the people/governments loaning the money. The less money there is for everyone to borrow. It may not be a problem now but that’s not to say it couldn’t become one.

  46. Kevin Stall

    You think debt is just a hot potato to be passed around until at some date it finally collapse? Be like Russia and Ussr. Just go into debt then change government and not recognize the old debt.

  47. Guest

    “Wipe out the middle class”, you cry. Default. Never mind the mass poverty. YOU are trying to dump bankers debt onto the poor.

  48. Guest

    Meanwhile, back in reality, we’re facing deflation.

  49. Guest

    No, use of the credit card analogy is a hate lie.

  50. Guest

    Printing money, as we’re about to plunge into deflation, is a good thing.
    And our bonds interest is at near-record lows. Our credit rating is fine.

    What will affect it negatively at this point is NOT spending. Becoming poorer.

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