Opinion: Avoid the Tax Avoiders!

On 15th October last, Liberal Democrat Voice published my splutteringly crimson outburst about multinational corporation tax avoiders Opinion: Calling All Bloggers – Don’t make me a tax avoidance accomplice.

Back then, I pleaded that an ongoing media debate would hopefully, at last, provide the oxygen needed to bring about some serious action in respect of corporate tax collecting: “…the media at least seems to be smelling blood. I hope they see this through to some sort of conclusion.”

And didn’t they do well?

But the sleepy-eyed laissez-faire attitude by the respondents to my call-to-arms was frankly pathetic; apart from one or two likeminded firebrands, the nit-picking pedantry and lack of battle in the rest of the bellies was palpable.

All the more reason to train my virtual arsenal of rotten vegetables not only at the culprits, but also at the accomplices; all those bloggers who try to sell me books, their own as well as others’, by clicking through to Amazon (£2.3m tax on £7bn UK sales).

The few per cent Amazon throws to such ‘affiliates’ could well be likened to a bung and yes, the accomplices – sorry ‘affiliates’ include Liberal Democrat Voice and at least two of LDV’s heaviest hitters – you know who you are! Other accomplices are available: Labour List, Guido Fawkes.

Since October I have carried out my threat to boycott any blogger who didn’t terminate their link to Amazon and link instead to a fully UK-tax-paid-up online bookseller. There are several:

http://www.bookstore.co.uk
http://www.pickabook.co.uk
http://www.bbcshop.com
http://www.whsmith.co.uk
http://www.foyles.co.uk/
http://www.waterstones.com
http://bookshop.blackwell.co.uk

All price match Amazon for the most part, and they also carry all the same stock – unless you’re desperate for something like “French for Cats” or “How To Lose Weight through Great Sex with Celebrities (the Elvis Way)”, in which case you might struggle. In more ways than one.

And Oh, how I whooped and cheered when Danny Alexander bashfully confessed to Andrew Marr that he hadn’t actually bought anything from Amazon since this tax-dodging-transfer-payment-row erupted.

My bliss was complete an hour later when a grinning Chuka Umunna joined the fray, telling Andrew Neil that he hadn’t favoured the aforementioned tax-acrobat with his Christmas business either – WooHoo!

So remember guys, there’s only one thing worse than belonging to the wrong party: belonging to the right party whilst applying the wrong principles.

Lib Dem Voice would welcome the views of its readers on whether it should continue to display ads as an Amazon Associate.

* Kirsten de Keyser sits on the Camden Liberal Democrat Executive and is a member of Social Liberal Forum and Liberal Democrat Friends of Palestine. She blogs here.

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43 Comments

  • Are you also boycotting those terrible anti-social people who avoid the tax on cigarettes by not smoking?

  • Alex Macfie 11th Dec '12 - 4:52pm

    @Chris; That is not tax avoidance in the sense meant by this article. “Tax avoidance” here is like buying your cancer sticks (legally) in an EU country where duty is much lower and bringing them back without having to pay import duty on them.

  • Morwen Millson 11th Dec '12 - 5:02pm

    Absolutely agree that Lib Dem Voice – and indeed the party – should sever links with Amazon. I have to confess that I have never bought anything from Amazon; I once came close and then couldn’t seal the deal as my son had registered his account and password on my lap top! However, I have issued instructions that I don’t want any Christmas presents bought from Amazon.

  • @Alex Macfie

    There’s absolutely no difference between not smoking and arranging your affairs in such a way as to avoid tax in the way that is described in this article. It’s just the same as your vile and evil failure to buy 36 mars bars (and so pay tax on them) for your breakfast this morning.

    There would be nothing whatsoever wrong with buying cigarettes in another EU country, no matter what angry statists say.

    Given that much of our tax is used to pay for things like drones attacks on Pakistani civilians, a keenness to pay tax doesn’t exactly put you on the moral high ground.

  • Alex Macfie 11th Dec '12 - 8:51pm

    @Chris: Actually there is a big difference between doing X and avoiding paying any tax on it, and not doing X at all. Google operates in the UK and arranges its tax affairs to minimize the tax it pays in doing so. This is similar to a smoker buying his cancer sticks from an EU country that taxes them less (probably nearly all of them) The equivalent choice for Google would be not operating at all in this country.
    I never said I thought it was wrong to buy cancer sticks in another EU country. I am pro-EU, and I support the concept of the single market. I think it’s foolish to buy and use cancer sticks at all; whatever the duty levied on it in the jurisdiction you buy them in, they are a waste of money, as well as the health risk. However, I do think there is a moral difference between an individual on limited means avoiding tax and a large cor poration doing so. I would be very happy to pay 1% tax on what I earn because as a middle class person (i.e.. NOT rich) I would welcome any extra money that I can get; therefore if there were a legal and affordable way of doing so I would, and I would not condemn individuals in my position for doing so. However, rich people, and rich corporations, can easily afford to pay the tax that is properly due in their case, and so it is much less morally defensible to use legal trickery to avoid doing so.

  • I’m not sure if LDV can or would want to completely severe it’s links with those companies that do business in the UK but arrange their tax affairs to legally minimize the UK tax they pay, as this would mean replacing Google Syndication and Google Analytics, and potentially Twitter, Facebook and MessageSpaceAds …

  • Is this the start of a campaign to vilify the poor for avoiding paying tax by not earning any money?

  • Kirsten de Keyser 12th Dec '12 - 12:40am

    Encouraging to see more correspondents engaging with the argument this time around, even though a fair proportion miss the point being put forward: Channelling Maynard Keynes “when the facts change, I change my mind”, so it is our duty to react when our laws – tax or otherwise – prove to be misused in a manner that throws up consequences which were clearly not intended.

    And, whether or not people avail themselves of duty free fags and booze from time to time, it simply cannot be right that a book written, printed, published, sold, packaged, posted and read in the UK, is taxed in Luxembourg.

    That’s just wrong and that makes the law that allows this to happen wrong.

    If we approached the business of Government with such logic more often, rather than debating and procrastinating until we disappear up our own whatsit, we might actually stand a chance of moving forward in a fairer fashion.

  • The UK has zero VAT on books, so could be regarded as a tax haven for books. Other EU countries charge VAT on books, Should we boycott books bought in the UK? Why should we pay no VAT on paper books in the UK, but 20% on ebooks? – Any answer to this? I think Luxembourg charges 3% on all books whether E or on paper, which at least shows some sort of consistancy. What Amazon pays, I would not know, but we should not see this as a one sided issue.

    The underlying issue, so far as I see it, is just how dreadfully overpriced ebooks are. Even when you have paid for them, you do not apparently own them and Amazon can and have been known to delete ebook accounts summarily.

  • Matthew Green 12th Dec '12 - 8:48am

    I think it is much better to change the law than indulge in consumer campaigns on a few conspicuous targets. As advocated by John Kay in the FT (and my blog thinkingliberal.co.uk) this means replacing the arm’s length principle for international transactions with an apportionment method, such as that used by many states in the US. It would be much better if we spent our energies campaigning for that idea rather ultimatley futile consumer boycotts.

    And MatGB – corporation tax is economically much less of a deadweight than income tax (which interferes with labour costs), for example. It adds to the cost of capital, but in a way that impacts minimally on incentives. It does not interfere with the pricing of goods and services. One of very few taxes that economists recognise as efficient. It doesn’t raise that much money, though.

  • If you’re not happy with the amount of tax a company pays, lobby the government to close the loopholes. It’s especially nonsensical to organise a consumer boycott of companies which are behaving completely legally when we’re part of the sodding government and could actually do something concrete about this instead of this pointless grandstanding

  • Tom Snowdon 12th Dec '12 - 9:58am

    We might not like or agree with what these corporations do, but they are acting within the law. I agree with Mathew Green, that if we don’t like what’s being done under a particular law, then change the law. Consumer boycotts leading to voluntary offerings to the Inland Revenue ? I’d rather see a robust tax regime for multinationals. We should change the law, UK and European, to ensure that taxes are paid where profits are made.

  • @Martin, yes, but Amazon has enough remote sales to probably all EEA countries (certainly they do to Slovakia) to oblige them to register for VAT locally in each country. So if I buy a book on their uk page, the actual price goes up by 10 percent (the local VAT on books, standard is 20 percent) when I put my address as Slovakia. VAT havens only work when you business is extremely small scale (so you fly under the VAT limit of the country you are posting stuff to) people or when the customers come and visit you in person, for example Gibraltar with zero percent VAT is an attractive place for people in the southern tip of Spain to go shopping.

    @Matthew Green – totally agree, although it still leaves the question is what should we be taxing.

    I would be interested for people to consider the following cases and tell me how people think the tax on the overall profits should be distributed:
    1) UK company has vacuum cleaners made in Malaysia using UK intellectual property and then sells them
    a) in the UK.
    b) in Malaysia
    c) in a third country

    2) Korean company makes cars in Slovakia using Korean IP and sells them
    a) in the UK
    b) in Slovakia
    c) in a third country

    3) American company uses American IP (the brand) to charge full-whack for books printed in China and imported to a) the UK before being posted on to local customers
    b) as a) but with another country not the UK.

    4) Car built in the UK by Japanese company exported to France

    5) American company working out of an office in Ireland sells services over the web to customers in
    a) the UK
    b) Ireland
    c) the USA
    d) a third country

    6) American company working out of an office in the UK sells services to
    a) the UK
    b) Ireland
    c) the USA
    d) a third country

    From observing the debate it seems that people don’t really have a clear idea of whether they want to tax turnover (for example by raising VAT to 25 percent and removing exceptions, with benefits and wages adjusted to compensate) or profits. For those who want to tax profits the determining rule seems to be that the tax should always be paid in the UK and not another country if there is any connection to the UK at all.

  • Kirsten de Keyser 12th Dec '12 - 11:21am

    I totally agree with everything Martin says. In general, books, e or otherwise, should not be subject to VAT. A most cogent argument for such a state of affairs is put forward by South Africa’s Democratic Alliance . In these straitened times, however, a case could probably be made for just certain types of books being exempt, which may be more realistic, but that’s for another argument.

    And Matthew, Jennie and Tom – I hope you are all, indeed, busy lobbying for “replacing the arm’s length principle for international transactions with an apportionment method”, but ‘one swallow doesn’t make a summer’ and we must also run an effective consumer campaign alongside such a lobby. Many small buckets bailing are just as effective as one large one. What we don’t need is no bucket.

    Consumer boycotts are tactical, and they have worked ever since the sugar boycott of 1791. Having started with the sugar, now it’s the turn of the coffee – to wit the Starbucks boycott, culminating in their recent distasteful £20M handout.

    If firms didn’t have healthy respect for consumers, why spend gazillions advertising to them? Consumer action unsettles and weakens the ‘prey’, in readiness for the real action. Which is where Matthew, Jennie and Tom come in.

  • Richard S, your experience of Amazon sales to Slovakia is curious. I do not think they need to do that; it looks as though they are charging the VAT but not paying it. I had thought that part of the idea was for Amazon to place themselves fairly centrally for theîr EU operations and then have satellite distribution centres; but these things are often not what they seem.

    I understand that Amazon are to be publishers in their own right in Luxembourg from next year, which will change the argument again.

    The EU has stipulated (as I understand it) that countries set a basic minimum VAT rate, but the problems start where exceptions have been made, such as on books, magazines and children’s clothes – when is a book a book? Are ebooks included? When do children’s clothes become adult clothes? (should small adults be allowed to wear clothes intended for children?!!)

  • @ Martin, a company based in Slovakia and distance selling at reasonable volumes into the UK would have to register for VAT.

    http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm#3

    It works the same the other way around, although obviously the relevant legislation is in Slovak.

  • Matthew Green 12th Dec '12 - 3:37pm

    Richard S: it should work like this. Compute a global profit, using an agreed method. International Accounting Standards would be the starting point, no doubt adjustments would be needed for depreciation, intangibles and so on. This global profit is then allportioned using a formula such as the Massachusetts Formula used by 43 US states, which weights sales, payroll and property equally. Then tax the bit apportioned to the UK at the normal UK rate.

    If it works in the US, why not here?

  • I agree, we have to put money where mouth is. this is complicated though, and not so easy.
    I have (great deal of self discipline, and buying things from other websites that are far more time consuming!) not bought anything from Amazon since the news came out, BUT
    1. on “any answers” at the weekend some people rang in who sold things through Amazon, that were small businesses, paying their tax, and being badly hit. We need to know how not to boycott them.
    2. I have a kindle. John is getting one from Christmas, so we are fairly tied to getting our e reading from them – no easy solution there.
    3. can someone tell me how to send a message to Amazon. Their website not easy to find such, and I do want to let them know how strongly I feel about their tax dodging. Can hardly have a demo outside the “internet”.

  • I like the way the author dismisses as ‘nit-picking’ those who point out that she’s simply wrong in her premise (see comments to her previous ludicrous article for that). I’m certainly not going to boycott any of these companies just because some ignorant people have started a campaign against them. If you want the rule of the mob, you’re in the wrong party.

  • @Matthew Green, I would have to look into it more, but it occurs to me that companies operating across the USA are one legal entity with one group of owners/shareholders producing accounts for the whole area. Internationally companies don’t always wholly own their subsidiaries, they sometimes don’t own them at all and simply franchise. Starbucks would be able to simply sell its UK arm to a local company and then continue to charge the 4.7 percent franchise fee to them and continue as before. There is a risk then that introducing such as system would simply enable companies to exercise more choice over how best to structure themselves to introduce new tax dodges (i.e. high-tax UK, we’ll do it with a franchise or part-owned subsid – low tax Cyprus we’ll do ourselves to declare more profits there instead of in the US) rather than the arms-length transfer-pricing model.

    Those who think 4.7 percent of all turnover is a lot of money to pay to licence the Starbucks brand are of course welcome to set up a cafe next door to one, without the American branding but with the prices 4.7 percent lower and see how they do. I would say they are quite likely to find that running cafes on UK high streets isn’t quite the licence to print money that they imagine it to be.

  • I would also add that 4.7 percent of sales for the (I presume) American owners who created the business isn’t a lot compared to the 20 percent VAT for the British overlords upon whose domain these cafes stand. But of course they want more.

  • I tried one of the alternatives about a year ago (not for tax reasons – I just wanted to support a British retailer) and the shopping experience and customer service was so appallingly bad I’ve gone back to Amazon. Perhaps I’ll try another one on the strength of this article; anyone have a recommendation?

    On topic: Amazon has no obligation to pay more tax than is legally due. It’s up to the government to change the law – and the government should do so.

  • More information on Amazon and sales of internet services.

    Under an EU directive, internet services sold direct to consumers rather than businesses (which would include downloads of e-books) are charged VAT based on the location of the supplier not the consumer, so it is correct that you would only pay 3 percent VAT if you bought a e-book from Luxembourg. The reason for this is presumably that it was thought too complicated to have different VAT rates depending on the site’s ability to determine the location of the consumer and requiring them to register in each country – perhaps high tax countries didn’t want their citizens to see how much extra they were paying.

    From January 2015 this exception to the system will be abolished and we will return to the pre-2003 system of charging VAT based on the location of the customer. So it is worth pointing out that the campaign in so far as it relates to Amazon’s tax arrangements, is for a change in the law that is already agreed.

  • Kirsten de Keyser 15th Dec '12 - 12:35am

    Thanks all for leading this topic into such an interesting and illuminating discussion. We are, however, now a few days on from my original post, and the circus has doubtless rumbled on to the next village green. I will therefore limit myself to tie up a few loose ends, bullet fashion:

    Suzanne:
    You should definitely write to Jeff Bezos, Founder and Chief Executive of Amazon (his official title is “President, Chief Executive Officer and Chairman of the Board”. Little point in going for anyone lower down the food-chain in a behemoth such as Amazon. Jeff Bezos’s email is all of these (just include them all):

    [email protected]
    [email protected]
    [email protected]

    and I gather that his mail does actually get answered.

    Failing that, try:
    Deborah Hankins
    Executive Customer Relations of Amazon
    [email protected]

    Her post also generates replies.

    Dominic:
    To blithely assert that “…these movements are unenlightened mob rule” is patronising and, in itself, unenlightened. What makes you think that a popular crowd is necessarily ‘unenlightened’?

    Geoff Crocker:
    “The protest movement has neither principle nor fact.” Most grassroots protest movements have neither the time, resources nor the inclination to mount a legal-proof argument of principle and/or fact. What they do have is gut-instinct. They sense a wrong. That is their role; to whip up a storm of public emotion which forces electable politicians, ever fearful of the vote, to sit up and take notice. Granted, it doesn’t always work, to wit the Iraq war, but that doesn’t mean we should stop trying.

    Mark H:
    You’re correct, of course, that “Amazon has no obligation to pay more tax than is legally due. It’s up to the government to change the law – and the government should do so.” Which is the only argument that can be made; back to Maynard Keynes “when the facts change, I change my mind”.

    And which other online retailer did you try? They have come a long way this last year but I noticed that bookstore.co.uk is groaning alarmingly under the strain of Amazon defections. It’s a shame, in a way, that all this happened so close to Christmas, so the smaller alternatives didn’t have time to get their ducks in a row. I’ve found the main UK booksellers e.g. Waterstones, WH Smith etc very reliable, even up to Christmas.

    Richard S:
    It’s correct that from January 2015 VAT will be charged based on the location of the customer. But that’s just VAT, not corporation tax on profits.

  • @Kirsten, So you want corporation tax to be charged based on the location of the customer. Apart from the fact this opens up a whole raft of new possible tax-avoidance strategies (for example investing, even in break-even stuff, in low tax countries simply to move the average customer somewhere more favourable, tactical choice of franchising versus subsidiary models depending on tax rates) which are not possible under a properly enforced transfer-pricing regime, I don’t understand why your other article which you link to mentions you protested at Vodafone, whose supposed crime is paying tax on the profits from their German business in Germany and not the UK. Others pointed that out. Instead of engaging with them and explaining your position more closely, you dismissed them as nitpicking.

    You object to Dominic claiming the protests are unenlightened, however the choice of targets seems to be totally inconsistent with any possible model of how to change the system and, if I was being uncharitable, seems to be based on a particularly ugly form of street-nationalism because the sole thing in common in the choice of targets protesters smash seems to be the belief that taxes from any activity anywhere should always be paid in the UK, not another country. Dominic and others have asked for explanations of what criteria the protestors are using but you have been unable to provide them. He is therefore entitled to describe you and the crowd as unenlightened.

    I have pointed out the problems with “location of customer” model earlier and also that it is highly likely to lead to lower tax-take once companies restucture themselves for the new regime. Yet while you have no response, this appears not to change your mind – an approach that is only consistent with the use of political opinions as fashion accessories.

  • Kirsten de Keyser 17th Dec '12 - 8:46am

    Ok Richard and Geoff, I accept that you dismiss my approach.
    What would be your modus operandi then?

  • @Kirsten.

    I think more generally the modus operandi should be first to set out what your values are (in this space there is some room for gut-feeling, for example you and I might quite legitimately rank freedom and financial-equality in a different order, although of course there doesn’t have to be a strict rank order as we are often going to be balancing priorities). Then, when examining a proposal (or formulating your own), try to work out whether or not the real-world consequences of that proposal would lead to the things you value or not.

    When you feel a gut instinct about something happening in the world, try to work out whether the values that underpin that instinct are the right ones. I mentioned earlier about the UK-centric nature of some of the targeting, this is a natural instinct (at least for British people) but when you identify that, then you have to realise its wrong. You might also find jealousy among the reasons for the gut-instinct. Equally, where a company has got away with murder on a tranfer-pricing agreement, where HMRC seems to have been asleep on the job, then your gut instinct may be based on the value of “fair play”, “equality of opportunity” and so on. But the gut instinct is only an alarm that there might be something worth thinking about, it’s not enough on its own to reach a conclusion about anything. If you think the values are the right ones, then try to formulate a proposal (or look at what other people are proposing) and try to evaluate it according to what you think will happen if it is introduced, and examine other peoples ideas about what the consequences would be, to see if they hold water or not,

    More specifically about tax, I also agree with Geoff’s last post, and would add that if you think that the royalty charge that Starbucks has agreed with HMRC (in other words, the government that represents us) is too low, then more properly your disagreement should be with HMRC doing (in your view) a bad job of representing our interests, not with Starbucks for doing a good job of representing its shareholders in those negotiations. The other thing to remember about transfer-pricing though is that it also needs to be accepted at the other end; so if the Dutch branch of Starbucks was effectively giving away its European rights to the name, then the Dutch tax office would legitimately have a case to say they were being short-changed. That is not to say however, that there aren’t cases where transfer-pricing couldn’t be tightened up.

    If you want a proposal about corporation tax that the two of us can agree on, how about “The government should seek to have company-specific special tax arrangements, such as the one Starbucks has (or is said to have) in the Netherlands ruled illegal under EU competition law, or to change EU competition law and/or tax treaties to make such agreements illegal.” However, to have any credibility on the issue of tax avoidance, the UK government would have to do something about its non-dom personal income tax arrangements. For foreign millionaires, the UK is the best tax haven going, because as London is a major business, artistic, entertainment and shopping centre, it is much harder for foreign tax offices to use anti-avoidance rules against people who claim to have moved here other than for tax reasons, than it is against people who claim to have moved the centre of their life to the classic small island tax havens other than for tax reasons. Perhaps closing down the non-dom arrangements would not be in the UK national interest? Ok fine, but if the UK is not willing to give up that small bit of its own GDP, then don’t except the Netherlands to reform its own system, and certainly don’t expect the small island havens, many of which would effectively have third-world status without their offshore arrangements, to do what you are not willing to do yourselves.

    If you want more of the money from the sales of products to stay within the country of sale, then raising VAT is possibly the answer, as it is a fixed percentage of sales, and is a lot less reliant on somewhat subjective notions of which place is responsible for corporate profits. Of course, short term it is inflationary, so you need to make sure you change benefits and minimum wages at the same time to offset it.

  • I now realise I should have included a numerical example of what is wrong with using sales as a basis for corporation tax. I imagine the folowing two companies as software companies, but they could be in any industry or even two different industries.

    Company A is in France (could be the UK, but I am goingto use France so the currency is the same), and makes a profit of 1 million euros on sales of 2 million euros (net of the 400K Vat they paid at 20 percent). They pay 33 percent, so 330K corporation tax.

    Company B is in Cyprus, they also make a profit of 1 million euros but on sales of 5 million euros (net of the 850 K VAT they paid). They pay 10 percent, so 100 K corporation tax.

    Now imagine these two companies merge. Under the current system, they pay the same tax as before as I assume we would all think they should, (this assumes the parent company is not located in a high-tax jurisdiction, but would work for example if the Cypriot company buys the French company) because it works on the arms-length principle. Now, if we change the system to apportion profits for tax based on where the sales are, then the five sevenths of the profits (1.43 million) belong in Cyprus and two sevenths (570 K) belong in France, based on the position of the “average customer”. The newly merged company would only pay corporation tax of 143 K in Cyprus, and 188 K in france, so 331 K in total, a full 100 K less than if they were separate companies.

    If we reverse the example (so the higher turnover company is in France and the lower turnover company is in Cyprus) then the corporation tax is 57K for Cyprus (10 percent of 570 K), and 472K for France or 529 K in total, so a full 100 K more than if they were separate companies.

    Apart from the injustice of this, it doesn’t take a lot of cynicism to predict that larger companies would never let the second scenario happen but would be actively looking for opportunities to let the first scenario happen – perhaps even setting up divisions in Cyprus buying and selling junk to each other to churn money around and create turnover in the right place. The tax office which would be best placed to investigate whether these Cypriot transactions had any or sufficient substance would be the Cyprus tax office, which would be the one that stood most to gain by recognising them as valid – or would the UK tax office be out in Cyprus trying to read invoices written in Greek? Under the current system, the tax office with something to lose is always in a position to investigate the relevant transaction as it is being put forward as a taxable cost for their branch of the international company.

    This is why the best way to keep more of the value of the sales in one place is to raise VAT.

    It is true that a system with elements of the one you propose (or I now hope “proposed”) is in operation between individual states in the USA, but the state element of the corporate income tax is always less than ten percent, so the same avoidance stategies don’t arise I imagine, at least not to the same extent. If they were to adopt the current system we have in the EU it would require them to apportion costs to individual states, produce auditable accounts for each state as well as agreeing with all the state tax offices about all the transfer pricing for anything crossing a state line, which is much less of a problem in the EU when the companies are typically different legal entities in the different states anyway and are already doing those things, but is probably a winning argument against such a system in the USA.

  • Kirsten de Keyser 19th Dec '12 - 11:28am

    Richard’s and Geoff’s extensive contributions to potential solutions to this tax avoidance dilemma contain a variety of seemingly viable measures, which makes me even more annoyed at a Government on whom such tools are apparently lost.

    That being said, I still query Geoff’s request to “… stop protest movements based on wild accusations against anyone if they haven’t passed the test of principle and fact. Otherwise we are into mob rule.” Hadn’t it been for protest movements based on what has turned out to be not-so-wild accusations, we likely wouldn’t be having this discussion at all.

    Your interesting suggestions clearly form sophisticated pieces of financial and political analysis, but the two approaches are not mutually exclusive. In fact, they depend on each other. No point in having lots of good ideas if no one’s listening and it usually takes someone with a megaphone to garner attention first. By the same token, there’s little point in hollering about a bunch of empty barrels. We need each other’s pulling power.

    In that sense, Richard comes closer in breaking a concerted campaign into its constituent parts. You could say the’ brawn and the brain’, ‘heart and head’, however you prefer to similarise it. What matters is that both are needed and that everyone taking part should work to their best strength.

    From Plato to Orwell it’s not hard to demonstrate that change invariably comes about from the ground up. Why would those already at the top initiate change to the status quo that took them to the top in the first place? Turkeys…Christmas and all that, and if we needed recent proof, check out the AV referendum and Lords Reform. But I digress.

    Progressives in power (that’s us) admittedly do try harder to look at fresh ideas than the entrenched power bases, but still not without a fair degree of apparent discontent in the rank and file.

  • @Kirsten, you are right that the two approaches depend on each other. There is no point in analysis if there is no set of values by which to judge the results of the analysis. Without thinking and analysis though there is no way to know that any protest is attacking the right targets – as I showed above, your well-meaning idea of asssessing profit-taxes based on location of sales actually opens up new possibilities for tax avoidance and the accusations against Vodafone make no sense in combination with the ones against some other companies. Many policy areas are like games of chess, in that the government makes one move, and other people in society or abroad respond or react, so instinct is very often a very poor guide to policy.

    Without analysis, the protestor is like a blind man armed with a hand grenade; without values you have a nihilist * with a hand grenade able to see, but no basis to choose where to throw it. I don’t agree however that the solution is to combine those two grenadiers into one army. The nihilist is difficult to help, but the person with no analysis can start to think. Those who can’t produce their own analysis can read that of others and decide independently if it follows logic or not, and also try to follow a wider range of other opinions (expose their thinking to more varied lines of analysis) than the feedback loop groups of like-minded people, and again see if the ideas hold water logically. Doing that, instead of accepting pre-packaged ideas from the people around you, is a volitional choice that every one can make but not everyone does make, but it is the only way to survive in the modern world (also outside politics), and yes, if you prefer to think that way, the only way to resist and not be a victim.

    While seconding what Geoff says, I would also say that the person with the megaphone shouldn’t come first. The analysis comes first and then the megaphone; just as looking comes first then throwing the hand grenade.

    I don’t agree that people protesting in the streets count as “the bottom” in a way that people voting in elections or against us in the AV referendum don’t. The AV referendum is a good example of how strength of feeling (mostly directed against the Lib Dems) was able to trump rational argument in many people’s minds.

    As a Lib Dem member, (which I no longer am). a good strategy for you to suggest for your party to follow would be to suggest that the EU harmonises, or at least sets a minimum level of corporation tax across the EEA in the same way as it already does for VAT (rates are not allowed to drop below 15 percent). This would take out a lot of possible tax avoidance strategies. The party is also desperately searching for something positive to say about the EU at the moment.

    *I mean in the Lebowskian sense of believing in nothing at all.

  • On Vodafone, while I still hold the position that comparing their worldwide profits (or turnover) with the tax paid in the UK is the wrong approach and quite UK-centric, there is actually one issue with them related to the way they are financed, through a loan from low-tax Luxembourg, which might not be justified commercially, the interest transferring profits over there. Of course it is up to politicians to change the laws.

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