Is George Osborne Superman or Rambo?

Philip Fisher
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The Chancellor’s brave decision to take on the powers behind globalisation deserves to be praised. It remains to be seen whether he can succeed.

A long letter published in the Financial Times last Saturday entitled " We Are Determined That Multinationals Will Not Avoid Tax " suggests that a remarkable transformation is taking place. We are all familiar with mild-mannered Mr Osborne, the Chancellor of the Exchequer who is loath to say boo to a wealthy voter, let alone a large conglomerate.

Previously, we have been far less cognisant of SuperGeorge - the valiant crusader bent slaying the dragon of the nasty multinationals. This is the kind of camply-dressed ace that we have all been waiting to see emerging from one of the old red telephone boxes that still ring the Treasury long after they disappeared from almost every other street in the country.

To be fair to Mr Osborne, he has long appeared to be unhappy about his department's struggles in a losing battle to bring in an adequate amount of tax revenue to pay for all of the expenditure which his pal David Cameron wanted to lavish on the austerity-hit nation.

However, far too often it appeared that Mr Osborne talked a good game but did not take sufficient concrete action.

Suddenly, at the G20 summit in Moscow, in a move that might actually be more closely associated with Rambo than Superman, the Chancellor of the Exchequer has emerged from his deep trench and is ploughing into no man's land with all guns blazing.

This contrasts with his wimpish boss who on Monday was reduced to moaning "Some would say, 'Just change the law to make aggressive avoidance illegal', but, with respect to my friends in the accountancy profession, it is difficult to do that.

"I think there is a legitimate debate to say very aggressive forms of avoidance are not appropriate.

"And particularly, in a country which has set a very low tax rate, it is fair to ask people to pay it." Mr Cameron might need reminding that it is only the Queen who is allowed to set her own tax rate.

We must all accept that for the most part large multinationals including those plying coffee on high streets and entertainment in the ether are paying the correct amount of tax under British and international law.

However, when the correct amount of tax is frequently less than 5% and in some cases zero, it can be galling to the rest of us who are indisputably paying our fair share so law changes are desperately needed. As Mr Osborne has pointed out, it is not just the UK that is losing revenues, so are many developing countries that much more desperately need it even than we do.

However, his decision to head a tripartite assault with his co-signatories and counterparts, Mr Pierre Moscovici and Mr Wolfgang Schäuble respectively from France and Germany (with support from the United States) is still refreshing.

Bearing in mind the amount of legal tinkering that has gone on in this country even in the last decade, and attempts to create a fairer tax environment, international taxation is stolid and unfit for purpose.

Many of us will have been surprised to learn that the current OECD and international tax laws were originally introduced by the League of Nations in the aftermath of the Great War and have hardly changed since.

The jazz age has now been replaced by post-post-post-postpunk and the multinationals who are said to pull the strings behind politics around the globe must have felt that they were safe for the duration.

Therefore, we should all respond positively to the statement that "Germany, France and Britain want competitive corporate tax systems that attract global companies to our countries and help our economies to grow. They are a significant source of growth, investment, employment and tax. But we also want global companies to pay their fair share of taxes".

If Mr Osborne and his colleagues have their way, many tax havens will suffer irreparable blows. This could take years but the eventual outcome should be greater fairness in taxation and much happiness amongst the multitudes, maybe even enough to keep Mr Osborne and Mr Cameron running the country for generations to come?

Very few of us have a real understanding of the potential impact of changes in international tax legislation and there could be downsides but in view of the fact that many of the current laws are looking to celebrate their centenary, some kind of review and revamping seems long overdue.

Hail SuperGeorge.

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20th Feb 2013 09:10

Downsides, possibly, possibly not!

Bill Dodd's 'reason' for defending profit shifting, was that if multinationals pay UK tax they will just pass the tax cost onto consumers. This would just put them on the same footing with UK companies.

This would give companies that are wholly UK a chance at competing with the multinationals. As it is, they lose out as they pay tax, and a lot of multinationals do not. I think it unfair that multinationals can gain such an advantage over UK companies.

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By Old Greying Accountant
20th Feb 2013 10:18

Agree with Shirley ...

... it might also raise standards.

I personally think CT should be on turnover, not profit ( a lower rate on a larger figure) - may be using a similar system to flat rate VAT so that low margin businesses are not penalised unfairly, but bench mark on UK companies rates, not ones distorted by price shifting.

It might also give independant stores a fighting chance against the large national and multinational chains and reduce the risk of another "horsegate" scandal!

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