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Starbucks is evidence that tax campaigning works

The Guardian reports this morning:

On Thursday, YouGov’s BrandIndex, which records the strength of companies’ brand identity, revealed Starbucks has plummeted in the past few days. Its “buzz” score, which measures the number of negative and positive comments customers have heard, reached a four-year low, falling to -13.9 from +0.7. Its reputation score has also fallen from 4.6 a week ago to -3.9 on Thursday and could continue to drop.

Sarah Murphy of BrandIndex said: “To say this story has been a disaster for the Starbucks brand would be a bit of an understatement. It’s still too early to say what the long-term impact of this is going to be, but in the current climate we’ve seen the public take a fairly dim view towards accusations of corporate greed.”

I think the case that tax avoiding can harm shareholder value has been made.

It’s time corporate bosses noted. The anti-tax avoiders campaign is not going away.

Even in his apology, Nick Clegg lied about student loans

In Nick Clegg’s apology to the public, he says he should not have made a commitment to block tuition fee increases because “there was just no money around”.

That’s not true for all sorts of reasons.

First, there was been money to pay for cuts in the 50p tax rate. That costs more than £100 million a year according to the government – I suggest it is massively more.

There were cuts to corporation tax rates costing £4.5 billion a year to date (taking into account decisions from 2010 to 2012). And changes in controlled foreign company rules costing about £1 billion a year.

In other words: there was money available. Student loans amount to about £3 billion a year.

The second problem is that the claim that student loans save the government money is just bogus. The loans students take out to pay their educational establishment are lent to them by the government. That’s because the loans are provided by the Student Loan Company.

The government lends the student loan company money it has borrowed from the markets so that the SLC can lend money to students, so that students can pay it to government owned universities for their education, to reduce the supposed cost of the government supplying those students with their education.

Basically, the government is paying for that education by borrowing. It’s just, potentially, making the students responsible for one day repaying that loan. Nothing avoids the fact that right now student’s aren’t paying for the education: the government is.

Therefore Clegg lied. Or is so daft he doesn’t realise the truth.

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A longer version of this blog post is here.

It’s about time we started taxing wealth in the UK

Nick Clegg wants to tax wealth. So do I. There’s no other way to reduce wealth inequality in this country, and that wealth inequality is deeply destructive of community in the UK.

That it so happens revenue can be raised a the same time is a bonus.

But Clegg is wrong if he thinks that a mansion tax (as Matthew Oakeshott is suggesting he’s demanding) is going to address this issue.
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The way to dealing with tax evasion is not cutting taxes

I’m amused to read a typical right wing response to Tax Justice’s new report – The Price of Offshore Revisited, which suggests that as much as $32 trillion of wealth may be located in tax havens – is to suggest that the problem could be solved by cutting the rate of tax on the wealthy.

What Eric Jackson, who suggested this in Forbes, is in effect saying is that the best way to reward those who have in very many cases broken the law by hiding their wealth offshore, so as to undermine the state, is to undermine the state in its own backyard instead.

We should next be expecting them to suggest that the best way to beat burglars is to ban locks. The logic would be identical.
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The G4S scandal also shows outsourcing does not work

We should be quietly grateful to G4S for messing up big time on its Olympics contract. Not that I’m saying that it should ever have had such a contract; it shouldn’t, but because by getting it so badly wrong it shows why the whole logic of outsourcing does not work.

First, it put profit first. As a result it has cut corners. That’s not what public service needs. We all know that.

They just graphically prove it.
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No link between size of state and growth

It’s often said that the state has to be shrunk to allow growth to happen.

Martin Wolf of the FT produced this graph, and I’ve borrowed it from the the Fahrenheit 23 blog:

Where’s the correlation?

There isn’t one.

Which shoots 98% of the neoliberal argument into oblivion.

How the CBI is misleading in pursuing a race to the bottom on taxes

The CBI offered another piece of gross misinformationwhen launching its new tax report ‘Tax and British Business – Making the Case’ (which it spectacularly failed to do). The CBI claimed:

The long view is a revealing one. In 1982-3, the main rate of corporation tax was 52 per cent and yielded tax revenues equivalent to 2 per cent of GDP. In 2010-11, the corporation tax rate was 26 per cent, half what it was, but yielded 2.8 per cent of GDP, almost half as much again.

What they wanted people to believe, very clearly, is that UK business now pays more in tax than it did in 1982. The claim was certainly that the proportion was not falling. But this is misleading.
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George Osborne’s corporation tax cut has utterly failed

In last month’s budget George Osborne made a 2% cut in the large company corporation tax rate, introduced for this current financial year.

Perhaps of all the budget measures this though was the most unnecessary and economically incompetent.

As the Observer pointed out yesterday morning, the Ernst & Young Item Club now estimate that Britain’s large companies are sitting on a cash pile that between them that amounts to £750 billion.
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Five steps UK could take now to cut tax avoidance

I’ve been challenged to suggest five steps that could be taken now to tackle tax avoidance, given that the topic is in the news.

Let’s be clear why this issue is important. I estimate tax avoidance costs the UK £25 billion a year.

What we do now know though is that it is substantially more realistic than the government’s own estimate of £5 billion.
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Have we reached the tipping point on tax avoidance?

It’s been an extraordinary few days.

Amazon’s tax was exposed. They’ve done nothing illegal, of course, but their conduct has clearly been judged unacceptable.

The tax affairs of politicians have become issues of public debate – Ken and Boris have guaranteed that in perpetuity. The move to tax transparency in the public domain has, I suspect, become unstoppable. Polly Toynbee argues for it universally this morning. I have sympathy, but until now have always thought it a step too far.
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