[governance] Re: Telecom TV on Google and Taxes
Jacqueline Morris
jam at jacquelinemorris.com
Sun Dec 16 09:12:21 EST 2012
Not defending Google per se, but...
Leaving out the cyberspace part for the moment, ALL companies seek to
reduce costs, including taxes. Mattel, DuPont, GE, Pfizer all pay
little or no tax. Some even get tax rebates based on billion dollar
profits. (Yes, that's madness, for a company to have a -57% effective
tax rate, on profits in the billions, but it's the law.)
Google legally routed profits and reduced their tax bill. It's the
fault of the UK tax regime that allowed them to shift profit overseas
and not pay taxes on it.
Yes, this is a problem for countries, but it is not incumbent on a
company to fix the tax regime of a country in which it operates. The
Govts need to make sure that the routing of profits that companies
currently do legally, to reduce the tax that is owed, is no longer
legal. Taxation regimes around the world are complex, full of
loopholes put in to support "friends of govt" which are then are used
by others, and oops! we've got no tax revenue coming in, and the
companies that filled out their tax bill according to the law are
suddenly evil. CS can and should work on the governments to close
these loopholes that they create for their friends and for the
lobbyists. But is this totally IG? I don't think so.
I understand where Parminder is coming from, with the idea that small
and developing countries do not have the size/power to say - pay our
taxes or else. But this isn't IG, in my opinion.
The IG part is figuring out what portion of value and business, and
hence tax revenue, goes where in a mutli
-national/multi-jurisdictional cyber transaction. And to that, the IGC
can, and should, look at this issue, look at the harmonisation efforts
going on in Europe and elsewhere, and suggest workable mechanisms for
collection and fair/equitable division of revenues from these
transactions.
Jacqueline A. Morris
Technology should be like oxygen: Ubiquitous, Necessary, Invisible and
Free. (after Chris Lehmann )
On Thu, Dec 13, 2012 at 7:54 AM, Carlos A. Afonso <ca at cafonso.ca> wrote:
>
> Dear Parm, unfortunately (again) I am unable to follow up closely on the thread. But one point intrigues me: taxes are determined by governments within their geopolitical boundaries. Why don't governments charge appropriate taxes (if any) on services such as Google's?
>
> The point is: I do not think a corporation of that size just evades taxes and keeps an eye for what may happen. The certainly know about tax legislation in the countries they have operations.
>
> What is the proper way to define a policy on this for us?
>
> frt rgds
>
> --c.a.
>
>
> On 12/13/2012 02:33 AM, parminder wrote:
>>
>>
>> Rather shameful that google paid 3 percent tax on its overseas profit!!
>> It surely leaves it with a lot of money to spend in lobbying and
>> advocacy efforts to keep global markets free for its unlettered
>> operations... Like organising campaigns against ITU, German legislature,
>> and so on.
>>
>> Would IGC write an open letter to Google that its tax evasion policy is
>> anti people, and it should pays its taxes where it makes its profit. (Or
>> is it that the IG civil society does not go into such re-distributional
>> questions ) It is not rhetorical but a real question to the list, and
>> its coordinator.
>>
>> parminder
>>
>>
>> On Wednesday 12 December 2012 09:37 PM, Salanieta T. Tamanikaiwaimaro wrote:
>>>
>>> More on Bloomberg:
>>> http://www.bloomberg.com/news/2012-12-10/google-revenues-sheltered-in-no-tax-bermuda-soar-to-10-billion.html
>>>
>>> On Thu, Dec 13, 2012 at 4:48 AM, Salanieta T. Tamanikaiwaimaro
>>> <salanieta.tamanikaiwaimaro at gmail.com
>>> <mailto:salanieta.tamanikaiwaimaro at gmail.com>> wrote:
>>>
>>>
>>> Somehow it feels that there is a targeted media campaign out
>>> against the likes of Google and other mncs - the timing of the
>>> release is almost impeccable with the WCIT.
>>>
>>> Source:
>>> http://www.telecomtv.com/comspace_newsDetail.aspx?n=49763&id=e9381817-0593-417a-8639-c4c53e2a2a10
>>>
>>>
>>> Google “can make money without doing evil” (as it evades $2bn in
>>> taxes)
>>>
>>> Posted By TelecomTV One
>>> <http://www.telecomtv.com/go/?ct=9&id=e9381817-0593-417a-8639-c4c53e2a2a10> ,
>>>
>>> 12 December 2012 | 1 Comments
>>> <http://www.telecomtv.com/comspace_newsDetail.aspx?n=49763&id=e9381817-0593-417a-8639-c4c53e2a2a10#comments> |
>>> [0 people rated this an average of 3/5] [0 people rated this an
>>> average of 3/5] [0 people rated this an average of 3/5] (0)
>>> Tags: /Google
>>> <http://www.telecomtv.com/results.aspx?tag=122&tagname=Google>/
>>> /corporate
>>> <http://www.telecomtv.com/results.aspx?tag=6972&tagname=corporate>/ /tax
>>> <http://www.telecomtv.com/results.aspx?tag=434&tagname=tax>/
>>> /Finance
>>> <http://www.telecomtv.com/results.aspx?tag=365&tagname=Finance>/
>>>
>>>
>>> As the net closes around the multinationals that avoid paying
>>> corporation taxes, Google is accused of saving $2bn by routing
>>> income through a “Double Irish Dutch Sandwich”, paying tax of just
>>> 3.2 per cent on its overseas profits. Guy Daniels reports.
>>>
>>> Three questions. One; where do you stand on the subject of tax
>>> avoidance? We at TelecomTV believe that individuals and
>>> corporations have a duty to pay their fair share of tax. By fair,
>>> we mean whatever respective governments rule to be the legal
>>> requirement (after all, in most countries, we voted the
>>> politicians in to office). By all means try and mitigate the
>>> amount of tax you have to pay, using whatever accepted mechanisms
>>> are available. But avoidance? That just means somebody else (with
>>> far less access to expensive and clever advisors) has to
>>> contribute to your share as well.
>>>
>>> Second question: how do you define evil? The Oxford English
>>> Dictionary defines evil as “profoundly immoral and wicked” or
>>> “something which is harmful or undesirable”. In my book, that
>>> means tax avoidance is evil, simple as that.
>>>
>>> Third and final question: Is Google evil? If you believe that
>>> avoiding tax is wrong (especially through aggressive and
>>> mind-boggling complicated avoidance schemes) and if you believe
>>> that depriving society of tax revenues is wrong (and so reducing
>>> the level of available State support for the most needy) and could
>>> be described as an evil act, then surely you must conclude that
>>> Google is acting in an evil manner.
>>>
>>> An investigative report by Bloomberg
>>> <http://www.bloomberg.com/news/2012-12-10/google-revenues-sheltered-in-no-tax-bermuda-soar-to-10-billion.html> has
>>>
>>> discovered that Google avoided about $2 billion in worldwide
>>> income taxes in 2011 by shifting $9.8 billion in revenues into a
>>> Bermuda shell company – almost double its total from three years
>>> ago. The information was disclosed in a November filing by a
>>> Google subsidiary in the Netherlands, which was discovered by
>>> reporters from Bloomberg.
>>>
>>> It appears that Google legally routed profits from overseas
>>> subsidiaries into Bermuda, which doesn’t have a corporate income
>>> tax, thereby enabling it to cut its overall tax rate almost in
>>> half. Bloomberg says the amount moved to Bermuda is equivalent to
>>> about 80 per cent of Google’s total pretax profit in 2011.
>>>
>>> Tax evasion and avoidance costs the European Union a staggering €1
>>> trillion a year. That’s worth dwelling on for a moment longer…. €1
>>> trillion. No wonder politicians are now acting to try and prevent
>>> this financial loss and branding such acts as scandalous and immoral.
>>>
>>> Bloomberg has a good quote from a UK-based tax accountant, which
>>> pretty much sums up the feeling in Europe at the moment. According
>>> to Richard Murphy of Tax Research:
>>>
>>> “The tax strategy of Google and other multinationals is a deep
>>> embarrassment to governments around Europe. The political
>>> awareness now being created in the UK, and to a lesser degree
>>> elsewhere in Europe, is: It’s us or them. People understand that
>>> if Google doesn’t pay, somebody else has to pay or services get cut.”
>>>
>>> Just look what happened to Starbucks. When the public discovered
>>> the US coffee giant paid zero taxes in the UK (yes, absolutely
>>> nothing at all), it started to boycott the chain.
>>>
>>> Advertisement
>>> As a result, Starbucks was forced to “volunteer” to pay taxes…
>>>
>>> The UK is Google’s second-biggest market, responsible for about 11
>>> per cent of its sales. Of the $4 billion it turned over last year,
>>> it paid UK corporation tax of less than $10 million. Bloomberg
>>> says Google avoids tax by using an Irish subsidiary to collects
>>> revenues from ads sold in the UK, which then pays royalties to
>>> another Irish subsidiary whose legal residence is in Bermuda.
>>> Payments are then sent to yet another subsidiary in the
>>> Netherlands (with no employees, note) before finally reaching the
>>> tax haven of Bermuda.
>>>
>>> Sounds pretty ‘evil’ to me. And if so, then that’s against the
>>> internet company’s guiding principles. Stated clearly on the “Ten
>>> Things We Know to be True” page on Google
>>> <http://www.google.com/about/company/philosophy/>’s website is the
>>>
>>> following:
>>>
>>> “You can make money without doing evil.”
>>>
>>> I’m sorry, Google, but I don’t see how avoiding tax is anything
>>> but evil. Of course you – and all companies – have a duty to
>>> shareholders to maximise profits. But there are rules. Some of
>>> these are merely ethical, whilst some are legal. There is no
>>> indication or suggestion that Google has acted illegally, but
>>> there is every suggestion that it has acted unethically.
>>>
>>> And who said you can’t have ‘ethical companies’? Of course you
>>> can. I don’t buy the ‘extreme capitalist’ viewpoint that
>>> corporations will only act in self-interest and never “do the
>>> right thing” or pay their fair share. If their customers start to
>>> boycott their services, then they’ll change. It happened with the
>>> sudden emergence of all the so-called ‘corporate responsibility’
>>> positions that all featured heavily in annual reports. I don’t see
>>> why it can’t happen with fair tax positions.
>>>
>>> Other ICT companies reported in the media to be using this
>>> complicated tax evasion (sorry lawyers, of course I mean
>>> ‘mitigation’…) structure include Apple, Facebook, Microsoft and
>>> Oracle. Unfortunately, Google – and all the others, who no doubt
>>> will soon be named and shamed – will continue their sharp
>>> practices until they are forced to make a change. If governments
>>> can’t do that through the legal process, then it’s up to customers
>>> to vote with their feet and walk away from Google services. As
>>> Richard Murphy said, consumers are beginning to get the message
>>> that it’s “us or them”, and we’re already being squeezed by the
>>> many austerity measures that are in effect to drag us out of
>>> recession.
>>>
>>> Come on Google, time to step up to the plate and show some
>>> leadership. Pay your fair share. And then the rest of the ICT
>>> industry can do likewise. Or else remove that fatuous and
>>> out-dated “don’t do evil” slogan from your website once and for all.
>>>
>>> _Further reading: _The Pearse Trust
>>> <http://www.pearse-trust.ie/blog/bid/86105/US-Companies-Their-Use-Of-The-Double-Irish-Dutch-Sandwich> blog
>>>
>>> has a detailed explanation of the so-called “Double Irish Dutch
>>> Sandwich” tax scheme. Please don’t try and implement it.
>>>
>>>
>>>
>>>
>>> --
>>> Salanieta Tamanikaiwaimaro aka Sala
>>> P.O. Box 17862
>>> Suva
>>> Fiji
>>>
>>> Twitter: @SalanietaT
>>> Skype:Salanieta.Tamanikaiwaimaro
>>> Tel: +679 3544828
>>> Fiji Cell: +679 998 2851
>>>
>>>
>>>
>>
>
>
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