Who set up our current tax laws!

[jts1882]

How does investment fare under a revenue tax structure?

At the moment investment in plant, infrastructure or even staff only costs a company 76% of its cost. Under revenue tax you'd be charging a company 100%. Hardly the way to promote growth.

I don't think taxing revenue is a smart idea, but I'll ask you a few questions.

Why should a company only pay 76% of the cost of something in a free market? Who decides who pays the other 24%?

If the answer is the taxpayer pays through tax deductions, then why should the company getting the tax deduction be allowed to avoid paying its fair share of tax by diverting profits to tax havens?

 

[Superhudd]

What I don't like about Amazon is that they undercut everyone, bring people cheaper prices and are able to do so because they basically don't pay tax, these cheaper prices make the consumer blind to the real damage they are/have done.

They have pretty much singlehandedly destroyed shops like HMV, Woolworths, Game, JJB, private owned small business and a like by undercutting and our tax laws have pretty much helped their demise.

Amazon probably has one mega warehouse, and probably employ a small percentage of these previous stallwarts of the highstreet, so.. more unemployment and less tax. NI coming into the coffers from all angles.

How anyone can defend Amazon and its business model I don't know.

And what happens when Amazon are the only ones left standing to purchase items, and because there is no competition they put prices up to what they want, because they have spent the last 10 years killing of the competition.


The govenment just did not see the change from high street to internet quick enough, therefore the govnement needs to make changes to help fill the void that these companies have created (with our help).

 

[Richie]

Your final argument is flawed because they can't do that in a free market. If there is no competition and they put prices up, someone else will come along and undercut Amazon and win all their business. They are hardly the only online store and even if they were, they wouldn't be for long.

 

[jts1882]

Your final argument is flawed because they can't do that in a free market. If there is no competition and they put prices up, someone else will come along and undercut Amazon and win all their business. They are hardly the only online store and even if they were, they wouldn't be for long.

You can if you establish a monopoly and there are significant entry costs for new businesses. That's the reason they have laws against monopolies because they circumvent the free market.

 

[Richie]

And again, this all comes down to free trade. Everyone complaining about Amazons practice is a protectionist. They are a foreign company who is selling in the UK at cheaper prices and you are complaining because they don't pay UK corporation tax. It's frankly ludicrous to ask every company to pay corporation tax in every country it sells in. If they undercut the high street then fantastic, that is good for the consumer. It is up to the government to stay internationally competitive.

 

[scaramanga]

You can if you establish a monopoly and there are significant entry costs for new businesses. That's the reason they have laws against monopolies because they circumvent the free market.

But if there's enough scope to undercut Amazon (in the presented scenario they are increasing prices as high as they like) then the barriers to entry become fairly small in comparison.

 

[Richie]

You can if you establish a monopoly and there are significant entry costs for new businesses. That's the reason they have laws against monopolies because they circumvent the free market.

In reality it is very difficult to sustain a monopoly over any sustained period of time in a genuinely free market without (usually inadvertent) government help. It is government regulations that increase entry costs for new businesses. Regardless, your point is flawed in respect to Amazon because setup costs for an online business are very low.

 

[jts1882]

And again, this all comes down to free trade. Everyone complaining about Amazons practice is a protectionist. They are a foreign company who is selling in the UK at cheaper prices and you are complaining because they don't pay UK corporation tax. It's frankly ludicrous to ask every company to pay corporation tax in every country it sells in. If they undercut the high street then fantastic, that is good for the consumer. It is up to the government to stay internationally competitive.

Its not ludicrous to force a company to pay the relevant taxes in every country where it does business. That is not protectionism, its the basis of international free trade.

You seem to be confusing the free market with a free lunch. Its not good for the consumer as they end up paying high taxes to fund the national infrastructure. If the people making the profits don't contribute their fair share, everyone else pays.

 

[Richie]

So lets say Amazon headquarters in Luxembourg is for every European country. They should be paying corporation tax in all 27 EU member states?

 

[Leeds Spur]

Yes - the profits they make in each country should be subject to the full tax due in each jurisdiction.

 

[Richie]

Yes - the profits they make in each country should be subject to the full tax due in each jurisdiction.

So you're ok with BAE sending most of it's corporate tax to the USA? Because 80% of the business is done with the United States, surely we owe them a whole load of corporation tax.

 

[Superhudd]

Your final argument is flawed because they can't do that in a free market. If there is no competition and they put prices up, someone else will come along and undercut Amazon and win all their business. They are hardly the only online store and even if they were, they wouldn't be for long.

I know, but I find interesting is you didn't comment about the rest I wrote.

 

[Superhudd]

Richie, your defence seems to say Amazon is good for the consumer because it offers lower prices, which no one can deny is great, but you don't seem to adknowledge the knock on effects of such a business taking over the British highstreet.

For me its like one step forward yet two steps back when we look at the bigger picture.

 

[Superhudd]

Can I also say that despite what has been said in this thread. In my which magazine last month, it states clearly the cost of living for groceries in the 50s, 70s and today, and on everyday stuff, prices have gone way up in comparison, so despite the Tesco's of this world bringing wider choice, prices have gone up and not down. So IMO the theory that big superstores are helping the consumer is actually false.

 

[Richie]

One of the very few things that economists have a consensus on is that protectionism is bad for everyone.

Take a look at it from the business perspective. It's better for businesses to buy from abroad if it is cheaper and then those UK firms can pass on savings to the consumer. For example if a builder can buy foreign bricks at half the price abroad then he can do it and make cheaper houses. Therefore the person buying the house has more money to spend on other things.

Listen to Milton Friedman on Protectionism, he explains it far better than I ever could http://www.youtube.com/watch?v=6qqG6OurHaM

 

[Seedy Ron]

So you're ok with BAE sending most of it's corporate tax to the USA? Because 80% of the business is done with the United States, surely we owe them a whole load of corporation tax.

BAE have an American subsiduary which sells to the US DoD, presumably the tax owed over there comes from that arm of the business.

The point of Amazon in the UK is surely that it's not really a foreign company, in that the buyers are in the UK, the goods are stored in the UK, they're shipped in the UK, using the infrastructure of the UK, etc etc. For all intents and purposes, its a standard UK company. I assume its the same deal with their French and German operations. That the HQ for them is in Luxembourg, and for tax purposes is where the transactions take place, is surely just a legal dodge?

 

[Richie]

So feasibly by this plan, I can set up a business in the UK but do all my trade with France or Germany and therefore pay zero corporation tax in the UK

 

[scaramanga]

So feasibly by this plan, I can set up a business in the UK but do all my trade with France or Germany and therefore pay zero corporation tax in the UK

Maybe you can trade in Luxembourg and I can buy from you there. Then you won't pay any corporation tax

 

[jts1882]

So you're ok with BAE sending most of it's corporate tax to the USA? Because 80% of the business is done with the United States, surely we owe them a whole load of corporation tax.

If 80% of the business relates to the US then yes. However, the calculation is not that simple If the items are produced in the UK by the British subsidiary, then the American subsidiary buys the goods from their British one. The British company pays tax on profits made from their operation. The American subsidiary makes profits on any further processing they do before selling to the Pentagon. Just because 80% of the goods end up with the US purchaser, doesn't mean 80% of the profits reside with the America subsidiary. These supply chain arguments illustrate why tax on revenues would be ridiculous.

Of course, in the real world, the key patents would be held in the Cayman's and large royalties would be paid to those compnaies, so much of the profits would go to secretly owned companies registered there. Of course, none of these companies would be owned by the rich individuals who lobby the US and UK governments on tax laws.

 

[southstand1882]

If I'm taxed 50% of my revenues (and believe me, I'm a loss making entity at the moment), why can't companies?

Either that, or tax me nothing until I'm profitable (pension and house paid for)

Then you can have 100% of my profits for all I care

Would it kill Tesco or Starbucks to pay 1 pence on every item they sell until the countries debts are cleared?

No, of course it wouldn't. Global financial crisis over in a heartbeat.

Instead, I pay 50 pence in the pound on my wages and 80 pence in the pound on fuel, because politicians care only about the next 5 years

I think most people seriously underestimate how fudged up the world is right now

When the financial crisis hit, I estimated 10 years for things to be fixed. I think I was wrong by a magnitude of 3-5 times that.