Tax is, more often than not, a dirty word. Rarely is it the topic of choice when catching up with your friends or teaching your kids their fun fact of the day.
However, it is crucial in providing our UK government with spending money and keeping our cultural landscape running smoothly and effectively. It’s necessary, whether we love it or we hate it (quite commonly the latter).
It’s a dirty word, in particular, when talking about big corporations. The media loves a good tax avoidance story, whether it be to run Starbucks’ reputation into the ground, bad-mouth Amazon or sully the sweet name of Tate and Lyle.
But these stories can be misleading, as UK corporations, in truth, contribute 30% to our tax payments, according to a report by professional services network PwC. Certainly not a lowly number – but who are these big players?
Corporate tax: the big players
The 100 Group, an alliance of FTSE 100 finance directors, contributed £80 billion to tax last year, as stated by a report in the Telegraph. The oil and gas industry also pay far more than their two cents – it’s the most highly taxed industry in the country, with oil fields developed since March 1992 taxed at a whopping 62%.
The oil and gas industry is liable for both corporation tax at 30% and a supplementary charge at 32%. With fossil fuels accounting for 87% of energy consumption worldwide – you can only imagine how the industry is fattening up the taxman’s pockets.
With George Osborne having announced in this year’s Budget that the main rate of corporate tax will be reduced to 20%, this will help to relieve the big business moguls of a little further of their economic burden.
How does this help the UK economy?
Changes to tax always have a ripple effect: lowered taxes on corporations inspiring songs of praise in CEO’s and furrowing the brows of the public. It’s difficult to play the balancing game between corporations who are paying too much and those who are paying barely at all – not all big taxpayers essentially filter their money back into the UK.
For instance, financial news website This Is Money published a list of companies who were the highest UK taxpayers in 2013, but paid the most overseas – including names like Shell, BT, Tesco, HSBC, BP and Barclays.
More so, 12 British-born companies, including Rolls-Royce and Vodafone, paid no tax here at all. So where is the line – how do we measure fairly what companies owe, and remove the clandestine undertones of the topic of tax?
What does this mean for you?
With our new Budget announcement, UK businesses now pay the lowest Corporate Tax rate of any of the majorly advanced industrial nations (the G7), clearly implying that our government is ready to take on and help grow a lot of new business – but we can’t have the funding without the big players.
Perhaps it’s just a case of finding out what percentages are fair – from companies paying 60%, to other companies paying only one pound for every seven that’s distributed overseas, UK economic input is distinctly uneven. Something’s gotta give – and only then will tax stop being a dirty word.
