To Brexit or not to Brexit?

The referendum announced last week by the British Prime Minister David Cameron immediately led to lines being drawn and allies being sought in the corridors of power. 23rd June is the date which means we'll have a lot more sniping and political manoeuvring as individual politicians decide which side they want to support and we'll have a lot more 'analysis' from media types who try and explain why so-and-so has decided in what way they have.

Image taken from here

If you're into this sort of thing it makes for fascinatingly great reading/listening as individual and personal ambitions override, get conflated or get confused with national responsibility. Almost like a real-life Game of Thrones except there's an even wider range of characters and plots are even more convoluted. Naturally, it's expected that politicians and business leaders will make noise over the issue but it seems like everyone and their mother will want their view heard. Just today we had some scientists who want to stay in and some who want to get out.

In many respects the arguments for and against are very similar to those we heard in the Scottish Independence referendum. Very simply Leave the Union and it's all either uncertain or a reclamation of our nation or stay in the Union and prosper as you have been or be forever bound to your foreign overlords. In the Scottish referendum the Stay campaign won and life generally continued as before except in a moment of panic the British government proposed to implement a whole raft of policies which would benefit Scotland - though as I write I'm unsure if these have been followed through. I suspect not entirely.

I expect similar for the EU referendum. Up until now David Cameron has been using the threat of Brexit to help in re-negotiating the treaty that keeps the UK in the EU. Having now concluded the negotiations he has to deliver his side of the bargain and keep the country in. So he'll make his case and the Leave campaign will make theirs and with every passing day the arguments will become more and more hyperbolic and doom-mongering and end up confusing most of the populace who will get annoyed and I think will end up voting along two lines:

• Stay in for continued economic security.
• Leave and bravely reclaim your country.

I'm not seeing these are correct claims (we saw them used in the Scottish Referendum as well). We'd probably have just as much continued economic security outside the EU and we'd still have to deal with Europe for trade and politics even if we did leave. But I think it's too much to ask for the average voter to care enough to read every single viewpoint and come up with a reasoned and balanced view. People vote for government (or at least have a government) so we don't have all have to deal with the politics of power and can free up time to be productive instead. Either way, there will be lots of spin on both sides as each attempts to persuade but it's worth remembering that since neither side actually knows what the future holds it's all a lot of bluster and bluff and people saying what they think is best - not what they know is best. I fully expect that after the vote people on different sides will point to events that happen and use them as proof their side was correct - hindsight is a wonderful thing.

So anyway, I'm calling a 65-35 vote in favour of staying in. From what little I've seen and read of the world, I'd say people care more for their perceived economic status than their perceived independence. As yet I'm undecided which one I care more about but certainly I'll be voting!

Make sure you register to vote.

Previous post: Tax and Google

Tax and Google

On 2 February 2016, Alphabet (Google's parent company) overtook Apple to become the most valuable company in the world. Valued at over £320 billion it's an absolutely huge company with fingers in a huge number of pies around the world. However, this extraordinary achievement was overshadowed in the UK with Google's ongoing tax avoidance saga.

In a very quick nutshell: Google recently agreed a tax bill of £130million with the UK taxman (HMRC) to cover underpayment for the past decade. No sooner had this been agreed than it was treated as an outrage by many groups. Two major reasons were cited - that it was still an underpayment given the scale of the company's activities in the UK and it was rumoured to be a significantly lower figure than that agreed by Google France with the French taxman.

This past week the head of Google Europe, Middle East and Africa (EMEA) was hauled in front of the UK Parliament's Public Accounts Committee to answer questions question about Google's tax arrangements. Judging from all the press reports it seems it was quite a fierce grilling but didn't actually get anywhere to persuading Google to cough up and pay a bigger bill. There was some bluster and weak attempts to make it look like Google was a nice fluffy company which wasn't trying to avoid paying tax but Google's main argument was more or less "we're paying what we are required to pay by the laws that are in place and we've agreed the figure with HMRC".

The line of defence is pretty robust. However they've gone about it and whatever clever accounting methods and legal practices they've used, they've come to an agreement with the tax collectors/investigators and the company intends to pay that figure. The government can enforce a tax payment - it is not a charity that is raising funds thanks to its donors' better nature. Those who presume to rule in government have set the tax system and it's on them to enforce compliance. If the tax system is complicated enough that sharp accountants can find loopholes and legally avoid paying tax then that is a problem with the tax system not with the company that's trying to reduce its' tax burden.

If the government is unhappy with its tax receipts it can change the tax system - though it will then have to live with the consequent effects on how businesses and people change their behaviour, for example by moving their trading centres to different countries. Changes are starting to happen - there are now moves within the EU to clamp down on the avoidance privileges enjoyed by international companies who have been using the different tax systems in different countries to their benefit. And since the whole EU is being coordinated together on this companies can;t simply hop from one country to another to get around the change. Seems to me like a good move and a far more effective way to ensure companies pay an acceptable* level of tax than lecturing them on how immoral they are for avoiding tax.

* Acceptable to the tax collectors. Whatever level they do pay someone somewhere is going to be unhappy!

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