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November 14, 2012

“Immoral Tax Avoiders” Amazon, Starbucks and Google Beat Out Petraeus for British Tabloid Headlines

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British MP to Google: “We’re not accusing you of being illegal we’re accusing you of being immoral.”

While the American commentariat (including FDL, guilty as charged) were obsessively sniffing the Petraeus panty drawer, the British tabloids were in high dudgeon over the appearance of “immoral tax evaders” Google, Amazon and Starbucks before Parliament’s Public Accounts Select Committee.

According to Charles Arthur, Technology Editor of the Guardian, “Select Committees are the best fun you ever get in Parliament. And sometimes they’re brutal.”

Arthur compared Committee Chair Margaret Hodge and the other MPs to “wizards who are zapping the Muggles appearing in front of them.”

Full video of the committee’s proceedings here. The Financial Times liveblogged it here.

British MP’s grilled Google’s Matt Brittin over reports that Google had paid just £6m in UK corporation tax on UK revenues of £395m in 2011.

Also on the hot seat for tax evasion were Andrew Cecil, Amazon Director of Public Policy, who was blasted by MPs for failing to answer questions.

Troy Alstead, Starbucks Global Chief Financial Officer, was left scrambling to explain how Starbucks had filed losses each of the 13 years it has been in business in the UK.

“You’re either running the business badly, or there’s some fiddle going on,” said MP Austin Mitchell.

Google’s Britten evoked the strongest ire, however, when he denigrated the work being done for the company by UK workers, and said it could be outsourced:

Guardian tweet 1

MPs lashed back that Google was running a “tax avoidance scheme” rather than adopting a business model where they made a real profit:

Political economist Richard J. Murphy said “now we have Google admitting it stacks cash in Bermuda and does not actually pay the US for services it supplies.”

One MP called Google a “giant executive share bonus generation scheme — not an exercise in creating shareholder value.”

Google operates its European business out of Ireland because of the favorable corporate tax rates. Recently French tax authorities wholloped Google with a $1.3 billion tax bill for money funneled between France and Google’s Irish holding company for the past four years.

There seems to be a trend of cash-strapped countries forced to chose between highly unpopular austerity measures or collecting a fair share of taxes from large multinational corporations doing business in their territories, and choosing the latter. Sadly, the US does not appear to be one of them. Many “grand bargain” proposals allow US orporations to evade paying taxes on foreign earnings when they bring profits back to the US.


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