RAID, short for Recently Acquired Income Deficiency is the latest acronym to hit us squarely in the pocket I might add for some less than popular bankers. Whilst bankers would once fly off to some far flung destination, 5-star+ and with a brand new Porsche waiting in the garage on their arrival once they have pocketed the January bonus. Now threatened with ‘divorce’ from their screen/phone/desk bankers now claim the January bonus is actually a charitable contribution so that they can maintain their former excesses. I’m quite sure that its a lonely place to dwell – an income deficient banker that is, but I’m also equally convinced that no so many of us would shed a tear, apart perhaps from the spouse of the afor said income deficient banker, or the car dealership or the swanky restaurant or the mortgage company.
Now what about the companies we all work for and are served by? They’re in a reputation crisis at the moment; rogue employees bringing companies to their knees, oil spills, and faulty cars all afflictions of 2012. But honestly are these the things that are gonna enrage the public? I don’t think so! Well not until the fury surfaced as reports surfaced that US companies were seen to be dodging UK tax, yes I’m talking about Starbucks, Amazon and Google here. The effect on the public was nothing short of remarkable.
Not unexpected in an age of austerity, Twitter and Facebook. The reactions…
Amazon and Google – no change! they haven’t broke the law after all so why should they.
Its reported that Google in-spite of the “don’t be evil” motto has hidden as much as $9.8bn in a shell company based in Bermuda. You make your mind-up on this one, does that look like a tax dodge or just a company being prudent?
Starbucks took a radically different tack, you have to remember that people were actually boycotting their shops, not sure if or how that influenced their actions, you decide. But they have decided to make a voluntary contribution of £20m to HMRC. Now frankly either they owe the money or they dont, it almost looks like an admission of guilt. But more importantly folks started to buy coffee again, so from a marketing perspective; GENIUS IDEA.
Starbucks smelt it, it smelled like humble pie and they liked it (well it looks that way). They effectively have made a charitable contribution to a second rate, ailing nation, but it sets an odd kind of precedent if you ask me. Should we all treat tax as optional?
I know given the opportunity I will avoid whatever direct taxation I can.
Banks – split them up, stop them from gambling with depositors money. But heck, reward individual success like never before, nothing wrong with being filthy rich, they will spend it.
Starbucks et al – sales tax applied at the point of sale!
Direct Taxation – once a person reaches a certain level of income they will have the resources to avoid handing over chunks of money in tax so you have to be clever. Tax the stuff they buy at the point of sale. Whilst they’re earning they’re motivated, whilst they’re paying direct tax they spend too much time avoiding it and not creating wealth.
A final point; some time ago a friend beat me in a one-on-one road cycle race, I was devastated, distraught, I should have won! But they explained that losing teaches the lesson that it ain’t nice but you can learn from it, the trick is not to repeat it too often. They then said (by way of taunt) that winning isn’t everything, its the only thing!
I beat them the next time, and beat them well!
The point is this, we all, individuals, companies, nations will get it wrong, miss the point, fall some way short of the mark, basically screw-up at some point but we have to move on and become a winner.
I don’t like humble pie and I’m not sure I know anybody who actually does.