Tax? I’d rather not!

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The Starbucks Logo on a wooden wall outside a store
Tax? I’d rather not!

Everyone, including students, has what is called a Personal Allowance – the amount of money you’re allowed to earn each tax year before you pay Income Tax. The tax year runs from 6 April to 5 April, and for the 2015-16 tax year the standard Personal Allowance is £10,600 – if you earn less than this, you don’t have to pay any Income Tax at all.

But good news… In the 2016-17 tax year the Personal Allowance will rise to £11,000 which some argue is a waste of time – but what could you do with that £400? Well, buy an iPhone 6, an Apple Watch or even a  55″ flat screen television!

What would you say if I told you that you would never have to pay tax again! I am sure your response would be one of great jubilation and surprise – but how can it be done? I hear you cry! Well others seem to have managed…

Starbucks announced in June 2013 that it would pay £5,000,000 in tax with a further instalment of £5,000,000 in 2014. We should be grateful – they paid nearly as much tax in 2015 as they did in their first 14 years in the UK. It’s lucky their customers don’t have to wait so long for their coffees.

Starbucks is not the only one… Caffé Nero has not paid corporation tax in the UK since 2008, despite racking up sales worth £1.2 billion.

Ballons advertising Fair Tax Town
Balloons advertising Fair Tax Town

Starbucks claim that “the business overall continued to make a financial loss in Britain.” Do you believe that? Perhaps the “Dutch sandwich” should be added to their uninspiring array of delicacies.

Dutch sandwich. Wikipedia define the term as “a tax avoidance strategy that some multinational companies use to lower their corporate tax liability”. The strategy uses payments between related entities in a corporate structure to shift income from a higher-tax country to a lower-tax country. It would take me a long time to try to explain how it works but watch this 3 minute clip – it explains it very well.

Coffee Cups advertising Fair Tax Town
Coffee Cups advertising Fair Tax Town

Yet, in the land where sheep are allowed to roam and birds to sing, there is a dark tax avoiding town. Crickhowell. The Big Corporate tax avoiders of Britain should be worried as the businessmen of this small and pretty rural retreat are angry and they’re fighting back! They have set up what is known as the “Fair Tax Town” brand and their aim is for every business in the UK to pay a fair share of tax (as decided by the government not themselves!). They have created their very own tax sandwich “Isle of Man – Netherlands – UK” – so they too do not have to pay tax.

Proving the point that it can be done is one thing – and drawing attention to the problem is another, but then actually avoiding tax looks very much like gamekeeper turned poacher, and in a part of the world where poachers used to be hung, they are playing a dangerous game.

I think that the idea of the people of Crickhowell changing the rules on tax avoidance is absurd! The idea is good but the delivery is flawed. Every business should pay their fair share of corporation tax but the people of Crickhowell should stick to farming and leave the government to sort out who pays tax and who doesn’t.

Is it time for a revolution against Big Business? Even if it were possible, it will not happen!

The logo of Fair Tax Town