G,ooo,ooo,gle

2 Jun 2013

So, a committee of MPs continue to throw allegations at Google to try and make them feel like a big evil corporation guilty of dodging taxes, and it might seem that these MPs have hit the nail on the head, but we must recognise that there may be other variables to consider.

Take the situation on a basic level then yes, the fact Google paid £10m on revenues of £11.9bn between 2006 and 2011 would amount to them being all together a bit evil and would suggest some seriously illicit behaviour. To put this in perspective, collectively those on an average wage, and therefore qualifying for the basic tax rate of 20%, would only have to earn £50m before £10m is put into the taxman’s pocket.

 

So it could be fair to say that Google's corporate motto of "don't be evil" may have been thrown out of the window when it came to submitting their tax forms in the UK, but I am not so sure it is as simple as that. Of course Google are not the only culprits, other Internet giants such as Amazon have also been proven to be exploiting some pretty big loopholes to try and get away with paying lower taxes, with the online retailer paying a measly £3.2m tax on £4.2bn earned.

The natural response to these sorts of figures is probably one of annoyance and anger, especially when the cocky boss of Google, one Eric Schmidt, nonchalantly shrugs off criticism and claims that he is "perplexed" over the row and argues that his company pays exactly what they are legally made to do so. I think it would be easier to swallow if Google felt even a little bit guilty about what they are doing, it could be argued that Mr Schmidt has a point, his company is not breaking any laws, they pay what they are required to and not a penny more, but do they not recognise that this amount is hugely out of step with ordinary society? Of course their line of argument shifts the blame to the government and the revenues service, after all it is the responsibility of a government to collect taxes rather than being on civilians and businesses to hand over their money. Ultimately, Revenues and Customs and Cameron's coalition should be standing up to their responsibility and closing the loopholes so these big businesses are forced to contribute more.

Still however I believe there is another factor in play, and this is one that has not really been explored thus far. This factor is just how much our modern society relies on these Internet giants. Look at the case of Starbucks, who were caught doing exactly the same as Google and Amazon. There was massive public backlash, a co-ordinated campaign and pickets outside a variety of stores. Starbucks felt the public backlash and contributed more to the taxman, even though they had no legal obligation to do so, they donated an extra £20m to the economy. Okay, while this figure still doesn't bring them up to what could be considered as proper it is a step in the right direction and was something they did not have to do.

This form of direct action from the public cannot be taken against the likes of Google and Amazon however, due to how embedded their products are to our daily lives, which are increasingly online. Aside from a change in law from the taxman, the one thing that would force these companies to contribute more to the economy would be a loss of users, which would hurt their profits enough for them to take a hit and contribute more, so the users who left would return. It was possible to do this to Starbucks, where in the UK we do not hold the kind of commitment to the brand as our American counterparts; I think most people would be just as happy to drink in a Costa as they are in a Starbucks. 

Unfortunately the same does not apply to Google, we are all in with Google, even when there are controversies over issues like privacy we continue to return to the brand, and this is for the simple fact there is not a viable alternative. There are other search engines out there, Microsoft's Bing for example, but in reality none of them possess the quality of Google. Furthermore, on top of this are the masses of other Google products that we depend on, our email, our phones and even for some our income all comes from Google. This causes Google to have the sort of attitude that says “so what” to tax avoidance, they know that they’re the best at what they do and they know that no matter what illicit activity they get caught doing they have too strong of a hold on the Internet for these activities to turn users off.

Google have built up a massive empire and have created dominance on the infinite platform that is the Internet, which is a massively impressive feat. Sure they should probably feel morally obliged to contribute more of their earnings, but if they can legally get away with paying less can we blame them for doing so? If me and you were in the same situation we can claim that we would do the right thing and avoid tax loopholes, would we really? Wouldn't we want to impress the CEOs and attempt to create the biggest profit margin? As I mentioned earlier the impossibility to shake Google from everyday life must also be considered when this whole tax argument is raised, they know they won't receive the public backlash that Starbuck received, but again can anyone really be blamed for this dependency?

Ultimately it is a poor tax system that should be accredited for the bending of the rules and as irritating as it is agreeing with the nonchalant opinion of the Google boss, it is up to the government to change its rules if it expects more money to go to the taxman. A group of MPs, who obviously have a clear moral conscience, moaning at some business representatives (which is the current approach) isn’t really going to achieve anything. At the same time however our dependency on these large corporations should be considered and there could be an argument that if we were more willing to boycott these big corporations this direct action from the public could push them into contributing more of their supposed fair share to the economy. Maybe I can suffer Bing after all.

By James Read

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