The Bedroom Tax and the Google Tax: A sad reflection of our government’s priorities

31 Jan 2016

 

This week, HMRC and the government struck a deal with Google, where the latter agreed to pay £130 million in taxation – the most that Google has paid in tax in the UK for ten years. It represents about 3% of all the tax that should have been paid by Google over the last decade, if the company hadn’t used perfectly legally yet morally questionable tax avoidance methods.

 

Also, this week, whilst Google was able to negotiate how much tax it pays – unlike the vast majority of small and medium sized businesses in the UK – two families won their cases against the Bedroom Tax in the Court of Appeal. The first case was that of a domestic abuse survivor whose home had been adapted to include a safe room due to the potential risk to her life. Her safe room was subject to the Bedroom Tax. She being taxed for the right to feel safe. The second case was of a family with a disabled teenager who had a second room for nurses to stay overnight. The DWP and Pembrokeshire Council classed this as a spare room. According to some estimates, there are over 300 people in similar situations. There are also countless families who are being punished by the Bedroom Tax due to the government’s woeful housebuilding programme; there are simply no other suitable small houses in their area.

 

The fact is that this week has been a perfect illustration of the attitude of the government. Not just the current Conservative government but every government since 1979. The fact that Google has paid just 3% tax for the last 10 years, yet the Bedroom Tax has resulted in some of the poorest families losing 14% of their housing benefit payments, is a damning indictment of our political establishment. Some of Britain's most desperate families are being forced to ‘pay down the deficit’ whilst multinational corporations amass exorbitant profits. But this is not a recent phenomenon. In the 1980s, Margaret Thatcher dramatically rolled back the welfare state and fuelled the self-nourishing expansion of the private sector. New Labour were complicit in this trend. Private profit was once again prioritised over public interest as Blair and Brown allowed financial institutions to operate with dangerous neglect – which ultimately contributed to the Great Recession of 2007-2010.
 

There's no arguing that domestic abuse victims and disabled teenagers are amongst the most vulnerable people in Britain. Why are Google’s profits more important than the wellbeing of the poor? Moreover, isn't this situation unfair on small businesses who can't afford an army of financial advisors? Small local businesses are disadvantaged when it comes to taxation, yet the government has the cheek to say that it is on the side of small business owners. When it comes to fraudulent benefit claims the government is keen to name and shame "cheats and scroungers", yet the government acts with awe and respect towards a company that cheated the taxman out of £1 billion.

 

Now, you might say "but tax avoidance is legal, whereas benefit fraud is not" and you're absolutely right, but you should also ask the question "why?" Why is it against the law to steal benefits but perfectly legal to avoid paying over a billion pounds in tax? Why do we have loopholes? Why are vulnerable individuals effectively taxed for having a spare room whilst multinational giants get away with paying just 3% tax? It can't just be a quirk of the system, because it'd be a huge quirk and one pretty easy to fix. It's almost definitely deliberate. We've seen similar issues with corporation tax – and in some cases income tax (Jimmy Carr and Gary Barlow, for example). It can't be an accident that for decades the richest have been able to legally avoid tax with no consequence other than public ridicule yet poor people cannot. And let's not forget that a lot of the companies who fail to pay tax use services funded by ordinary taxpayers. Indeed, they rely on the state education system for employees. They position their stores to exploit state infrastructure such as transport networks. They benefit from government apprenticeship schemes paid for (you guessed it) by British taxpayers.

 

So, ask again: "why are they allowed to get away with it?" Because rich individuals and the transnational companies they own have leverage over the political system. They are able to frighten our leaders with threats of redundancies and relocation. The poor and vulnerable can’t offer similar threats. They are powerless, and they are consequently exploited by the powerful.

 

 

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