Lord Lawson supports tax on firms’ sales, rather than profit

Did anybody think they would see the day in which This Blog praises Lord Nigel Lawson?

Well, he is to be praised today for coming out in support of a tax on companies’ UK sales, rather than their profits.

The suggestion was floated by a commenter on Vox Political, and has since been taken up by politicians.

Lord Lawson told the Telegraph: “It is profoundly unsatisfactory that corporation tax has to be collected from large multinational corporations by a series of ad hoc compromise deals, as we have once again seen with the Google affair.

“It is also grossly unfair on smaller businesses, who are unable to shift profits between tax jurisdictions and have to pay the full amount due under UK law.”

He’s absolutely right, and there’s nothing more to be said about it…

… Other than that – of course – the current Conservative Government won’t take a blind bit of notice.

Corporation tax should be replaced with a levy on firms’ UK sales, according to the former Chancellor Lord Lawson.

It was “unsatisfactory” tax had to be collected from big firms through “ad-hoc” deals, he told the Telegraph.

His comments come after an agreement for Google to pay £130m in tax dating back to 2005 was condemned by critics.

The government and HMRC defended the deal and the Chartered Institute of Taxation said corporation tax should not be abandoned.

Labour has called for the public spending watchdog, the National Audit Office, to investigate what it criticised as a “sweetheart deal”.

Earlier this week, the European Commission said it was considering how to respond to a letter of complaint from the SNP about Google’s tax deal with the UK.

Source: Google row: Tax UK sales not profit, says Lord Lawson – BBC News

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8 thoughts on “Lord Lawson supports tax on firms’ sales, rather than profit

  1. daijohn

    See Richard Murphy’s latest blog – Tax on sales only is wrong and would ultimately fall on the poorest on most vulnerable. Corporation tax is a tax on the gain of capital not sales.

    1. Mike Sivier Post author

      Perhaps it is worth the threat, if it brings the tax avoiders into line. Peer pressure could possibly manage it, if other firms realise the actions of the tax avoiders will bring them under threat with the imposition of a turnover tax?

  2. Chris

    This sounds like a good idea until you remember that many businesses when they start up find that their sales are barely covering their costs – it can take several years to start making a profit. To calculate tax based solely on their sales would make the business unviable. There has to be a better way of taxing these global companies but I don’t think it’s this.

    1. Mike Sivier Post author

      Oh really?
      And at what rate would such a tax be unviable? Any – as you seem to be suggesting?

      1. Joan Edington

        Much as I want all these multi-nationals to pay their fair whack of tax, I have to agree with Chris on this one. The loopholes should be closed rather than moving to a tax on sales which, if it was to be fair, would be very complicated.

        For example let’s take an arbitrary 10% of sales. If applied to the likes of Google, Starbucks etc, the Treasury would be well in pocket and the companies barely notice the difference. If, however, that same rate was applied to a small company that worked on a 5% profit basis, the tax would obviously bankrupt them resulting in no tax at all for the Treasury next year, with employment up to boot. It is supposed to help small businesses but, enacted in the Tories usual ill-thought-out manner, could actually do the opposite.

        For the system to work, it would have to depend on the profit margins of individual companies and different rates being applied. As I said, very complicated.

      2. Mike Sivier Post author

        They manage okay inflicting such a system on the citizens of this great nation via income tax.

  3. Terry Davies

    if there is a legal amount required then prison should be the only alternative option to payment. CEOs should be subjected to this accountability.

Comments are closed.