My take on Taxes.

I’ve been avoiding writing about Politics recently. Unless we are friends on Facebook, then you’ve probably seen my daily articles posted about new breaking political atrocities.

That’s how it feels, it’s as though every day, every week, another story is published which shows us just how bad our current (UK) government is. Yet, despite the marches, the protests, the petitions, the media outcry, very little can be done. Which leads to disenfranchised voters.

IMG_2269A friend and I got talking yesterday morning about tax. Tax. A wonderful conversation to have over breakfast on a Sunday morning.

Hmmm. Never the less, it is a topic which I have struggled with many times. Not the tax itself, but why so many are allowed to just…not pay.

That’s what it comes down to. The British government system has Allowed them to not pay tax, so they’re not, but now people are upset about it. What always stands out to me is the language used…

“the HMRC will ASK google, they will ASK Starbucks, Facebook, Amazon, to pay their taxes.”

And if they don’t?

They could face up to £22, 140 annual penalty.

Huh?

That may sound like a lot of money just for a fine but these are MULTIMILLION COMPANIES! That is spare change for them, especially if it means they get out of paying the extra £600,000 tax or whatever it is.

Were you ever asked to pay tax? No. Whether you are employed and use PAYE taxes or self employed, you don’t get a choice.

I had to do a self assessment a few years ago, which was silly as it was only due to being out of the country for a couple of years, but a requirement regardless. It was so complicated as none of the boxes applied to my situation and even the phone agents were making guesses. I returned it a few days late due to this and got a £100 fine even though I didn’t owe them any taxes. IMG_2177

If Facebook return their tax records late it’s a £300 fine. £300. That’s only three times what I got fined, but I assure you they earned a lot more than three times my income!

Here is an example of our current taxing system.

A woman living in Britain earning £45,000 a year as a teacher will pay 40% tax.

40% of £45,000 is £18,000.

So each year, this teacher will pay £18,000, leaving herself £28,000 or £2,333 a month. Or £3750 if she didn’t pay taxes.

A corporation earning £1,000,000 a year in profit will pay 20% tax.

20% of £1,000,000 is £200,000.

So each year this company will pay £200,000, leaving themselves with £800,000, or £66,666. Or £83,333 if they didn’t.

It’s fine to talk about these corporations earning and paying in the millions. But when you break it down to real earnings on a  monthly basis it’s horrifying.

Why is a teacher, tasked with educating the next generation paying 20% higher tax rate than a million pound company? It just doesn’t make sense.

The difference between £2,333 and £3,750 in actual living terms is HUGE! That would make the difference of being able to get out of debt, send your kids to a better school, still afford the bills if you partner becomes unable to work.

Whereas, if you are already earning £66, 666 a month, taking that to £83,333 means what? You can buy another fancy car that month? Or spend a fortnight on a private island?

The Socialist in me cries.

Yes okay, those businesses are offering jobs, services, even sometimes infrastructure, which contribute to Britain as a whole.

But then what would happens if the government Insisted they pay?

IMG_2102Amazon employs about 8000 people in the UK. That’s quite a lot of people. What would happen if they decided to move their business somewhere else due to increased tax?

Well, they would lose business. Postage time and fees would increase. Brand reliability would decrease. Reputation would decrease. This would all pave the way for an alternative amazon company opening up in Britain.

Jobs would be created out of the companies moving in to fill the space left by amazon.

We live in fear of these companies. Consumers, tax payers, they like things easy, convenient, fitting with modern lives. It could seem quite daunting I’m sure, especially for the people employed by all these corporations.

But if our government is Asking them to obey the law, the same laws that you and I follow, then who is running our country? Because it’s certainly not a democratic government we were led to believe were fairly elected by the British population.

If you have any suggestions let me know 🙂 Check out more links below.

-Auburn xx

Benefit fraud vs Tax Avoidance

Ethical Consumer