Boris Johnson has said it is “absurd” to blame corporate giants for the “derisory” sums of tax they pay in Britain, as most companies are using legal measures to minimise their bills.
Although the London mayor “largely agrees” that tax loopholes and dodges should be scrapped, he compared criticising the likes of Apple and Amazon to “blaming a shark for eating seals”.
Writing in The Daily Telegraph, days after Google reached a deal with HMRC to pay £130m in back taxes, Mr Johnson said: “It has never seemed fair that some of these companies – no matter how wonderful the service they provide – should be paying so much less in tax than the high street tea rooms and bookshops they have pulverised.”
Despite this, the Conservative MP stressed that “the problem does not lie with the firms”, adding: “We should recognise that the fault in the whole affair lies with our national arrangements – our own system for not getting a fair whack from the tech giants.”
Mr Johnson praised Chancellor George Osborne for making progress with the Google settlement, but urged: “We now need to go further. We want, need and deserve these companies somehow to pay more tax in the UK.”
The mayor’s newspaper column comes after critics alleged that the extra tax to be paid by Google was “trivial” compared to how profitable the search engine giant has been in the UK since 2005.
This backlash to the “sweetheart deal” has been led by the Labour Party, with shadow chancellor John McDonnell claiming that the payment amounted to a tax rate of about 3% – which was “unacceptable when most people in this country pay much more”.
Mr McDonnell added: “If you look at the amounts of profits this company has made in the last 10 years, some commentators have said they would have expected the payment to be something like seven to 10 years more than what they have actually paid.”
The agreement with HMRC does mean that from now on the firm will pay higher tax and they have not been fined or punished for tax avoidance.
Following the deal, Mr Osborne suggested that it could result in other large firms reaching similar deals with the taxman, although he would not be drawn on whether Facebook could be one of them.
In October, the social media company defended its tax arrangements – even though it only paid £4,327 in corporation tax for the whole of 2014.
Source: Sky News
