Tuesday, December 07, 2010

More taxwash from the City of London

We just came across this 2009 public relations exercise by PriceWaterhouseCoopers on behalf of the City of London. This is what they say:

"The study estimates the Total Tax Contribution of the FS sector in the financial year to 31 March 2009 as £61.4bn, or 12.1% of total government receipts for all taxes."

We are sorry to report that journalists up and down the country swallow and regurgitate this puffery. This is PWC's Total Tax Contribution rearing its ugly head once more. As we have remarked before, it is just bogus. Bob Mcintyre of Citizens for Tax Justice in the U.S. exposes the Total Tax Contribution concept as well as anyone can.

"PwC is trying to get corporations to pretend their tax bills are bigger than they really are, by counting not just their actual taxes, but also taxes they don't pay, such as those paid by their customers, workers, suppliers, and so forth."

And note our recent blogging, in the same vein and in the context of the SABMiller story. It is another example of "taxwash" that PWC is flogging to anyone who can afford its services.

The real figure for the City of London is the one for corporation taxes: £7.6 billion - not £61.4 billion. 1.5 percent, not 12 percent. Of, if you are being generous, you include extras like air passenger duty, the congestion charge for London, customs duties, stamp duty land tax - and a few others, at £26.1 billion, not £61.4 billion.

These institutions, which have clamoured for taxpayer bailouts and then laughed as they return to bonuses-as-usual, contribute relatively little to the government in terms of taxes, contrary to what PWC would have you believe.

Don't believe the hype.


Blogger Tim Worstall said...

"The real figure for the City of London is the one for corporation taxes: "

I really don't think you want to say this. For doing so is stating that all employers' national insurance is being paid bu the worker. Meaning that base rate tax on earnings is 45% or so, top rate 63%. Enough even for you guys, surely?

And, of course, if you're going to talk about the incidence of the other taxes then you really must talk about the incidence of the corporation tax. Which, as we know, isn't on the company.

Which rather obviates your entire campaign. If corporation tax isn't on companies then asking companies to pay more tax, something they cannot do in the first place, is a rather Quixotic errand really, isn't it?

4:37 am  
Anonymous TJN said...

As we have repeatedly demonstrated, the incidence argument is a joke. It is a lobbying tool to bamboozle governments into cutting corporate taxes -but it is without foundation. See, for example, here
and here
The argument just doesn't work, unfortunately. Among many other things, if the incidence isn't on the company, then companies won't take the trouble to avoid tax, will they?

2:15 am  

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