Crickhowell first Fair Tax town?

By November 13, 2015News

Bag 0440 2014-02-14

 

The media is buzzing with news that a Welsh town has supposedly ‘gone offshore’ in protest at tax avoidance by multinationals such as Starbuck and Google.

In a programme due to be aired on BBC2 on Wednesday 20th of January, local traders from Crickhowell in the Brecon Beacons shine a light on the dubious practices normally only available to large businesses by attempting to copy them and set up an offshore structure of their own.

It’s a classic ‘David vs Goliath’ story that has caused quite a stir but what happens next? Will encouraging towns to go offshore lead to real change? We’re not convinced.

When big businesses and wealthy individuals avoid tax, they undermine the very social contract upon which our society is based. As citizens, we’re rightly outraged, and think “if I have to pay, why don’t they?”.

However, if that sentiment then turns into “well if they’re not, I’m not going to either” which is what the Crickhowell businesses seem to be saying, it could turn into a very dangerous game indeed.

Fair Tax is about more than just ensuring everybody gets to play by the same rules – although that’s clearly important. It’s about ensuring that everybody contributes their fair share to society, so we can all benefit. Tax not only pays for schools, hospitals and vital services but like it or not, it’s also very literally the glue that holds us together as a nation of law abiding people.

If ordinary people start joining the avoiders, we end up undermining the tax system and the society on which it is based, rather than forcing the real culprits, government and big business to change their ways.

The Crickhowell businesses say they want to pay corporation tax – and rightly so, as this is the only tax that allows the community to share in the profits they helped create.

Therefore while we are happy that a new group has joined the debate on tax justice, a truly Fair Tax story has a different ending – one that ditches the sleaze, and embraces a longer term solution that we can all be a part of.

We have been working in public and behind the scenes for many years now to create truly Fair Tax towns, ones that don’t embrace the tactics of the race to the bottom and instead seek to involve businesses and others leading by example to embody the changes that they want to see.

We invite all those involved in this programme (from the production company to the Crickhowell shops) to consider getting Fair Tax Mark accredited and participate in our campaign.

Of course they will have to wind up the offshore structure and instead join a growing movement of businesses including the likes of SSE, Lush and the Phone Coop that believe paying tax is as the heart of a fair society.

Imagine if the whole Crickhowell chose to only buy from Fair Tax businesses? That not only directly impacts the avoiders, but sends a powerful message to government too – without undermining the tax system or taking unnecessary risks. It may not quite be a happily ever after ending, but it would be the first step to a more positive future.

31 Comments

  • “Because Fair Tax is at the heart of society” is a belief we share in Crickhowell Fair Tax Town and we have never claimed to be the first to hold this view, but we are the first to sit down with the head of Corporate taxation and his team at HMRC 100 Whitehall and ask ”what it would take to level the playing Field”. You can see his response when the program is aired by the BBC.

    Our difference in strategy not objectives. Forgive me for saying, since ‘Love Fair Tax’ is hardly a household name, perhaps you might consider that appealing to people’s values may not be working. Perhaps the protest needs to have teeth and that’s what our Fair Tax Town strategy and movement has introduced. Time will tell who is right but we are trying to achieve the same thing, Fair Tax to support social justice.

    Breaking with convention and short term tactical approaches are sometimes necessary to challenge and change the status quo. Does ‘Love Fair Tax’ have a list of tax successes to share that would convince you are creating change of corporate companies. Can you supply the names of the top 100 companies that are changing their tax policy?

    We have established that tax avoidance will always be available and attractive to the elite, no matter what economists, tax experts, governments or the OECD do. Not until it becomes a moral issue that is repugnant to consumers, customers and employees of the offending companies, will anything change. There will always be avoiders and evaders because the public do not take a moral stance on Corporate Tax because most people are unaware of the scale and impact of this custom and practice. The estimated UK Corporate tax gap is >£34 Billion a year.

    But this Tax Avoidance is technically legal and Corporations with size and scale negotiate with HMRC on a one to one basis. They call this ‘man marking’ and is an acceptable strategy that allows company’s like Amazon to ‘shape’ their negotiated tax liability. They even use them as focus groups to shape future tax strategies. If I tried this they wouldn’t even take my call. Pay late and I’m fined, whereas for Amazon it would be part of their tax strategy and result inevitably in a lower tax bill. Sound fair? Of course not but good luck in persuading anyone to change this by carrying a ‘love Fair Tax’ bag. You will spend the next 100 years on this journey. In the meantime, I will pay 7 times the Facebook UK tax bill next year and they turned over £233,000,000 revenue for the same period and paid around just £5,000 tax.

    Most experts accept that tax avoidance, will always lag behind the innovation and spending power of these Corporations. It’s just like illegal drugs and the power of the drug cartels to buy immunity. The same is true of the multinationals and tax avoidance, they will always be able to outspend and out-expert the tax authorities, often with recently retired HMRC officials. The only difference is that unlike illegal drugs they are not breaking the law, but the cost to society is just the same, on this we appear to agree.

    The Fair Town Tax strategy is not to get bogged down by the ‘tax technicalities’ but to make people ashamed of working for these Corporate tax ‘avoiders’. So for example: to criticize and name and shame Facebook on their own platform; damage the Starbucks brand by store protests; boycott Subway; hit the Amazon share price and let Bono know that even if he does want to save the planet, he still needs U2 to pay fair tax and stop being a hypocrite.

    All these companies have Corporate Responsibility Statements in place that gush about being responsible corporate citizens that pay their way. What they don’t say is that HMRC allow them the space and opportunity to avoid tax legally, so they can say, what they say. What they say may be true but it is a constructed truth full of deceit, a half-truth, that is completely cynical. The consequence is, they do not materially contribute to hospitals, education and society to the full extent they should, given the wealth they accrue. They leverage the benefits of our government’s authorized tax leniency but without supporting the very communities and consumers that create their companies and shareholders’ wealth.

    However here’s the irony, these companies bizarrely have a duty to their shareholders, under corporate governance best practice, to legally avoid tax, which is often pre-negotiated with HMRC is OK. If they didn’t do this and their competitors did, this could create legal challenges by activist shareholders for not acting in their best interests. So , which lunatic is running the asylum?

    Our Strategy is not a stunt, far from it. It is to change corporate behaviour by putting their brands at risk from a position of strength, which may mean threatening to collapse the tax system. These brands are priceless and their Achilles’ heal. Some experts predict we may get defeated in the ‘tax detail’ at some stage but what you should understand we believe is that by the time that happens, we will have raised levels of consciousness and we hope, levels of disgust in this unfair practice to create a movement or a coalition of the willing that creates real fear in the politicians minds’ and in George Osborne’s strategy of using SME’s to drive growth and therefore tax revenue. Put this under threat and you have scale and a position of strength, which is what you have to have in order to create change.

    For those businesses interested join our ‘Pledge’, http://www.fairtaxtown.com.
    Yours sincerely,

    Steve Lewis MBE
    Founder Member of Fair Tax Town Crickhowell

  • Fair Tax Mark says:

    Steve

    Thanks for leaving your comment, and we appreciate what you say.

    Because we have dedicated so much time to tax campaigning, in some of our cases for well over a decade, and because we grew out of the work of the likes of the Tax Justice Network and Tax Research UK, we would hope that it is obvious that we share your frustration with the tax system, its failure to treat small businesses fairly, and its inappropriate bias. This is precisely what we too wish to address.

    But, you are right; our tactics differ, although not by as much as you might suggest. We, and organisations we are connected with, have been meeting HM Revenue & Customs, the Treasury, politicians, and others to discuss these issues for many years. Some of our directors and technical advisory committee members of been extensively involved in the development of data on which text campaigning takes place, and in negotiating many of the key international developments on these issues over recent years. We have, in our turn, generated a fair amount of media coverage. Our aim, like yours, is to draw attention to these issues and to then highlight ways in which they can be addressed.

    One way which we think that can be done is to reform the way in which large companies have to declare their tax liabilities, which is a process that can also be encouraged by small companies accepting that they are to, have obligations to show that they pay their fair tax contribution to the societies in which they operate. We do not believe in dual standards. This is what we’re focusing on. It is our belief that if we can create a tipping point where, for example, country-by-country reporting is available for all large companies it will be much harder for them to use and abuse tax havens.

    Pursuing such an objective, and persuading some companies that it is appropriate that they support us in doing so, is a long-term task. It involves a different approach to that which you are adopting. There is not say that one is better, or worse than the other: what we share is common belief that reform is necessary. And, from experience, we know that reform must eventually involve those who are creating the problems we seek to address, which will, therefore, necessarily mean we have to tackle the companies who benefit from an unfair tax system. That is what we are doing.

    That is why we hope that the traders of Crickhowell will see a long-term benefit to potentially joining with the Fair Tax Mark to campaign, as we do, for a level playing field where all consumers can also identify those companies they want to trade with on the basis of a visible indication that they are seeking to pay the right amount of tax, at the right rate, in the right place at the right time.

    If you would like to discuss that, we would be very happy to do so with you.

    Best regards

    The Fair Tax Mark Team

    • Sharon RS says:

      Sounds to me like a group of local businesses have done more to raise awareness and shake things up in a few weeks/months that what you’ve been able to accomplish in 10 years….. I looked to see the businesses you’ve recruited to pay fair tax and there are only a handful.

      Co-op being one, which in all honesty have always paid fair tax and pride themselves in being an ethical business.

      I don’t see Amazon, Facebook, Starbucks, Subway etc etc listed on your site yet…why is that?

      • Meesha says:

        Hi Sharon, thanks for your comment – we’re absolutely delighted that the Crickhowell businesses have inspired so many people. This article was written before the TV programme aired – and we do support Fair Tax Towns even if we remain cautious about an approach that encourages the use of offshore. As for us, we’ve been going for under 2 years, and are an accreditation scheme – that works with businesses to improve their transparency and reporting as well as their tax behaviour. Ensuring that there is no secrecy around tax is key if we’re going to push the bigger companies and governments.

  • Gavin Barker says:

    I appreciate what Steve Lewis is saying but worry about the Cricklewood approach. While it has almost certainly raised the issue of corporate tax avoidance practices by the big companies, it does so by jumping on the same bandwagon that we so urgently need to jump out of. What will other small towns local business communities take away from all this? Not the nuanced argument that Steve Lewis puts here but the headline information that we can all avoid or minimise our corporate tax if we are as clever as Cricklewood. It is providing leadership in totally the wrong direction and with potentially disastrous results!

  • Maggie says:

    This is fantastic. Is there a petition I can add my name to to add pressure?

  • ettore says:

    Dear sirs

    In my opinion all things are possible any company working in the UK
    Should pay our tax any I t is easy cut the off shore rates
    You work in this UK you pay UK tax
    less of the corruption off our governments and there nonsense
    I have boycotted large company’s that don’t pay
    We as a nation should boycott them and name and shame
    Mario

  • Exerlent: I have a business: how do I join you?

  • Excellent: I have a business: how do I join you?

  • John Winder says:

    I might be more impressed by the Crickhowell movement if the participants were planning to use the tax saved by the scheme to set up some sort of “social” fund to help local causes.

  • Derek Picton says:

    Tax avoidance will not change as there are lots of politicians doing the avoidance schemes I will not put a name to one in particular ex leader who paid £360,000 tax on £12000000 income that’s 3% don’t see any of the Westminster lot making any comment about this and this is the reason why it will not change.

  • Karen Long says:

    I do think that any company who trades in the United Kingdom will declare and pay the tax on their weekly or monthly revenue taken. Those company employees have to declare their earnings and tax is deduct from source. I believe with 2016 IT technology this procedure should be put in place and no negiotation . If they do not wish to follow this then take your business to another country. Small local businesses lost will emerge again and communities will spend on their doorstop. The days of options and discussion for tax evasion for business ends now. We UK residents pay our taxes so the UK culture and services continue. If you do not then you are not a part of that system and do not trade in this United Kingdom.

  • John says:

    Great to see the measured responses in the comments.

    Get together and fight the fair fight together. You’re clearly two arms of the said campaign!!!

  • David Crawford-Cummings says:

    Well done Crickhowell taking on the taxman and the bully boys of the High Street. You can see on almost every main Street of South West Wales what the influence of the Hypermarkets Multi national coffee shops have had. The policy of one tax rule for them and another small businesses is not fair and is not working for the benefit of Britain.

  • David Santos says:

    I have a business: how do I join you?
    will pop in crickhoell today or tomorrow if you got office send me address please. i like to start a soon possible.

  • Geoffrey Murray says:

    Going through this step by step. I think the correct focus for a moral feeling here is to obey the law. Once that is decided then it is fine to use your ingenuity and all the resources you have available to play the game: arrange your affairs in the most tax efficient way, line up a tax haven and have yourself a ‘Dutch sandwich’. All okay so far. Now we zoom out and see that something doesn’t feel right. There is an imbalance. The problem then is the law. That is the paradigm upon which the system is built. We must be free to use our ingenuity and creativity to work the system as this is also the process by which great advances happen and the bedrock of a free society. You have to let the smaller boys club together and work the system too. You can’t not. They are within the law. The proper focus for a moral objection is towards HMRC and the government. They are the ones that need to make systemic change. Once the law is changed then it all changes and the moral imbalance would be satisfied.

    Go Crickhowell!

  • Josie Howell says:

    Great programme, loved it. Little people fighting back and using the same so called legal rules as the tax avoiders, beats writing to your MP etc.. Showed the total hypocrisy and unfairness of our tax system and made the HMRC appear weak and fawning. Anything is ok for the big boys, but the rest of us must tow the line or else! Spread the word, we need these avoiders to pay their fair share, apparently approximately £25bn is avoided each year, this is enough to stop the cuts to our welfare system!

  • David B says:

    I disagree with those that believe the CrickHowell approach is a scam.

    Crickhowell, like many other historic towns and villages, *does have* brand value.

    The image of these towns has been cultivated over decades, far longer than some of the big multinationals have been in business.

    They should be entitled to access this brand value in exactly the same way as a newcomer like Amazon does.

    A vibrant competitive economy is achieved by providing open access to the rules for all, big or small. A world where there is only one coffee company, one bookseller, one auction house, is bad for everyone.

  • David Blunn says:

    I watched the TV programme about Crickhowell & noticed that, when it came to analysing what the big corporates did with their tax savings, nobody mentioned the buying of politicians. Don’t think for one moment that it only exists in the US. Eventually this campaign will end up in the lap of the political class, & then watch as a load of warm words, spin & worthless promises are forthcoming. Always remember that you can tell when a politician is lying – their mouth is open.

    DB

  • Mike Watt says:

    Steve Lewis and Crickhowell have the right approach. British and OECD politicians who largely speak on behalf of big business or are looking to find lucrative retirement there have been bleating about the nasty, horrible tax havens who are “responsible” for big business avoiding taxation. The solution is directly in their own hands. They and no-one else is responsible for the current dispensation that favours the rich, the influential and the powerful. They make the tax laws which allows spurious deductions for “Intellectual Property” and the like. Change the UK law to tax UK profits at the corporate rate and disallow these ludicrous deductions. Its very simple.
    However it behoves our politicians to muddy the debate with claptrap, white noise and nonsense about tax havens. This rubbish serves two purposes. Firstly, it keeps the people that lobby them happy in return for all the freebies they receive and keeps all their options open for lucrative employment working for a large bank, auditing firm etc. etc. post their political career. Secondly it distracts the British public from the reality of the situation which is that the solution is entirely and completely in the hands of the politicians who have it absolutely within their power to change the law to make the field level for all. “Its not us that are responsible for this mess” is the usual political refrain, “its them nasty tax havens”.
    If you believe that, then you will also believe that the Fair Tax mark and the quiet behind -the – scenes lobbying approach will have any affect or change anything in 100 years of begging and pleading.
    Crickhowell has graphically demonstrated the monstrous unfairness of the business playing field created by our politicians. Crickhowell have rightly claimed the same privileges and tax breaks they have granted to big business. All businesses should pay their fair share. Large and small.

    Crickhowell made it clear that they don’t mind paying their taxes. They are vividly demonstrating that its the gross unfairness of the tax system that is destroying their businesses, their towns and others like it, making high streets disappear and paving the world with Amazons and Starbucks. If the politicians say that their big business friends don’t have to pay, why should they have to pay?

  • david webber says:

    Well done everyone, a mixture of robin hood and david v goliath.
    interesting that HMRC said they had resources to allocate staff to big companies but not you and in the same breath threatened to deploy resources to fight you.
    the government could instantly level the playing field by scrapping 0% witholding tax to Netherlands or bring in a turnover tax on big off shore companies.

  • Simon Ashmore says:

    I can’t believe that this article’s author has failed to grasp the basic point of the TV program and The Fair Tax Campaign.

    Maybe watch the program again?

    Clear response from Mr Lewis.

    I’m off to leave Facebook.

    • Sharon RS says:

      I believe the programme made clear that there was no intention of implementing the tax avoidance measures Crickhowell had uncovered.

      The aim was to raise awareness of how large organisations avoid paying tax and show how other businesses could do the same if the government left this “loop-hole” open.

      I hope this does put pressure on our government to make sure tax is fair. There should be a level playing field for all.

      Frankly, a local Welsh coffee shop paying more in UK tax than the global coffee chains is outrageous.

  • RAJ says:

    I totally support the campaign. Remember they are not supporting tax avoidance they are asking for HMRC to give them a level playing field by putting pressure on HMRC and the Govt to close the loop holes. Big corporates make lot of profit and pay less or no tax than these small businesses and therefore are able to muscle out competition.

    I will even donate money for their legal battle if this goes to court.
    For the benefit of our society, thank you Crickhowellians for having the courage to do this.

    Raj

  • adams says:

    I watched your prog and enjoyed it . What a lot of attractive ladies you have in CH . However there was not one mention of the EU rules and regs which allow Amazon and the rest to avoid tax in the countries where their profits are generated . The British Gov have given this legislation authority to the EU so can do nothing but waffle about the ludicrous situation where these huge companies pay zero tax . Holland and Luxembourg is a clearing house for mass avoidance thanks to EU rules . To get back control of taxation we need to get out of the EU as the situation will get worse not better if we stay in . Do you know all this or is it new to you ? Your group should be campaigning to VOTE LEAVE in the Referendum . Look behind YOU !!!!!!!!!!!

  • David Preen says:

    What an inspiring movement! It has been a mystery to me why not just the small businesses in one town but even big players like John Lewis sit down with no protest against unfair competition. ( I wrote to the Margaret Hodge when she was roasting the coffee pedlars in Parliament, asking her to bring together reps from small business and these fair play big companies. She did not. You should demand it.
    Yet magnificent as your effort is–it is not radical enough. You won’t get a fair tax government until you get one elected by a fair voting system; a government that truly reflects opinion across our society, not a two party Buggin’s -turn system where a Westminster elite in the pockets of financiers comfortably ignores public moral outrage.

  • FRANK LANE says:

    I have now lived and worked in the UK for over half a century. I have to date paid a fortune in PAYE (no chance to avoid that one), CGT, SDLT, VAT and Excise Duty. I have only recently started a business having, after reaching maturity, been ‘let go’ so I have, not so, far paid any CT. The only UK tax I have avoided paying has been IHT. I was able to structure my parents ‘vast wealth’ (ha-ha) in such a way as to avoid been caught by that one. They were also decent enough to live long enough for the necessary arrangements to be in place and to die before they required residential care.

    I have not voted for decades but my study of the UK political elite and establishment (has not the head of HMRC been made a ‘Dame’ for doing her already well-rewarded civil service job? — the only consolation being that the honours system is now utterly discredited) is that they will not move to any extent until the tax system is all but broken — that will, I agree, result in significant knock-on social consequences.

    I am now utterly fed up – to put it politely. Only £30k of my redundancy payment was tax free and in that particular tax year my PA was reduced to 0. Having now paid what I consider to more than my fair share of tax to successive wasteful UK governments (after all if you sit on your back-side all day in Whethy’s awaiting your befits cheque and / or bemoaning the lack of available / affordable child care then you are not a ‘striver’ and you will be paying little or no tax) I am therefore about to take myself and my sart-up business ‘off-shore’ to the Isle of Mann – no CGT, no SDLT, no IHT and little or no CT depending on where you operate and what business you are in. The income tax structure is similar but rates are half those in the UK and capped at £125k pa for new entrants. There are no barriers to entry to the IoM – just get on a ferry and register for tax and health care etc. when you get there. The IoM is conveniently only 50 miles from where I presently live. Incidentally there is no MoT on the island so keep away from those with IoM plates racing up the M6 to catch the Heysham ferry! Well they are mostly less than 3 year old Mercs and the like so you will be ok. The IoM is of course not in the EU.

    Sorry folks but I for one I have had enough of the self serving HMRC (remember the ferrule corporate culture and virtual criminality within the former MH Customs and Excise) and tax-rip-off UK along with subsidising the life-style choices of non-strivers. Based on the IoM I will be ‘alright Jack’ (remember that one!) thank you.

    Good luck all – you are going to need it going forward! Though I suspect having read this some you who like me cannot afford the British (oh! yes they are) Cayman Islands will be joining me on the IoM. Rain — well less than in the Ribble Valley!

    Frank

  • I was so impressed by Crickhowell that I wrote to my Tory MP asking if he would help our town and businesses to enjoy the same benefits outlined in the programme.

    if and when all towns adopt these tactics it will demonstrate that taxes are not evil not something to despise and avoid but to pay for the benefit of living, being educated and being safe in our society.

    my view is that I don’t think the movement is genuinely trying to avoid tax, more to show that if everyone avoids tax then society doesn’t have working capital.

    My MP works at the Treasury.

  • David says:

    Have watched the programme and feel most other posters are missing the point. As all in Crickhowell have said, we don’t want to set up this offshore scheme, we just want to pay our dues. Just needs the others to do likewise, and that is what this campaign is about.

  • bianca says:

    I think many are missing the point. As the politicians & HMRC have the ability to bring in fair taxation to all but, seem to exclude the multinationals that make the highest profits & destroy the small businesses & our high streets, why oh why would they give a damn about the rest of us & what we want or think? Most of these controlling powers are using these systems of tax avoidance themselves & politically receiving large perks from these companies which help keep them where they are & help maintain the same status quo. Frankly, I think the ‘fair tax towns’ should set up the offshore tax avoidance schemes as should every other town in the UK. If every small business joined & there was a joined pot of money saved from the avoidance which was then used to battle against HMRC in court with the best lawyer that the saved tax avoidance money could afford from ALL the uk small businesses well, then, they would force a change. If all small businesses were involved in this united campaign then we would truly be united & a force to be reckoned with. Yes, it sounds like it could get messy & is irresponsible but the government would have to yield as they couldn’t allow our society as a whole to collapse. Afterall, who is being irresponsible? Of course the government is for creating/allowing this huge inequality to exist. Once they realise that all small businesses are united both in actions & monetary clout to match that of the multinationals they would have to yield. Lets face it…if every small business did it it would flag up every small business with HMRC after just 1 years tax year. They would not have resources to deal with it & the government would have to take immediate action or face the consequences. Boycotting a few multinationals will not work….others will just rise to take their place & the boycotting would have to happen in every country which they’ve got dealings with. No change will ever happen unless the small businesses force a change as a united front with a huge money pot to really fight using the same laws that the multinationals have. If they’re all creating a dutch sandwich & they’re NOT using the money to just line their pockets but instead using these would be tax funds to fight the battle in the courts surely, it could work

  • Michael Richard Hughes says:

    Saw the programme tonight. Crickhowell’s attractive Russian lady need not worry about the Animal Farm cautionary tale, which is that once having achieved power, there is temptation to abuse it.

    The brilliance of this movement is that having achieved its end, the movement is automatically extinguished by its success. This movement puts pressure on the Government’s and the World’s tax laws. Laws which will have to be reformed otherwise there will be no money for national defence. Not to mention the salaries of the PM and all MPs, Whitehall civil servants and HMRC

    I love it. There is so much I loved about the logic of the movement you should book me for a talk. I could go on for hours