Originally Posted by
Optimistic Nick
I agree with you on the legitimacy of radical changes to tax systems. Scrapping income taxes and replacing it with wealth tax and indirect tax actually makes a bit of sense - it is far harder to avoid, and might better promote wealth redistribution. The US have undertaken an enormous change to their tax system recently (although not quite so dramatic as change in approach from direct to indirect taxation). It can be done.
Alternative minimum taxes based on turnover not profit are interesting. I actually did some work with a government about 10 years ago which looked at ways to beat tax avoidance, and an AMT was one of my recommendations. They are reatively easy to implement and administer, and hard to avoid. But it is the nature of the income on which there is perceived avoidance that is the problem. The typical US multinational example, which makes sales in the UK but books revenue abroad, would not obviously be countered by an AMT.
I'm not sure why you think that the UK lags behind the rest of the EU in challenging the current system of taxation. We were the first to adopt anti-hybrid rules for example, which seek to counteract a lot of the principles used by multinationals in reducing their overall tax charge. We have a diverted profits tax too, which adds a punitive element as it taxes profits which are artificially diverted from the UK at a higher rate than they would have been taxed at had they been declared here. As well as specific rules to attack payments from the UK to tax havens in respect of IP. The digital services tax kicked in a few months ago, which will impose a fairly crude additional tax on a lot of the multinationals that are often accused of avoiding tax. And we also have something on the way that will seek to redistribute part of a group's overall income across countries dependent on location of sales rather than recognition of income i.e. stepping away from the long-established principles of transfer pricing, which really does represent quite a fundamental change.
In many ways, it is other EU states that hinder the UK's attempts and not the other way around. Just look at the behaviour of Luxembourg or Ireland. Our tax authority is actually pretty aggressive, pretty competent, and pretty keen on leading the pack when it comes to introducing anti-avoidance measures.
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