Vodafone has made more than £80 billion selling its stake in US mobile operator Verizon Wireless. It’s one of the largest corporate deals in history—and it looks like it will be a colossal tax scam too.
The Financial Times noted that just £3 billion, or 3.85 percent, is expected to be paid on the deal.
Meanwhile workers in Britain pay between 20 and 40 percent in income tax and have seen a 5.5 percent cut in their wages under the Tories. And Tory chancellor George Osborne has cut corporation tax from 28 to just 20 percent.
Tax expert and founder of the Tax Justice Network, Richard Murphy, has estimated that Britain has lost £12 billion in tax on the Vodafone deal.
But due to changes in Britain’s tax laws, brought in by New Labour, Vodafone has a number of ways to avoid tax.
Vodafone avoided paying tax by having its Dutch subsidiary conclude the Verizon deal. Gordon Brown’s government brought in a law in 2009 that exempted overseas dividends, or payments from shares, from tax in Britain.
So no tax will be paid in Britain from any dividend from the subsidiary.
And another clause added to Britain’s tax laws in 2002 states that companies based here don’t pay capital gains tax on shares sold by another trading company.
This gives firms an automatic right not to pay tax on deals involving other parts of their business.
Nonetheless Vodafone’s shareholders will grab over £50 billion, much of which may end up squirrelled away in offshore tax havens.
This deal should come as no surprise—Vodafone is a prolific tax dodger. Last year the firm paid £3 billion in corporation tax to other governments but no tax in Britain—despite around £1 billion in earnings.
Vodafone isn’t the only one. Several big names, such as Google and Amazon, have hit the headlines for the tiny tax they pay in Britain compared to their bumper profits.
The tax workers’ PCS union has estimated that the rich avoid, evade or don’t pay £120 billion in taxes in Britain every year.
It’s easy to see where the money to fund our public services can come from and why there is no need for any cuts. The Tories disagree—and have axed more than 600,000 public sector workers since they came to office.
Around 40,000 HM Revenue and Customs tax workers have been sacked since 2005. They each bring in an average of £1 million in tax every year.