And guess who's to blame? the head of the EU.
What a mess. Shame we can't have that referendum now.
Amazon’s sweetheart tax deal with Luxembourg is illegal, according to the European Commission. The Commission’s preliminary findings indicate that the deal, struck back in 2003, constitutes illegal state aid. Since then, Amazon has been paying taxes worth only 4-6 per cent of its operating expenses - an arrangement that the …
And guess who's to blame? the head of the EU.
No, Juncker is the head of the European Commission, even then he is only primus inter pares. The EU does not have a head. Power is shared by the Commission, the Council of Ministers (the leaders of the governments of the member states), and the European Parliament.
As the Commission's remit is not criminal law, Mr Juncker has personally not done anything illegal. In any case, most elected politicians enjoy immunity from prosecution for anything done as a result of executing their mandate as an elected official. This is why, for example, Tony Blair hasn't been prosecuted for the war in Iraq.
>No, Juncker is the head of the European Commission
That's slightly misleading. The EC is effectively the executive branch of the EU these days. And it is my understanding that as he as PM of Luxembourg he actively lobbied for companies like Amazon and Google to "base" themselves there, touting the tax advantages.
> proportional representation
No. PR is the special olympics of electoral systems - you get elected just for turning up.
The good thing about FPTP is that at least the losers get to lose and the more they lose by the bigger losers they are. See also the BNP, the SWP and the Greens.
Admittedly, Greens do have an MP but only in Brighton and that's only because the population thought it was a contest for the best drag-act.
No, it's a simple system where you get elected if you get a big enough proportion of the votes. 30% of the votes means 30% of the MPs. It's complex, so I can see why you might have difficulty with it.
The good thing about FPTP is that all your rich mates get to keep running the country and pretending it's because we asked them to.
I doubt if anyone hates our current crop of self-serving shitbags more than me. That doesn't mean I want to see minority racists getting to rule coalitions.
Or the fucking LibDems. In the UK, all PR would mean is that whoever you vote for, you always get the bastard LibDems.
(EDIT @sabroni - I did not downvote you. Each man's political opinion is his own affair).
PR though has severe limitations of its own. By not having local representation, it divorces electorate from their MP's further. Look how much people engage with their MEP - compared with their national MP (granted it's comparing unlike things, but it's an illustration). PR has a lot going for it, but that separation from your candidate seems to have an adverse effect on political engagement.
FPTP is also flawed of course, in fact all systems (there are more than those two) are flawed which is why we haven't switched to a 'better' one already.
"PR though has severe limitations of its own"
There are about a dozen variations of "PR" and some of them attempt to address the issue you raise by having electorate seats (FPTP) and list seats, Voters cast 2 votes (one for the electorate and one for national voting) with the list seats being used to "top up" numbers of seats to match the overall party vote (ie, if party X wins 20% of the electorate seats but gets 30% of the vote then it will get enough list seats to bring them up to to 30% overall representation in parliament.
See MMP ( https://en.wikipedia.org/wiki/Mixed-member_proportional_representation ) for an example which usually works fairly well, as does the AMS variant (https://en.wikipedia.org/wiki/Additional_Member_System) used in Soctland and Wales. Note that they require a 5% threshold to gain a list seat as thresholds below that figure usually result in unstable governments (This is a particular problem in Italy, which has a 2% threshold)
Despite various moaning about non-representavtive govt whenever XYZ group in the UK doesn't get its own way, the EU parliament has tended to work relatively well. If they'd just get rid of the massive inefficiencies caused by having to pack up and move to Strasborg for 1 day per week (which all by itself shows that France has undue influence over the EU) then things might run more smoothly(*).
(*) Some may argue that the disruption caused by having to move to Strasborg and back each week keeps the EU parliament from being able to be too effective. This follows the Heinlein school of thought on govts (that they work best when no group has an absolute majority, because for the most part they don't do anything at all)
"PR though has severe limitations of its own. By not having local representation, it divorces electorate from their MP's further"
I think you'll find the party systems wipes out almost all local representation - my MP votes for his party not his constituency, almost all of them do.
However were perceived to be a real problem with PR then perhaps some proper local representation should be introduced like upgrading councils and the like.
There are a couple of potential fixes to that.
1) Vote for a party and candidate(s) separately - party votes are counted for PR to determine the split of MPs, which are allocated to constituencies based on the level of acceptance of candidates in each constituency.
2) Simply allocate the MPs based on most popularity for the party in the constituency - e.g. if LibDem poll 30 seats, they get the 30 constituencies where they had the highest polling percentage. By elections can just be voting on members of that party, rather than candidates from different parties.
" In the UK, all PR would mean is that whoever you vote for, you always get the bastard LibDems."
What, you mean instead of the current UK system where no matter who you vote for you'll get either the rich man tories or the corrupt labourites..?
The LibDems are less corrupt, more simply inept.
The current system guarantees that almost 50% of the population spends up to 8 years being ruled by a bunch of scumbags they didn't vote for. HTF is that democracy?? At least with PR, you stand a change of getting a voice from your chosen party at the table even if they're not the majority.
When you say "almost 50%": the last U.K. general election in which a party won more than 50% of the votes was in 1931. The second most recent was in 1900. So the current system almost always ensures that at any given time fewer than 50% of the population want the current lot in power, and a system which forces coalitions would be a lot more honest.
"The current system guarantees that almost 50% of the population spends up to 8 years being ruled by a bunch of scumbags they didn't vote for."
In some cases, it can be MORE than 50%, depending on how electoral boundaries are drawn. (It's marginal electorates which determine governments and an electorate is represented by 1 candidate whether it has 97% voting for him/her or 51%).
Gaming the system by jiggering around with electoral boundaries is a practice which dates back to the creation of those boundaries.
"The LibDems are less corrupt, more simply inept."
Are you misquoting Roosevelt? They may be fools, but at least they are our fools?
[yes, i know i'm misquoting a misquote. It's not even double digit in the morning yet]
The way things are going, PR would mean more Greens. While I often disagree with them, I'd like to see them in Parliament so their ideas can be exposed to serious debate. It might result in them coming up with more realistic proposals that would actually get popular support.
"The way things are going, PR would mean more Greens."
It would also put some of the looney fringe parties in parliament.
Contrary to popular belief, this is not a bad thing overall. No mainstream politician will form a coalition with them (it would cost support) and the constant exposure invariably turns up stuff about them they'd prefer wasn't public, even if they don't actually get into govt:
For an example of this at work, see https://en.wikipedia.org/wiki/Christian_Coalition_%28New_Zealand%29 and https://en.wikipedia.org/wiki/Christian_Heritage_Party_of_New_Zealand
I'd like to see 50/50 split in parliament between PR and FPtP and everyone get two votes, one for each section.
I'd like to be able to elect the person I choose, but I'd also like to make a demonstrable impact by not voting for the top 2.5 parties. I'd like smaller parties to be able to build up an electoral base and demonstrate electoral success without being quashed by FPtP.
I'd like to see 50/50 split in parliament between PR and FPtP and everyone get two votes, one for each section.
That's exactly what Mixed Member Proportional (MMP) is and what it will give you. Half the seats in parliament are electoral ones and the balance are allocated to ensure each party's proportion of members closely matches its proportion of votes.
There can of course be slight variations when the seats are allocated - for example, a stand-alone candidate who scrapes through will likely have slightly more 'representation' than she is due by votes, but it's a trifling problem and still vastly fairer than FPTP.
NZ switched after a series of governments that were more radical than the country as a whole; despite some initial discomfort with coalition government, PR is now thoroughly.embedded. In the 2011 referendum, 58% of voters chose to keep MMP against any alternative.
What a particularly distasteful person you appear to be!
How dare you use the phrase "special olympics" as a derogatory term with the implication that paralympians get medals just for turning up.
Also, why the personal insult over Caroline Lucas's appearance?
Can I suggest that you take your small-minded opinions elsewhere.
> How dare you use the phrase "special olympics" as a derogatory term with the implication that paralympians get medals just for turning up.
Nobody mentioned the Paralympics. I mentioned the Special Olympics which is an admirable competition but where you do actually get medals just for turning up.
These forums are not designed along the same lines so you don't get treated nicely for turning up and I get to call you an idiot.
> Also, why the personal insult over Caroline Lucas's appearance?
You're just begging to be offended about something, aren't you? I mean, you're really working at it. I bet you write letters to newspapers and go on Have Your Say.
In case you are as simple-minded as you seem, Caroline Lucas was the only woman standing in Brighton when she was elected. Brighton is well-known for having a large gay population. I made a joke, based on the fact that all of the other "drag acts" hadn't even bothered - ie, they were men wearing suits with trousers.
Dogged is misinformed as to Caroline Lucas being the only woman standing in Brighton pavilion in 2010. In fact there were FOUR female candidates
- Caroline Lucas - Green
- Nancy Platts - Labour
- Bernie Millam - LibDem
- And I've forgotten the name of the Tory lady
Whereas it's entirely democratic that the leadership of a country is determined by the number of MPs, where the MPs are elected in constituencies where the boundaries are regularly moved to ensure as few votes for the current incumbents are counted in areas where they would be wasted.
And where the majority of MPs are elected on the basis of less than 50% of the turnout for their constituency - in many cases closer to 30%. So most constituencies have MPs where the majority of interested people voted AGAINST the winner, not for.
Sure, it's nice to laugh at BNP, etc. losing, but I would rather have a country where they have a - completely insignificant - say but where the government represents the view of the majority, rather than one where we can only be sure of it representing the view of the minority.
"Wuh you mean a parliament elected via proportional representation and a commission assigned by the heads of state of the member nations? That's more Democratic then the UK system."
Actually I was thinking of the unelectable Peter Mandelson and the Kinnock clan who have, incidentally been made millionaires, riding the EU gravy train. Maybe I was also thinking of the fact that the role of the Parliament is simply to rubber-stamp the ideas of the Commission, and the duty of the Commission is to further the EU project, not to represent their home nation. Or the fact that most people in the UK have never had a vote on the whole thing. Or the dodgy accounting and massive wastefulness. Or the rerun referendums when people voted the "wrong" way. Or the technocrats parachuted in, to run nations like Greece and Ireland in place of national elected representatives.
Take your pick really.
More democratic than the UK system? How's that exactly?
Open list PR might be more democratic than FPTP depending on the kind of open list but MEPs in the UK are elected by closed list PR which is far less democratic. You vote for the party and the party hierarchy decides who gets voted in. As someone else said they get a prize for just for turning up.
There's no link to the constituency level so good luck writing to find out their opinion on local issues and if we had general elections using the same system nobody could e.g. stand against Farage in the general elections because he's at the top of his list so will always get in as long as UKIP have enough of a vote at national level.
All electoral systems have a logical limitation which means they can never succeed in satisfying all of a small set of features that most would think were quite reasonable ande desitable. See Arrow's Impossibility Theorem. ( https://en.wikipedia.org/wiki/Arrow%27s_impossibility_theorem ). The issue then involves which compromises are one willing to make in order to have a working voting system. That is the place at which this debate should occur concerning voting systems.
I still don't understand why this tax haven is permitted to be part of the EU. Their entire country's economy is predicated on fucking over the rest of us by providing low taxation headquarters.
In most countries in the EU, there can be some differences in taxation levels, like Ireland and Netherlands, but even the Double Dutch pales in to what you can do if you are based in Luxembourg.
According to the Torygraph article on this the Luxembourg tax authorities got the letter from Amazon proposing their transfer pricing calculations/justification - and answered that yes those figures were OK within 11 days.
I'm struggling to think of the last time I got anything written out of a tax office in that kind of timescale, let alone something as horribly complicated as working out a hundred-billion dollar global mega-corp's international tax affairs.
That's so fast it's almost as if they wouldn't have had time to check, or had agreed the amounts in advance. But obviously that can't be true...
So it must just be that Luxembourg doesn't need to collect many taxes, because their government are just so damned efficient. Yes, I'm sure that's it...
it must just be that Luxembourg doesn't need to collect many taxes, because their government are just so damned efficient
Amazon may not pay much tax, but with a population of about 500,000 it probably amounts to about €20,000 per Luxembugger. No wonder they were quick to agree.
When there was all the row about Junker, I thought it was just because he was a federalist. But you have to wonder at how much useful experience he got from running a place the size of a smallish city where the main industry is tax dodging.
... the Friday evening trains to Luxembourg were widely reported to be packed with people taking their week's cash-in-hand earnings to their Luxembourg banks. Mind you, it would be unfair to single out Luxembourg for its role in tax evasion/avoidance - Switzerland, Monaco, The Channel Islands, The Isle of Man, Liechtenstein and half of the Carribean seem to depend on financial transactions that might be considered unsavoury even if not technically illegal.
It would be a simple matter to cut off financial transfers to all these dodgy destinations - the fact that it doesn't happen suggests that the people who might have the power to make that kind of decision have rather a lot to lose...
... the Friday evening trains to Luxembourg were widely reported to be packed with people taking their week's cash-in-hand earnings to their Luxembourg banks
Never seen those over there. The people go from Luxembourg TO Belgium at the end of the day because Luxembourg is one of the rare places in Europoorland that are still economically active.
As to "evasion", frankly, if you worked in Belgium, you WOULD do that.
40% and more (probably more around 60% if VAT is counted, amirite?) for a non-existent, corrupt and dysfunctional government mainly known for building bridges to nowhere. The rest will will be taken upon your death.
The dictatorship of the proletariat was not meant to be like this.
When I worked in Belgium some time ago, it was common for everyone to have multiple jobs. At that time, you could choose which job was your "main" job, and thus liable for the lion's share of tax.
Amazing how many accountants also ran landscape gardening businesses with a single customer.
given the state of things in general, we can expect 20-year court battle (I'm not EU-hater, but guess who's gonna foot the BILL), and at some point they will quietly shelf the case, due to "no proof that either party were aware of breaking any laws or regulations". In the meantime, tax deadline for regular tax payers ( self-employed) is due soon, come hell or EU commission...
What's the betting that IF Amazon (Lux) is found to have received state aid, and is ordered to repay it, then surprise, surprise, that little subsidiary will be found by that stage to have no remaining assets, and will quietly be allowed to "go bust" with no means for the EU to get the missing funds out of the rest of the company?
The offence is "state aid." The company complied with the requisite laws.
What would the EU do to Luxembourg? Well a fine could work. Luxembourg's position is valuable due to its position in the EU. If it got chucked out, a lot of that corporate money would stop flowing.
I'm more interested in this part
This practice is used to orchestrate where a group’s taxable profits will sit (usually in the cheapest country), and is allowed under EU law, so long as the internal group prices are in line with market prices.
What is the going rate in the market for the use of those trademarks and IP? After all, that is what generally gets paid to the tax haven subsidiary.
David Cameron has regularly been seen courting Amazon.
The same can be said for Boris Johnson so, at least to me, it very much appears tax evasion is encouraged over here in Blighty.
How about working for us, the public who have to make up this shortfall now increasing national debt so dramatically?
Bofferdings all round if it works out that the law obliges them to collect 10 years of back-taxes while at the same time closing down the chance of similar deals somewhere else, thus obliging Amazon etc to stay put and carry on paying tax at some new slightly higher rate.
many of the comments here are just plain silly. What the hell is wrong with you Europeans anyhow? Given the costs of living on your hellishly expensive continent, one would think you'd cheer about any jurisdiction that helped people avoid extortionate taxation. Perhaps even encourage your own local tyrants to get their friggin' mitts off your collective wallets. But no, here we want to wail about high taxes AND wail about organizations who (somewhat) successfully avoid your grubby tax-thieves.
I can understand a country-specific division of Amazon paying an internal price (always less than sales price) for books, Kindle's, etc. that are not produced in that country, but are sold there.
What I don't agree with is a company shifting it's profits around so that they are grossly disproportionaly accumulated in a tiny country that at best makes up 1%-2% of the company's sales.
They've not quite called it illegal yet. They've said we think it might be and can we have some more evidence please?
There's also no problem at all with paying a royalty for brand and technology licensing. The argument is only over how the price was worked out. And, of course, if Amazon has to pay more tax in Lux then it just claims a credit against US tax bills. Moves money around a bit but not much more than that.
"It's not Luxemburg nor the UK that takes a look at Amazon, it's the EU and they should as well have a look at some islands in British waters as the Brits will be the last to do it."
Well, yes, except those islands aren't actually in the EU.
I dont think they can claim this tax as a credit, as the money then goes to an untaxed Luxembourg partnership, not the parent company. This little bit of the tax evasion puzzle is only a little part. The partnership is owned by some individuals who are not based in Luxembourg, so no tax liability. They are probably based in another tax haven at a guess, its quite a complex scam.
It wasn't Amazon whose tax affairs are marked as illegal, but Luxembourg's. Amazon are just following the rules set by Lux. So we are arguing about which laws trumps which. In effect the EU is saying that they are the ultimate authority and that countries have no right to decide their own laws. Why do we bother with a UK parliament and paying 600 odd people lots of money if they can't make laws.
You're not nearly as good as Al Murray.
By joining the EU you undertake not to break the rules on State Aids, i.e. you are not allowed to prop up failing industries in order to prevent competitors from getting the business. Luxembourg is accused of operating a State Aid which makes it harder for European internet retailers to compete.
It isn't only the EU, there is also the WTO. I notice that Farage doesn't mention the WTO even though belonging to it restricts laws that can be passed in this country, probably because he realises that if he did, the inconsistency of his party would become obvious. We're not going to leave the WTO.
These treaties have existed forever, only in the past they were usually much more secret than they are now. Governments couldn't pass certain laws because they had a treaty with country X that said they would not, in exchange for something else.
The classical example is Bismarck's gradual takeover of Germany by creating a customs union, and then signing treaties with other German States that gradually reduced their power in exchange for staying in the customs union. The consequences of leaving would be serious for landlocked states in the days before aircraft; everything coming in and out would be taxed by Prussia.
"Luxembourg is accused of operating a State Aid which makes it harder for European internet retailers to compete."
We have no evidence to show it did this: from what's been published so far anyone else was free to sort out the same arrangement. If the deal said "and no-one else will ever get this", that should be prohibited.
It didn't, from what we can see ...
If it is in fact an illegal State Aid, nobody else is free to make the same arrangement and nor is Amazon.
If Luxembourg doesn't like the EU law they are of course free to leave, and then we will see how long the rest of the EU allows them to behave like a banana republic tax haven. I suspect, not very. Unfortunately it looks as if the experiment is going to be performed by the political Right in the UK in pursuit of some fantasy of Britannia ruling the waves and recovering an empire of black and brown people who really want us back ruling them.
"If it is in fact an illegal State Aid, nobody else is free to make the same arrangement and nor is Amazon."
That "if" is where the problem lies. If it was illegal when the arrangement was offered, then the Luxembourg government was at fault for offering it and Amazon for accepting it. If it was not, the EU can't be allowed to go changing the rules after the fact. It's easy to prove: get out the list of things that were forbidden at the time, and if it's not on that list, it was not illegal.
Whether it was right, separate question, possibly - probably - different answer.
"If Luxembourg doesn't like the EU law they are of course free to leave, and then we will see how long the rest of the EU allows them to behave like a banana republic tax haven"
That'd be the "banana republic tax haven" that has higher corporation tax rates for ordinary commercial activities than Hungary, Ireland, Lithuania, Poland, Portugal, UK, Netherlands, etc. then? Higher income tax rates than Poland, Latvia, Cyprus? A more efficient tax administration than Poland, Portugal, Czech Republic, UK, Italy, France, Hungary, Belgium?
BTW I don't know anyone on the politiical right of the UK who is seriously pursuing the fantasy you allege; I do know some on the left who think tax rates should go up even though they don't pay any. I have no time for either view, and certainly none at all for Farage-style EU bashing or Miliband-style amnesia
Actually, the title isn't inaccurate, but it is open to misinterpretation. Amazon was offered, and accepted, something that was perfectly legal under Luxembourg law, as far as I can tell from the coverage I've seen. Another institution, not answerable to the Lumxembourgers - in that they cannot, alone, remove it - then decided that the law itself is unfair: the deal itself broke the law. </pedantry> What is missing from a lot of the coverage of the issues - whether it's Google's, Amazon's or even Starbucks' tax positions - is that they are within the law; the popular shouting should be at the politicians and 'public servants' who allow those rules.
Having unelected Commissioners with any say at all in whether laws are fair or not is not exactly a precedent we should welcome. What if, next, they say that income tax lower than the Belgian level, corporate tax lower than the German rate, or VAT below the Hungarian rate are each unfair? What mechanism is in place to say "no, our country" (whichever one the reader is in) "does not want 50-plus % income tax, 30-plus % corporate tax or 25-plus % VAT? Conversely, what if the UK decided to encourage growth by copying the Estonian corporate tax regime rather than being closer to the French one? Would that be unfair?
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