G8 summit: free trade, the NHS and tax dodging

Submitted by Matthew on 27 June, 2013 - 11:08

At the G8 summit in Northern Ireland on 17-18 June, a start was announced for talks on a free trade deal between the USA and the European Union.

The talks will take two years at least, and may not produce a deal. They were able even to start only because a fudge was devised on France’s demands to have its “cultural exception” (measures which protect, for example, French film production) declared off-limits.

Campaigners in Britain have been demanding that the NHS be declared equally off-limits.

Otherwise future restoration of public service in health, in place of the market allocation the Tories have legislated for, will face legal arguments that it is a breach of free trade treaties.

Scandals about tax avoidance by big corporations have expanded to the point where the G8 summit had to promise some tightening-up.

At the same time, though, and less publicly, new tax loopholes are brought in. New legislation called “the Patent Box” came in from 1 April 2013: corporate profits reported as derived from patents and other “intellectual property” get taxed at 10% rather than the headline rate of 23%.

“Controlled foreign companies” (CFC) legislation, for companies controlled from the UK but resident in an overseas territory, gets some of their income taxed at 5.25% rather than the regular rate.

As accounting professor Prem Sikka puts it, “the colonisation of the state by economic elites [is] a key reason for the continuing failure to tackle organised tax avoidance”.

Law professor Sol Picciotto adds: “The only way effectively to reform the system of transnational corporation [TNC] taxation is precisely to move towards treating TNCs as what they are, unitary firms — rather than the current system that treats them as loose collections of separate entities” in different countries, recording their income wherever it will get least tax.

The “unitary” approach was not on the agenda at the G8.

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