Although yesterday’s PAC was quite amusing, I’m not sure exactly how valuable a couple of hours was spent watching it.
I don’t think anything that came from any of the witnesses was particularly shocking. I think Matt Brittin put in the performance of the day. Andrew Cecil must come a close second, though for entirely different reasons.
One thing I appreciated was that when they were discussing the decision to structure Google’s business in Ireland, Brittin made no disguise of the fact that the corporation tax rate was a consideration.
As a tax adviser, I find the idea that the PAC seemed to be labouring under, that businesses don’t consider the tax rates as a decision in structuring absurd. It’s one of many considerations (as Brittin explained) and MPs moralising over this fact is fairly dishonest, in my opinion.
Tax is often used as a mechanism for encouraging certain behaviours, and politicians certainly enjoy playing with the levers. It’s no surprise that the small reliefs given are optimistically viewed as having more behavioural impact than the revenue raising measures.
But you don’t sever that link just because you didn’t intend it that way. Probably, the reliefs and allowances you give away encourage the mindset, that the rules are there to provide decisions with differing outcomes that you are eligible to pick from. In Pavlovian fashion, there is a reward for picking the ‘right’ one. Or rather, there is less penalty.
Maybe business representatives being hauled before Parliament is just another attempt at conditioning.