Tom Peck's Sketch: A game with a catch – Google always wins
The important thing is not why they only pay a sixth of the rate of tax we do, but that blame is correctly apportioned
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Your support makes all the difference.There is an old economic experiment known as the ultimatum game. Two people have £100 to split between them. Person A chooses how the money is divided up, but if Person B rejects the proposal, neither of them get anything.
If we really are rational economic actors, so the theory goes, Person B should accept £1 even if it means Person A walking off with £99. However small the sum, it is better than nothing.
More often than not, however, Person B tells Person A where he can stick his derisory sum, which is why Her Majesty’s Treasury was forced to put up Person C to explain why it had accepted the derisory sum of £130m from the largest company in the world as payment for its taxes over the last decade.
At the weekend, George Osborne had described the deal as a “major success”. But on Monday he was in Liverpool curing malaria with Bill Gates so the Treasury’s No 3, David Gauke, was sent out to bat for him, as he almost certainly would have been in any case.
According to Mr Gauke, it was no longer a “major success” but “better than the last Labour government”.
Because, as people and businesses up and down the country prepare their tax returns, what is of course crucially important to them is not why Google pays around a sixth of the rate the rest of us do, but that the historical blame for it is correctly apportioned.
It wasn’t, he assured, a “sweetheart deal”. Google’s tax bill might seem to bear no relation whatsoever to its profits, but that’s not the point. Google’s liabilities relate to its ‘‘economic activity in the UK not its sales in the UK”.
In other words, grievances about Google not paying what seems like its fair share in the UK should be set against the far larger unfair share the UK does receive through half the world doing its banking here.
“It’s important in our tax system that everybody is treated equally and fairly,” John McDonnell pointed out. It’s a noble principle, and one that you’d think might be worth more than £130m.
Still, everything’s fine, as long as you’re Person A.
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