Lawmakers: Cynical, Dumb or Lazy?

Do you curse our politicians for not having the will to frame laws to prevent and handle rape cases? Call me cynical, but at least that can be understood: our politicians know it’s a slippery slope. Make the system work against rape, and who knows? Maybe the system will start working against corruption next. Why risk all that?

But that can’t be why the UK government is huffing and puffing against Google, Starbucks and Amazon. The Brits feel that those companies pay very little tax in the UK even though they make a considerable sum there. The best part? None of this is illegal; these companies just use (perfectly legal) ways to minimize taxes. And so the Brit government has gone crazy: they are demanding that such corporations pay more taxes than they are legally obligated to! Because that would be the “moral” thing to do!

That is dumb at so many levels:

-         Firstly, taxes are legal obligations (on all of us, not just corporations), not moral obligations.

-         Shareholders would throw a fit if companies started paying a pound more in taxes than they have to. Or has the Brit government lost all understanding of how stock markets and shareholders operate?

-         Just a decade or two back, the Brits were among the biggest proponents of free trade and globalization. Now they find that companies prefer to operate out of countries like Ireland to reduce taxes. C’mon, UK, you can’t have it both ways. The genie is well and truly out of the bottle.

-         If the Brits really feel the law isn’t right or has loopholes, then go ahead, change your law. But then you’d risk several companies leaving UK. Future investments may avoid the UK. And with that would go several jobs. Are you willing to risk all that?

-         Besides, even changing Brit laws may not be enough. There are all sorts of tax treaties between countries. Good luck trying to renegotiate those such that it all works out exactly the way you wish.

I think that the UK government knows every point made above. Which is why they haven’t gone and changed their tax laws. And it’s also probably out of desperation and frustration that they are asking companies to pay more taxes out of a sense of fairness!

Or maybe they are resorting to words like “fairness” and “moral” because they are so totally incompetent or lazy (or both) at governance that they are avoiding the hard task of evaluating how to frame new rules to collect more taxes without scaring away investors and companies.

Now I get what Scott Adams meant when he wrote:

“Fairness is a concept invented so dumb people could participate in arguments”.