The great Olympic tax swindle

 

By Simon Birch

Notebook - A selection of Independent views

http://blogs.independent.co.uk/2012/07/17/the-great-olympic-tax-swi...

Tuesday, 17 July 2012 at 4:00 am

(GETTY IMAGES)

With the country now on starters’ orders for the beginning of the London Games, the first winner has already been announced with the news that McDonald’s have become the first Olympic sponsor to refuse their Olympic tax break.

The move follows revelations by Ethical Consumer magazine and pressure from the online campaign group 38 Degrees whose online petition has gathered close to 100,000 signatures.

In response to the campaign McDonald’s issued the following statement:

“We will not be making any corporate income tax exemption claim with respect to any activity concerning our involvement with the London Olympic and Paralympic Games.”

Thanks to new HMRC rules which were quietly ushered in as part of Team GB’s winning bid, the Olympic site in East London has now become the world’s latest –....

Incredibly these tax rules mean that ‘partner organisations’ such as Coca Cola and Visa have been given a gold-plated tax break and as a result both companies are just two of the corporations that could make a tax-free fortune at the Games.*

The HMRC ruling also exempts the thousands of foreign nationals working on the Games here in the UK from paying income tax, including everyone from journalists and judges to the athletes themselves.

“Whilst we welcome the news that McDonald’s have agreed to forgo their tax break, we will continue to press them to publish the amount of tax they have paid on their Olympic profits,” says Tim Hunt from Ethical Consumer.

“We are now calling on all the Olympic sponsors to do the right thing and follow McDonald’s lead and pay in full the taxes on their Olympic profits. These companies also need to be open about about how much tax they are paying on these profits.”

David Babbs, executive director of 38 Degrees, believes that ordinary people can make a real difference in getting corporates to move on this issue:

“38 Degrees members across the country have said time and again that tax avoidance needs to be tackled. These companies rely on us as their customers so let’s use that power to get them to do the right thing. Good on McDonald’s for their step in the right direction. One down. Next it’s Coke!”

So how much tax revenue is likely to be lost this summer?

“It is bound to cost the UK tens of millions of pounds to give tax concessions to all the large companies who are operating at the Olympic site. We’re giving money away that we need to solve our debt crisis and to preserve essential public services,” says Richard Murphy from the Tax Justice Network.

According to Hunt, turning the Olympic Village into a temporary tax haven was the price of our winning Olympic bid:

“The sad fact is that passing tax avoidance legislation has now become part of the culture for hosting international competitions such as the Olympics and the World Cup. Without these tax sweeteners the International Olympic Committee would simply take their corporate circus elsewhere.”

Hunt claims that tax avoidance is now endemic throughout the entire London Olympic operation with even LOCOG using the much-criticised tax haven registered employee benefit trusts to pay organisers’ bonuses once the Games are over.

Caroline Lucas, MP for Brighton Pavilion is critical of the tax arrangements for this year’s Games:

“LOCOG and the Olympics team have a serious case to answer in allowing the Park to  become a temporary tax haven and so does the Government which has managed to find around £11 billion to fund the Games while at the same time imposing severe economic austerity on normal working people.”

Some of the Olympic sponsors are themselves no strangers to more conventional tax havens. In Ethical Consumer’s report, all 11 of the IOC’s Olympic Partners and all seven of the London Olympic Partners were surveyed.

The results show that apart from British Airways, all these companies including Adidas, Coca Cola and Lloyds have subsidiaries in tax havens.

Ethical Consumer is now calling on the Government to act now against tax avoidance:

“The Government needs to recognise that the issue of tax havens and corporate tax avoidance is a serious issue,” says Tim Hunt from Ethical Consumer. “It can begin by clamping down on legal but aggressive tax avoidance schemes.”

With HMRC recognising that corporate tax avoidance alone amounts to a whopping £5billion a year there is now a growing campaign against tax avoidance, in particular its cost to economies in the Developing World.

According to Christian Aid thanks to loopholes in the global financial system developing countries lose $160bn every year, a figure equal to one-and-a-half-times what they receive in international aid.

As part of their campaign to plug these loopholes, in August Christian Aid and Church Action On Poverty are touring the UK with a tax bus to highlight the issue of tax avoidance both in the UK and in the developing world.

Meanwhile Hunt believes that tax avoidance is now firmly embedded within all major global sporting events:

“Some of the tax laws have already been extended to cover the Commonwealth Games in Glasgow in 2014 and this process of relaxing tax rules looks set to continue with the costs borne, as ever by ordinary tax payers.”

*Both Visa and Coca Cola were contacted but no comment was issued at time of publishing