December 2013 Exchequer Statement
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Category: Fiscal Policy
Today’s CSO readings are good news and should be seen in their recent historical context.
News headlines are pointing to the ‘domestic’ part of the economy experiencing an uptick. Let’s look at final domestic demand as one measure of this. The two figures below bear this out, with the latest data coloured in red, and the series indexed to 2008 Q1, the peak of final domestic demand. The first plots out the movement from 2002 until 2013 Q3, the second from 2010.
The clear uptick can be seen, but the economy is obviously still fragile and the uptick, in the context of a rather demand-depressed economy, shouldn’t be overstated.
Here.
The latest report from the FAC is available here.
Using standard provisions in tax codes internet companies face low or no corporation tax bills in the countries of their customers. This issue has been repeatedly raised in the UK by Margaret Hodge, chair of the Westminster Public Accounts Committee. In relation to Google in particular much of the focus has been on whether Google has a permanent establishment in the UK.
This issue is also agitating the chair of the Italian lower house Budget Committee, Francesco Boccia, who has drafted a bill to try and force companies like Google to engage with their customers in Italy through a party that has a permanent establishment in Italy. See this report from Reuters.
The proposal would not tax the multinationals directly but would force them to use Italian companies to place their advertisements, rather than doing so through third parties based in low-tax countries like Luxembourg, Ireland or outside the European Union.
Doubts about the feasibility of such a proposal seem justified but it does show someone trying to take some action on this issue.