Madsen Pirie

There seems to be a mindset in the media that a company’s value to the country’s economy consists entirely in the taxes it pays to the Treasury.  This is completely wrong.  A company can be of immense value to society even if it pays no Corporation tax at all.  Companies create jobs and employ people.  They pay wages to those people who then pay tax on those wages and VAT on things they buy with them.  Company personnel pay taxes when they fly, when they buy insurance, when they buy houses.  They buy supplies and machines to make their products with, and pay VAT on those. Because we want to encourage the investment that brings growth and prosperity, we allow firms to offset their costs against their returns when tax liability is assessed.  An expanding firm might take years to achieve a net surplus of inflows over investment and expenditure, creating liability for Corporation Tax.  Even though it paid no Corporation Tax during that period of expansion, it was of immense value to its country’s economy because of its economic activity.  It’s what they do that counts, not what they pay.  And one must add to this the value to people of the goods and services they produce…

Filed under: Updates |