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Are big businesses to blame for our lack of saving?

Britons aren't saving enough for retirement. Are tax-avoiding multinationals a disincentive for us to save?

 

by Michelle McGagh on Dec 05, 2012 at 08:31

Are big businesses to blame for our lack of saving?

Big businesses are already under fire for paying little or no tax, but could they also be to blame for Britons’ failure to save?

Andy Zanelli, head of retirement planning at AXA Wealth, believes multinational companies are setting a bad example for British people by failing to pay their fair share and the consequences are more far reaching than the loss to the Treasury’s coffers.

This week Starbucks has got a roasting for its tax avoidance, along with Amazon and Google. Chancellor George Osborne has pledged to clamp down on companies and wealthy individuals and the Committee for Public Accounts has told the Treasury and HM Revenue & Customs to do more to ensure more tax is paid.

Margaret Hodge, chairman of the Committee for Public Affairs, said it was a ‘matter of morality’ that companies should pay more.

‘Many taxpayers are angry seeing major international companies reduce their tax liability by taking advantage of the loopholes and reliefs which few ordinary taxpayers and British businesses can use,’ she said.

Zanelli agreed and thinks that in order to encourage individuals to save for the long term the government must prove that everyone really is ‘in it together’.

There is an increasing onus on the individual to provide for their own retirement and put some money aside but as people see their wages stretched further they are witnessing companies get away without paying into the system, which he believes is a disincentive to save.

‘We are told all in this together but you see companies like Amazon, Google and Starbucks not paying tax, not putting anything in. You are talking about brands that people see and interact with every day and if they are providing the thought leadership of not paying tax then they are setting a bad example from a corporate perspective,’ he said.

‘You should not be able to shelter profits; if you make sales in the UK you should pay tax in the UK.

‘If people see the corporate world getting away without paying then they are going to wonder why they should pay their bit.’

All doing our bit

The government has to tackle the legislation to close tax loopholes and also ensure it pushes through the £140-per-week flat-rate state pension in order to motivate people to save, said Zanelli.

‘One crucial piece of policy that needs to go through is that we need to know what we will get from the state in retirement,’ he said.

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5 comments so far. Why not have your say?

ermine

Dec 05, 2012 at 14:51

What the hell is with the victim mentality here? You save because it is in your interests. Or not, if you don't believe that, it's still YOUR call. Either way, it is irelevant if there are thieveing twats getting away with murder next door, unless you are of the impression that Amazon et al have got their sticky fingers in YOUR accounts. They don't, unless you buy from them.

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Cande

Dec 05, 2012 at 16:45

There is no connection between multinationals and individual saving habits . This is not news . International corporates have always planned to minimise their worldwide tax costs and always will. The tax authorities around the world agree tax treaties to deal with these issues . It is laughable that Mrs Hodge thinks that US corporations should be kind and fair and cough up tax not required by UK Tax legislation

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TruffleHunter

Dec 05, 2012 at 17:03

What a daft headline. Citywire gets worse and worse. The reason people find it difficult to commit to saving is three-fold, Either you dont earn enough money, or you spend too much on foreign holidays trying to live the celebrity lifestyle, or if you are trying to save, thieving governments change the rules every other year. The moral hazard created by the benefits system also encourages a spendthrift mentality as people enjoy the cradle to grave socialism.

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Matt via mobile

Dec 05, 2012 at 18:43

In response to the question "What are you going to do for money when you retire?" an alarming number of people either shrug or mention the lottery.

This is usually because they believe that "someone" will provide for them or its just plain ignorance.

Either way, it's not Starbucks fault.

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Joe Bloggs1947

Dec 05, 2012 at 20:16

Many Britons can barely make ends meet at the moment so there is no spare money to invest. There are also the problems of under-performing investments. For example an old colleague has a sister who is a bank manager. He had £6,000 of savings in an account that paid a piffling amount of interest so she badgered him into seeing a financial consultant who advised him to put the money into unit trusts. About a year down the line he commented "My stupid sister got me to see a financial consultant who charged me sixty quid for showing me how to turn six thousand quid into four thousand quid!"

After Enron and similar fiascos people are quite rightly afraid to invest money in financial institutions. Buy-To-Let seems to be a safer option. If one can manage to do this in a university city where there is a constant demand for lodgings, the student rents will pay ones pension. The problem of course is that most people can barely afford one house not two. I did however hear about a young man who had five flats bringing him in rent by the time he was in his thirties. I suspect that he lodged with his parents whilst buying the first flat but to be perfectly honest I don't know how he did it. Allegedly the man was just a clerk in an office!

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