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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
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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