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Aggressive tax avoidance keeps on hitting the headlines



First it was big brands such as Starbucks, Amazon and Google squirming in parliament. Then it was the big four accountancy firms (KPMG, PwC, Ernst & Young and Deloitte) sharing their ‘impartial’ insight with parliament while operating as well-paid advisers to government on tax policy and profiting from rules they helped create. But rarely does the aggressive offshoring behaviour of the otherwise ‘outraged at tax avoidance’ media, especially News Corporation, make the front page.

While the vast majority of people tend to have their tax taken at source through PAYE, the affluent and almost all businesses tend to have more complex financial affairs. Tax is therefore calculated some time later, once profit has been added up and various tax-deductible activities have been taken into consideration.

This makes sense. Entrepreneurship, wealth creation and charitable activity should be encouraged through the tax system. Indeed, many of the things we take for granted – secure borders, domestic law and order, good infrastructure, excellent public health and education and technological progress – could not be provided without wealth creation.

There is a vital virtuous cycle between wealth creation and taxation. One simply could not exist without the other. Without the rule of law and its enforcement there can be no commerce and vice versa.

The tax and regulatory system certainly still imposes too much of a burden on start-up and early stage enterprises which will be the engines of future economic growth. Any pro-business, pro-green government would focus on helping small and disruptive businesses, especially those that operate sustainable models.

The most affluent and businesses gain most from the civil stability and commercial ecosystem that taxation underwrites. A healthy, educated population living in a stable society creates employees and consumers for their products and services.

While there will always be a heated debate about the actual level of taxation, the efficacy of government spending and the role government plays in service provision versus the private sector, the consensus is that a mixed system works.

OECD (developed) countries collected 34% of GDP as tax in 2011. The UK sits marginally above that average with 35.5% and is at the lower end of our trading partners. Our main export partners are Germany (collecting 37.1% of GDP as tax), the US (25.1%), the Netherlands (38.7%*), France (44.2%), Ireland (27.6%*) and Belgium (44%).

At the extreme end of the scale Mexico collects just 18.8%* and Denmark 48.1% (figures are for 2011 unless asterixed). Where would you prefer to live and do business? Mexico has a homicide rate of 22.7 deaths per 100,000 people while Denmark just 0.9.

Pure free market, very low tax economies tend towards mafia states, as law and order becomes unaffordable, and pure state economies tends towards totalitarianism.

The deal is simple. Companies and the wealthy enjoy huge freedoms in, and benefits from, stable affluent societies and open markets. In return, they pay their fair share of tax.

It therefore strikes the majority of people as unethical the lengths to which some wealthy individuals and profitable corporations go to avoid paying any tax at all. This is felt even more strongly during times of austerity. Insult is added to injury with the apparent offence that is taken when they are challenged over their tax returns.

The scale of tax avoidance amongst the wealthy and corporations is estimated to be £33 billion (£13 billion from individual avoidance, £8 billion from tax planning and £12 billion from the 700 largest corporations) – a sum greater that the spend on either defence (army, navy and RAF, £33 billion), police (£5.9 billion), primary and secondary education (£22.5 billion) and primary health (£21.4 billion). This is not the legitimate tax avoidance of personal saving which we need to encourage and that is an essential business investment, but is the use of complex and aggressive tax planning to hide personal and commercial profit.

As individuals and companies fail to pay their share, the burden of tax falls on those least able to pay, cuts needs to be made to benefits and in essential services and civil society starts to breakdown. Cue riots and reactionary politicians. Rather than a gradually rising spiral of affluence and progress, the system is locked into terminal decline.

So who can fix the issue? Wealthy individuals, profitable companies or elected governments. In reality, all three bear some responsibility.

From both a selfish economic and altruistic ethical perspective, individuals should pay for the foundations of a stable society and economy. Companies should also do the same. Anyone who principally operates or resides in the UK should pay the tax of this country. It is in their enlightened self-interest to do so. Governments should look to simplify the rules and enforce the spirit of tax laws that have been passed. They need to take the less well of and start-ups out of tax altogether. In addition, they need to provide HMRC with the necessary resources required to ensure strict compliance.

Taxing more high earners at source and company turnover (rather than profit) would be two ways to ensure greater compliance.

Associate supreme court justice, Oliver Wendell Holmes, said, “Taxes are what we pay for a civilised society.” Those who have gained the most and have the broadest shoulders should pay the greatest share if our country is to thrive, prosper and remain civilised.

Further reading:

MPs deem global companies’ tax avoidance as ‘an insult to British businesses’

The joy of tax

Can tax reliefs bring additional returns for ethical investors?

Simon Leadbetter is the founder and publisher of Blue & Green Tomorrow. He has held senior roles at Northcliffe, The Daily Telegraph, Santander, Barclaycard, AXA, Prudential and Fidelity. In 2004, he founded a marketing agency that worked amongst others with The Guardian, Vodafone, E.On and Liverpool Victoria. He sold this agency in 2006 and as Chief Marketing Officer for two VC-backed start-ups launched the online platform Cleantech Intelligence (which underpinned the The Guardian’s Cleantech 100) and StrategyEye Cleantech. Most recently, he was Marketing Director of Emap, the UK’s largest B2B publisher, and the founder of Blue & Green Communications Limited.


How Going Green Can Save A Company Money



going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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5 Easy Things You Can Do to Make Your Home More Sustainable




sustainable homes
Shutterstock Licensed Photot - By Diyana Dimitrova

Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.

1. Weather stripping

If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.

Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.

Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.

2. Programmable thermostats

Programmable thermostats

Shutterstock Licensed Photo – By Olivier Le Moal

Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.

Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!

3. Low-flow water hardware

With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.

Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.

Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.

4. Energy efficient light bulbs

An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.

New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.

5. Installing solar panels

Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.

Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.

From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!

These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.

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