The UK House of Commons Treasury Committee has announced that it will investigate sweeping changes to the country's corporate taxation structure, including exploring the possibility of basing corporate tax rates on company turnover rather than profit. 'The complexity of UK tax law is turning what should be a simple principle—that everybody should pay the correct amount of tax—into a piece of elastic,' commented committee chairman Andrew Tyrie, arguing that tax policymakers can and should do more to 'limit the elasticity'. The inquiry will investigate the broader dynamics of the UK's shrinking corporate tax base, while also scrutinising specifically whether HMRC is doing enough to stamp out avoidance.

Google symptom, not cause

The inquiry comes amid heavy criticism of a recent tax back-payment agreement struck between HMRC and Google. Experts have been quick to point out that the £130m settlement agreed to by Google pales in comparison to the estimated £7.2bn in profit generated by the company in the UK since 2005. Even when combined with the £70  worth of taxes already paid by Google during that period, the settlement amounts to a mere 2.77 per cent average of Google's annual profits in the UK, a meager offering when compared to the 20 per cent corporate tax rate applied to a majority of British businesses. The Google settlement raises questions about whether the country's corporate tax structure sufficiently equips government and regulators to ensure fair taxation. However, the House of Commons inquiry will not target Google specifically. 'Google may be the symptom, but it is not the cause,' commented Mr Tyrie. Sources: The Guardian; The Guardian (2)