Wednesday, 15 December 2010

Dear Luke Pearce

This is in response to a letter by Luke Pearce to Sir Philip Green as published on

Dear Luke Pearce

You do make a poor argument. You will undoubtedly carry out your purchases from another, possibly very similar business to the Arcadia Group, which will have their own ways of minimising the impact of taxes on their bottom line.

As with all outgoings in a business, tax is just another expense. This, combined with other expenses affect the cost of products, the wages of staff and the profitability of shareholders (many of which, if not most are ordinary people like you and me), who actually own the business. Sir Philip Green's job is to minimise these costs to be able to (a) provide a return to shareholders, (b) keep prices of his products low and competitive and (c) generate enough money to be able to pay his workforce in line with or above market rates.

The assertions in your letter seem to suggest that Sir Philip Green should voluntarily pay more tax than he legally owes. Why would anyone in the their right mind structure their business in a way to maximise costs? How absurd would that be?

Please note the distinction between tax avoidance and tax evasion. Tax evasion is non-payment of taxes due and a crime. Tax avoidance is a way of structuring your finances in a way so that you don't pay more than you have to. As allowed by law.

Sir Philip's partner, born in South Africa and a resident of Monaco is not liable for taxes in the UK. You are assuming that £285 million is untaxed. That's wrong. It IS taxed. In Monaco. Are you suggesting Her Majesty's Government tax people who are not British and not resident in Britain?

As a public servant, you are not driven by the need for growth and profitability as people who risk their all in running a business are, but I am sure you understand what it means to reduce costs. You do it too, when you shop around for food, clothes, mortgage deals, benefit entitlements, etc. Or buy cigarettes and liquor from trips to the European mainland. Okay, I'll admit there's a difference in scale but the principle is the same.

I don't see how you see yourself as 'shortchanged' and a victim. Was it your money that he earned? I wonder if you have ever voluntarily paid more tax that you were legally obliged to. I think not.

What if I suggested that every time you make a purchase, donate a percentage of the cost to the HMRC? It's the same thing - if Sir Philip Green pays more taxes, his products will cost more. Eventually it is YOU, the customer who will have to pay more.

On another note, you were able to shave off a whopping £120,000 or 45% of your non-staff and overtime budgets. I can only imagine the amount of flab there might have been for you to be able to almost halve that. And I suspect you already know you're going to better that.

If you must protest, then do so to bring down taxes in this country so we are competitive internationally. And if we're all in this together, surely there are 'culprits' other than Sir Philip Green's wife (who dutifully complies with the law of the land), who you could be targeting. For example, that great bastion of the left - The Guardian Media Group's parent company is one half of a joint venture that is incorporated in the Cayman Islands. Eden Bidco, the holding company formed by the Guardian Media Group and private equity house Apax last year to acquire Emap, is also registered offshore.
I wondered if you knew.

Yours sincerely

A very concerned citizen
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