Wednesday, 27 February 2013

More Worry About Profits

A few weeks ago there was much indignation because some firms were reporting either no profits, or very small profits, and thus avoiding Corporation Tax.

Today  complaints that Centrica has increased its profits, are not accompanied by any gratitude for the extra tax it will therefore pay.


Sasha said...

Could you be being disingenuous? People were indignant when Starbucks weasled out of paying Corporation Tax by claiming it had made no profits (just as if!).

People are furious about British Gas and its huge profits because it keeps putting up the price of gas to its poor, over-burdened customers.

Gerard Mason said...

Sadly, although the general public might prefer it if vendors reduced their prices until their profits after depreciation and cost of capital were close to zero, the government (and economists) would hate it, since this would constitute the dreaded "deflation", and since it would reduce nominal activity, also constitute a recession. In the case of Centrica, lower prices would also be "bad" from a conservation and low-carbon point of view.

Government would much rather prices remained high, and that they could then tax profits. So they *would* be two faced here if a government spokesman criticised Centrica.