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A Cheeky Welsh Town Goes 'Offshore' To Avoid British Taxes

Dec 24, 2015
Originally published on December 25, 2015 5:14 pm

Tax avoidance is a big issue in the United Kingdom these days. The discussion usually revolves around a large multinational company that "goes offshore" by using creative accounting methods to reduce or avoid paying British taxes on its profits.

But in a small town in central Wales, local business owners have decided to try the same thing — to make a point.

The town is Crickhowell, nestled in the Brecon Beacons National Park, surrounded by rugged mountains with a river tumbling past the remains of an Iron Age fort. Crickhowell, which has fewer than 3,000 residents, is the hub for surrounding villages and does a fair tourist trade, given its picturesque setting.

But these days, it's also known for local activism against big companies like Starbucks, Facebook and Google that pay little or no tax in the U.K.

When multinational companies shift income from Britain to a lower-tax country, the U.K. misses out on several billion dollars a year in taxes, according to an audit report.

A Town With Just One Chain Store

Michael Cashel, who has been here 40 years, runs a butcher shop right next door to the Corn Exchange, a pub that recently closed.

When a chain store proposed moving in, hundreds of people turned out not just to protest but to work out a plan for buying the property themselves to keep the town's businesses local.

Cashel says there's just one chain outlet here, a pharmacy called Boots, owned by Walgreen's, the U.S. giant. He's proud that his town has defended its independent businesses so successfully.

"Very rare, very rare, yes. Boots, don't talk about Boots!" he says with a laugh. "They're so mean, they wouldn't put up a Christmas tree last year."

'We're Revolting'

Across the street, at the Number 18 coffee shop, proprietor Samantha Devoss says she and a few other businesses have put forward a plan that mimics some of the tactics used by multinationals to avoid paying taxes in the U.K. They have submitted the plan to the tax authorities, who are studying it.

The point, she says, is not to deplete the British treasury even further but to force the government to crack down on big tax avoiders such as Facebook — which reportedly paid about $6,400 in U.K. taxes last year. Devoss says this is less than what her waitress paid.

"We're really angry, and it's totally unfair, 'cause we pay all of our tax. So we're — we're revolting in Crickhowell!" she says with a laugh.

There's a strain of whimsy about the campaign, although the underlying point is serious. Devoss says the town's businesses don't actually want to pay their taxes to some offshore entity.

"No, we don't, really," she says. "We want to pay our taxes and we want our taxes to stay in the U.K."

She calls small businesses the backbone of the country and says the chancellor of the Exchequer — Britain's equivalent of the U.S. Treasury secretary — relies heavily on smaller firms to pay tax.

"And if we weren't to pay our taxes," says Devoss, "I believe that he would have to close the loopholes that the big companies have."

Rebelling against central authority is something of a U.K. tradition. Fans of old British comedies may recall the 1949 movie Passport to Pimlico, in which a London neighborhood finds a document that seems to make it legally a part of France.

Possible Penalties

The Crickhowell tax campaign doesn't go that far. But the town could face penalties from Her Majesty's Revenue and Customs Office if its "offshore" tax plan isn't accepted.

Crickhowell Mayor Ann Jeremiah says making ends meet is a constant struggle. No sooner had residents launched their fundraiser to prevent the closed pub from turning into a chain store than a bank announced it would close — the one with the town's only ATM.

On top of that, Jeremiah says budget cuts are getting worse, to the point that even public toilets were faced with closure by the county council, which said it could no longer afford to maintain them.

"They were going to close the toilets in Crickhowell, which is taking us back to pre-Victorian days," she says. "So the town council have had to find the money to keep those toilets open. We're now facing library closures."

If nothing else, the town is now getting more attention than it has in a long time. The BBC plans to air a documentary on the "town that went offshore" sometime next year.

Copyright 2015 NPR. To see more, visit http://www.npr.org/.

Transcript

ROBERT SIEGEL, HOST:

In the United Kingdom these days, tax avoidance is a big issue, especially when a large multinational company goes offshore by using creative accounting methods to reduce or avoid paying U.K. taxes on its profits. In a small town in Wales, local businesswomen and men have decided to try the same thing to make a point. NPR's Peter Kenyon takes us now to the town that went offshore.

PETER KENYON, BYLINE: The town is called Crickhowell, and it's nestled in a Welsh valley surrounded by rugged mountains with a river tumbling passed the remains of a fort dating from the Iron Age. Crickhowell is the hub for surrounding villages. It does a fair tourist trade given its picturesque setting inside a national park. But these days, it's also known for something else - local activism against big companies like Starbucks, Facebook and Google that pay little or no taxes in the U.K. It's not hard for a big corporation to declare it's headquarters in another lower-taxed country. Lots of folks complain about that kind of tax avoidance. But people here decided to do something about it.

MICHAEL CASHEL: My name is Michael Cashel. I've been here 40 years.

KENYON: Cashel runs a local butcher shop right next door to a pub that recently closed. Cashel says when a chain-store proposed to move in, hundreds of people turned out not just to protest but to work out a plan for buying the property themselves to keep the town local. Crickhowell is gaining a reputation as the town that defends its independent businesses. Cashel says there's just one chain here, a pharmacy called Boots, owned by the U.S. giant Walgreen's.

CASHEL: Very rare - very rare, yes. Boots, yes, don't talk about Boots. (Laughter) They - they're so mean, they wouldn't put a Christmas tree up last year.

KENYON: Across the street, at the Number 18 coffee shop, proprietor Samantha Devoss says she and a few other businesses have put forward a plan that mimics some of the tactics used by multinationals to avoid paying taxes in the U.K. The point she says is not to deplete the British treasury even further but to force the government to crack down on big tax avoiders such as Facebook, which Devoss says paid less in taxes last year that her waitress.

SAMANTHA DEVOSS: We're really angry. And it's totally unfair because we pay all of our tax so we're - we're revolting in Crickhowell.

KENYON: (Laughter)Yes, well we won't touch that one but - so you don't really want to pay your taxes to some other offshore entity?

DEVOSS: No, we don't really. We want to pay our taxes, and we want to have our taxes to stay in the U.K. Small businesses are the backbone of the country and the Exchequer relies on us to pay our taxes. And if we weren't to pay our taxes, I believe he would have to close the loopholes that the big companies have.

(SOUNDBITE OF MUSIC)

KENYON: Rebelling against central authority is something of a British tradition. Fan's of the old British comedies may recall "Passport To Pimlico" in which a London neighborhood finds a document that seems to say it's legally a part of France.

(SOUNDBITE OF FILM, "PASSPORT TO PIMLICO")

UNIDENTIFIED ACTOR: (As character) A British passport for Pimlico - there must be some mistake.

KENYON: What's happening in Crickhowell is less dramatic than that. But the town could be risking penalties from her Majesty's revenue and customs office if its tax plan isn't accepted.

ANN JEREMIAH: You want - do want milk - yes?

UNIDENTIFIED MAN: Yes, please.

JEREMIAH: Sugar?

UNIDENTIFIED MAN: Actually, that would be great.

KENYON: As the mayor, Ann Jeremiah, serves coffee to visitors, she says it's a constant struggle. No sooner had they launched their fundraiser to promote the closed pub from turning into a chain-store than a bank announced its closing, the one with the town's only ATM. On top of that, she says, budget cuts are getting worse.

JEREMIAH: One of which was the toilets. They were going to close the toilets in Crickhowell, which is taking us back to pre-Victorian days. So the town council have had to find the money to keep those toilets open. We're now facing library closures.

KENYON: If nothing else, the town is now getting more attention than it has a long time. The BBC plans to air a documentary on the so-called town that went offshore next year. Peter Kenyon, NPR News, Crickhowell, Wales. Transcript provided by NPR, Copyright NPR.