Taking The Sith: George Osborne reveals possible tax relief for Lucasfilm just after announcing a crackdown on corporate tax avoidance

kamsandhu —  May 16, 2013 — 1 Comment

George Osborne vows to target corporate tax avoidance and evasion after meeting with the G7, shortly before announcing that the latest Star Wars film will be shot and produced in the UK leading to speculation and criticism that the production could be eligible for tax breaks.


Image: huffingtonpost.co.uk

11th May saw the UK’s Finance Minister meet up with the G7, a group of industrialised nations comprising of U.S, U.K, France, Germany, Italy, Canada and Japan, where they agreed to take “collective action” on tax evasion and avoidance. “We must put regimes in place… to deal with failing banks and to protect taxpayers and to do so in a globally-consistent manner,” he said. “It is necessary to collect tax that is owed and it is necessary to reduce tax avoidance.”

During the 2-day summit, Osborne took to Twitter to make a second announcement that the 7th installment of the Star Wars franchise was returning to the UK. Sounds good to us. Except that the production is thought to be eligible for tax relief. That’s right. A discount for Disney-owned Lucasfilm. Film Tax Credits were brought in last year to attract production companies to the UK and prevent British ones heading elsewhere. It’s for films which spend a minimum of 25% of their production costs in the UK and Lucasfilm could qualify for a rebate to a maximum of 80% of core production costs.

Source: Wired.co.uk

Source: Wired.co.uk

Given the chancellor announced further cuts to Arts Council funding during his budget announcement last month, it would seem that while grass roots organisations are having their funding decimated, a multi-billion dollar company could potentially save £100,000,000. There’s no cap to the amount that can be claimed. You might enjoy this pantomime analogy.

You could argue that the production will boost the UK economy. But as Osborne knows, tax avoidance costs the UK economy £25 billion a year annually while tax evasion robs the state of £15 billion. Both those estimates are conservative. And when compared to the £350 million saved by cutting the legal aid budget, leaving the most vulnerable people in society unable to access legal representation, or the “Bedroom Tax” which reduces the welfare bill by £480 million, discriminating against disabled people in the process, it’s clear we are not all “in this together”.

The extent and depth of the “tax haven” habit became all the more clear when Actionaid published a report earlier this week revealing that only two companies listed on the FTSE 100 have no subsidiaries in tax havens while companies like Barclays and Tescos have hundreds. Reinforcing the need for change, the charity said this “hidden obstacle in the fight against global poverty” needs to be tackled.

Image: Guardian.co.uk

Source: Guardian.co.uk

And it gets bleaker still. Today we hear that the amount Amazon paid in tax last year is less than the government grants it received. Yep, just £2.44 million of corporation tax was paid on UK sales of £4.2 billion, receiving £2.5 million from the Scottish Government.

But Osbourne’s happy. He got to post the lamest Star Wars-related tweet ever.

Photo: Twitter.com

Source: Twitter.com


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  1. Things We Learned Last Week (13/05 – 19/05) « - May 20, 2013

    […] this to other news this week that George Osborne had vowed to target corporate tax evasion shortly before announcing the new Star Wars film being made in the UK, which is eligible for tax […]

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