Partner Article

The one about entrepreneurial-driven economy & disproportionate taxes

The Bank of England has cut growth forecast to almost zero. Yet Ve interactive, who have outperformed the Government’s growth forecast for the past 18 months and will continue to do so for the coming year, have also produced significant online growth for 96.5% of its customers through its successful cart recovery and remarketing technology.

Ve Interactive is serving over 1,700 websites already. Its cart recovery software concept was conceived back in 2007 and after R&D, the company was formed in 2009. Since then the technology has expanded in leaps and bounds and is still evolving as a result of client input and operational experience. The company now has six offices worldwide and employs over 140 staff.

“I’m gutted about the 3.5% of clients that didn’t grow, the fact is they were sadly already going out of business,” says David Brown, co Founder and CEO, Ve Interactive. “It’s a truly incredible feeling to be able to drive revenues for our customers by simply helping them to increase their online efficiency. As a result, they don’t have to look for new budgets to fund more advertising, traffic acquisition or to just pay for search terms. By working with our software platform, they only pay us when we succeed.”

However the big question is, what can the British government do to drive more growth in the UK economy and have more deployable capital available at the treasury?

Brown outlines a pertinent view on this subject:

“Google’s monopolistic profits are not fuelling the British economy, but rather are dragging capital out of it. Google contributed just £6m to the exchequer on UK profits of £395m FYE 2011. However, UK bonus and share awards, not to mention inter-company expense feature significantly in its accounting practice.”

Over to Google’s executive chairman for an explanation - “We could pay more tax but we would have to do so voluntarily. “There are lots of benefits to [being in Britain]. “It’s very good for us, but to go back to shareholders and say ‘We looked at 200 countries but felt sorry for those British people so we want to [pay them more]’ … there is probably some law against doing that.” Eric Schmidt.

If the British Government wants to shift its growth forecast, it should start to understand companies like Google with its large offshore financial strategy. Continued Brown, “this is ultimately depriving the UK economy of a quarter billion of pounds in tax revenue every year, which could equate to £2bn of capital in the UK digital economy over the next 5 years, based on current growth.”

The cash extraction from the digital economy hits entrepreneurial start-ups the hardest. To quote Entrepreneur Country’s Julie Meyer, “ Society should be organized around the entrepreneur in order to grow prosperity for the broadest number of people. When this doesn’t happen, then the work of Europe’s homegrown entrepreneurs gets hoovered up by firms based elsewhere, and the benefits accrue to those other geographies as well. What is needed is more headquartered based major corporations in Europe which have started in the last decade leading the new paradigm.“

Brown agrees, “The extra cash circulation within the British economy would make the UK market more attractive for all. Google have implied that the UK has weak tax regulation for their sort of business; it’s now time for the Government to address this. Google ease their conscience and handle press criticism by insisting that they are compliant with regulation, create jobs in the UK and contribute office space and campus space to start-ups. However, the tax generated by this and their CSR start-up support falls massively short of what the Government could gain by taxing its UK generated profits. In fact, Google’s attempt to counterbalance the shortfall is over 80% short of the revenue that full taxation would generate for the British economy! If I hired everyone at Google and gave them a 10% pay raise but taxed it’s UK income, I could still net over £200m to the UK treasury in one year and closer to £1bn+ over 5 years. This alone could reduce required quantitive easing, impacting the entire population!”

Brown takes great pride in leading his homegrown, now multinational technology company and in offering an austerity-conscious business model that creates growth for its clients without incurring upfront or additional cost, and he intends Ve Interactive to continue to help online businesses to drive more revenue by being smart, rather than just by spending more.

As a footnote he added: “The failing Euro means it’s cheaper now to go to mainland Europe for a summer holiday than it has been anytime in the past two years and many people are planning to take advantage of this. However, consider doing the British economy a favour if you do. When you go online, type in a travel website URL into the nav bar of your browser, rather than going to Google to search and then giving them a slice of the holiday suppliers’ profits.”

This was posted in Bdaily's Members' News section by Kathy Heslop .