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Water companies avoiding taxes

February 20, 2013 at 2:54 pm

With water bills set to rise by 3.5%, UK customers who are increasingly struggling to pay for basic utilities won’t fail to notice the recent news surrounding six major water companies.

A new controversy has just erupted following the damning conclusions of a report by the not-for-profit group Corporate Watch; it has revealed that Northumbrian, Yorkshire, Anglian, Thames, South Staffs and Sutton and East Surrey water companies have been avoiding paying tax by using elaborate financial arrangements, in a similar fashion to Google, Starbucks and Amazon. These companies borrow money intra-group at favourable rates from tax haven based companies and pay the interest without deduction of tax.

The report reveals other controversial facts, such as the excessive profits and bonuses earned by the CEOs of water companies and the leakage each day of more than three billion litres from pipes badly in need of modernisation (most of the infrastructure dates from the Victorian period).

Since water companies were privatised in 1989, their efficiency and ethics have been questioned numerous times. This new scandal has led David Hall, director of the Public Services International Research Unit, a group that researches the effects of privatisation on utilities and healthcare companies, to urge for a campaign to re-nationalise water companies. Publicly owned companies would be able to borrow money at much cheaper rates than is the case at the moment – as the State is considered a safer investment – and bills would be cut by about £80 per year.

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