For five months now, ordinary British citizens have been protesting tax dodging by British multinational corporations and rich British citizens. Let’s look at what prompted this citizen action and the likelihood of anything similar happening in this former colony.

The spontaneous citizens’ campaign, called Uncut UK, is extraordinary. People have temporarily closed shops and disrupted retail commerce in the country’s busiest retail districts. They have blockaded Vodaphone cellphone service outlets and Boots drugstores. They have occupied Topshop trendy clothing stores. They are now targeting banks, which recently made a symbolic pact with the government to make a few loans and disclose some bankers’ bonuses.

The protests have hit multinationals where they live, so that the campaign has been much more effective than the bog-standard one-day picketing of the Whitehall government offices in London. But Whitehall is to blame. A lot of the objectionable nonpayment of tax by British multinationals is completely legal, and approved by both major political parties.

What prompted this outcry? Voters having tossed out the Labour government after the financial meltdown, which hit the country hard, the United Kingdom has a new government that is a coalition in name only.  David Cameron, the conservative prime minister, is attempting to radically reduce the British welfare state under the guise of austerity necessitated by bank bailouts and amorphous threats from bond vigilantes.

The participants in Uncut UK are making the logical connection between Cameron’s spending cuts and the lack of revenue from the most fortunate segments of British society. But this is no Tea Party. The protesters are objecting to recent tax cuts for corporations. They are asking that British multinational corporations pay more tax. The  household names that are their targets pay little or nothing.

The policies Uncut UK is targeting were initiated by the previous Labour government, only to be expanded in generosity by the current government. The Labour government overreacted to attempts by some British multinationals to move their tax residence to neighboring Ireland, which advertises itself as a European corporate tax haven. Many multinationals, especially American ones, shift their European income to Ireland.

The recently adopted corporate tax policy is called territorial taxation, which means that multinationals owe no tax on their foreign business income to their home government. Technically, dividends paid to the British parent company by its foreign affiliates from their business income are exempt from tax. The British government says it wants to have the most competitive tax system in the G-20.

Combined with transfer pricing, territorial taxation is an open invitation to multinationals to have as much income as possible treated as foreign. Ostensibly, this policy is required by “globalization,” and ostensibly it creates jobs for British headquarters staff. Globalization is starting to look like a fancy word for starving the home government of revenue and its citizens of  non-executive jobs.