Making them pay
How can countries effectively tax multinational corporations, if they should indeed be taxed? What do you think of the idea of making their tax offences public, perhaps with the aim of informing customers so that they can feel free to boycott or take their business elsewhere? Do you think Cameron’s claim that this would violate their confidentiality valid, or is this blurring the line too much between individuals and corporations?
I always find it quite disturbing when a man feels like breaking the law, just because of thinking that he is better than someone else. In this case, it is the arrogant multinational companies against other entrepreneurs and the state. Even though, they might not be breaking the law (we actually do not know exactly), they make use of their smart accountants to keep the transactions as secret and complex as possible. They prevent from paying the high UK tax rates by moving the profits offshore, where the taxes are much lower.
ReplyDeleteHowever, the most disturbing things of all is Mr. Cameron spokesman’s statement, that they do not want to undermine the taxpayers confidentiality, by naming the “thieves” publicly. The only relevant reason for such statement is his fear of this companies leaving the country. Nevertheless, that might be a very poor reason, since I cannot quite imagine those corporations leave a country like UK. In my opinion, it would be totally OK to “name and shame” them, as Margaret Hodge suggests. Still, they are not going to embarrass those who properly pay the taxes. If someone breaks the law and in fact steals huge sums of money from the state, I do not see why he should not be punished. It is completely up to the customers to evaluate the situation and either boycott the company or continue taking advantage of its services.
As Ms. Hodge said, the multinationals should not have any comparative advantage. They should pay the tax rates they are assigned in the country the profits were made in. The corporations should be thankful for having the economies of scale they have, and be obedient in the field of taxes. To tackle the problem, the governments should cooperate on an international level. It is a good sign to see that the issue is a priority for the next G7 and G8 meetings. I believe the governments should also use the existing EU connections and establish some common policies and rules. I think Slovakia tries to solve a very similar problem (or at least I want to think they try). The biggest corporations (investment groups) move their profits offshore to pay the taxes there. In my opinion, the recent increase in the tax rates will only add fuel to the fire with even more companies moving out.
I agree with most of what you said, Simon. But I would like to offer a broader look at the problem:
DeleteIt has undoubtedly become a trend for large corporations to move their property offshore in order to avoid taxes, but honestly, can you blame them? It becomes increasingly hard to find firms that stay in their country or origin that end up reaching billion euro turnovers. Even companies with great reputations for legality and thoughtfulness for their customera and emplyees such as Google have drawn a line which the governement has crosses and have started leaving their homelands in hopes of better economic environments.
The solution doesn't lie in whether to brand the companies as bad or not; the situation needs to be changed drastically in different ways if governments want these corporations to come back or not leave in the first place. Put simply, I don't believe that the current fiscal policies of most countries of the EU and the US balance out the cost and as long as the situation does not change, the management will always be on the lookout for loopholes and ways to 'mess with the system' in order to, well, survive.