My background is working with businesses, investors, governments, and NGOs on issues such as supply chain labour standards, corruption and climate change. Often, debates start out with mistrust and misunderstanding but develop through dialogue and collaboration towards clearer expectations and solutions. On the issue of ‘tax dodging’, the public debates never seemed to get beyond the mud-slinging stage. That made me curious.
I had also been working with the G20 and the UN, on green finance; where they are trying to overcome barriers to investment in developing countries, in areas such as clean energy, agriculture and infrastructure. At the same time, I was seeing arguments being made that the global sustainable development goals could be financed simply by collecting a lot more tax from the same investors. The tax debates seemed so disconnected from the perspective of those trying to make investments happen.
You’ve written for us that the level of public debate on corporate tax avoidance doesn’t appear to be improving. What should both sides do to help move the debate on?
It’s good to talk! Both sides should get out of their silos and find ways to really listen to and understand the issues from each other’s point of view. Conferences and panel discussions are okay, but people tend to repeat their existing positions. Roundtable discussions are better. Even better is when NGOs, companies and tax professionals work together on specific issues, or at understanding specific cases. This is happening somewhat in the extractives industries. I have also been involved with a working group of companies convened by the B Team (bteam.org). They have just developed a set of responsible tax principles. This involved some really productive discussions with several NGOs, and I hope it is part of a shift to a new set of relationships.
I’ve just written a paper at the Centre for Global Development, where I am a visiting fellow on the potential for win/win approaches to tax for development, which improves the investment environment and secures revenues (see bit.ly/2BUUQks). I think there is potential for collaboration.
What is the biggest myth of corporate tax avoidance or evasion today?
There are lots of widely repeated myths, such as that developing countries are losing three times more from tax avoidance by multinational companies than they get in aid. It would be nice if it were true, because then there would be a simple way to increase funding for health, education and infrastructure in very poor countries – just by changing the tax rules in Paris or New York. But the numbers are based on a triple misunderstanding: it is an estimate that wasn’t a tax loss; it wasn’t to do with multinational companies; and it was mainly not related to countries that receive aid. More fundamentally, these kinds of myths encourage people to forget that tax is political, and that for a government to collect a large proportion of GDP as tax revenue, a large proportion of the population will bear the tax. It’s the myth of: ‘Don’t tax you, don’t tax me. Tax the guy behind the tree.’
You see this kind of wishful thinking in the UK debates, too. People tend to assume that there must be huge sums of money related to big names like Facebook and Google. But Facebook makes around $14 in profit per user per year, so even though the tax issues are really knotty, wherever the tax is paid it is never going to cover a huge amount of health or social welfare spending per person.
New rules will require large UK companies to publish their tax strategies. From what you’ve seen so far, do you think this will make a real difference to the public debate on tax avoidance and to the behaviour of individual companies?
There is a lot of bland boilerplate in the first year’s strategies from many companies. But is a place to start from, and the fact that companies are required to publish strategies means that they have to put responsible tax on the agenda for the board, and the relevant committees. Saying nothing is no longer an option, and the rules require the strategies to be issued fresh each year. I am sure companies will start comparing with their peers, particularly if investors and NGOs look at these strategies and benchmarking companies. It is impossible to ignore concerns about corporate reputation in tax anymore.
Finally, you might not know this about me but…
I’m a scout leader (but I am not all that good at knots or navigation).
My background is working with businesses, investors, governments, and NGOs on issues such as supply chain labour standards, corruption and climate change. Often, debates start out with mistrust and misunderstanding but develop through dialogue and collaboration towards clearer expectations and solutions. On the issue of ‘tax dodging’, the public debates never seemed to get beyond the mud-slinging stage. That made me curious.
I had also been working with the G20 and the UN, on green finance; where they are trying to overcome barriers to investment in developing countries, in areas such as clean energy, agriculture and infrastructure. At the same time, I was seeing arguments being made that the global sustainable development goals could be financed simply by collecting a lot more tax from the same investors. The tax debates seemed so disconnected from the perspective of those trying to make investments happen.
You’ve written for us that the level of public debate on corporate tax avoidance doesn’t appear to be improving. What should both sides do to help move the debate on?
It’s good to talk! Both sides should get out of their silos and find ways to really listen to and understand the issues from each other’s point of view. Conferences and panel discussions are okay, but people tend to repeat their existing positions. Roundtable discussions are better. Even better is when NGOs, companies and tax professionals work together on specific issues, or at understanding specific cases. This is happening somewhat in the extractives industries. I have also been involved with a working group of companies convened by the B Team (bteam.org). They have just developed a set of responsible tax principles. This involved some really productive discussions with several NGOs, and I hope it is part of a shift to a new set of relationships.
I’ve just written a paper at the Centre for Global Development, where I am a visiting fellow on the potential for win/win approaches to tax for development, which improves the investment environment and secures revenues (see bit.ly/2BUUQks). I think there is potential for collaboration.
What is the biggest myth of corporate tax avoidance or evasion today?
There are lots of widely repeated myths, such as that developing countries are losing three times more from tax avoidance by multinational companies than they get in aid. It would be nice if it were true, because then there would be a simple way to increase funding for health, education and infrastructure in very poor countries – just by changing the tax rules in Paris or New York. But the numbers are based on a triple misunderstanding: it is an estimate that wasn’t a tax loss; it wasn’t to do with multinational companies; and it was mainly not related to countries that receive aid. More fundamentally, these kinds of myths encourage people to forget that tax is political, and that for a government to collect a large proportion of GDP as tax revenue, a large proportion of the population will bear the tax. It’s the myth of: ‘Don’t tax you, don’t tax me. Tax the guy behind the tree.’
You see this kind of wishful thinking in the UK debates, too. People tend to assume that there must be huge sums of money related to big names like Facebook and Google. But Facebook makes around $14 in profit per user per year, so even though the tax issues are really knotty, wherever the tax is paid it is never going to cover a huge amount of health or social welfare spending per person.
New rules will require large UK companies to publish their tax strategies. From what you’ve seen so far, do you think this will make a real difference to the public debate on tax avoidance and to the behaviour of individual companies?
There is a lot of bland boilerplate in the first year’s strategies from many companies. But is a place to start from, and the fact that companies are required to publish strategies means that they have to put responsible tax on the agenda for the board, and the relevant committees. Saying nothing is no longer an option, and the rules require the strategies to be issued fresh each year. I am sure companies will start comparing with their peers, particularly if investors and NGOs look at these strategies and benchmarking companies. It is impossible to ignore concerns about corporate reputation in tax anymore.
Finally, you might not know this about me but…
I’m a scout leader (but I am not all that good at knots or navigation).
