‘Corporation tax is an increasing headache for policymakers [who] are under pressure from large companies, which demand concessions with threats to move their headquarters elsewhere. The problems are aggravated by competition to secure economic activity and corporation tax revenue …The internationally agreed answer to the division of the spoils is the “arm’s-length principle” … but [in practice] arm’s-length pricing is self-referential.
‘Perhaps corporation tax is on its way out and we should tax savers and investors rather than companies. The fiscal implications are not so large as you might think. The UK government raises about 7% of its revenue from corporation tax but much of that would be collected as income tax on dividends even if corporation tax did not exist.
‘Another option would tax companies locally on a fraction of their worldwide income calculated by reference to their domestic activity [or] we might instead look at the underlying economics …
'Advocating global economic agreement is, in general, a recipe for expensive meetings with no consequences. But if corporation tax on multinationals is not to disappear into a morass of complexity and avoidance, there is really no alternative to such agreement – and some fresh thinking.’
‘Corporation tax is an increasing headache for policymakers [who] are under pressure from large companies, which demand concessions with threats to move their headquarters elsewhere. The problems are aggravated by competition to secure economic activity and corporation tax revenue …The internationally agreed answer to the division of the spoils is the “arm’s-length principle” … but [in practice] arm’s-length pricing is self-referential.
‘Perhaps corporation tax is on its way out and we should tax savers and investors rather than companies. The fiscal implications are not so large as you might think. The UK government raises about 7% of its revenue from corporation tax but much of that would be collected as income tax on dividends even if corporation tax did not exist.
‘Another option would tax companies locally on a fraction of their worldwide income calculated by reference to their domestic activity [or] we might instead look at the underlying economics …
'Advocating global economic agreement is, in general, a recipe for expensive meetings with no consequences. But if corporation tax on multinationals is not to disappear into a morass of complexity and avoidance, there is really no alternative to such agreement – and some fresh thinking.’
