Justin King says it is now for consumers to ask 'tough questions' of businesses
Half of the FTSE 100 chairmen who responded to a new survey believe public anger over multinationals using low-tax jurisdictions to minimise their tax bills is justified.
Business has to come to terms with the emerging reality that tax is not just a legal issue, it is also a political and moral issue, said one chairman, according to the Financial Times.
Many who thought the anger was misplaced accepted that it was genuine, but ‘said it should be directed at policy makers rather than companies’, the FT reported.
'Dissatisfaction should be directed at the tax legislation'
Korn/Ferry Whitehead Mann conducted the survey of FTSE 100 chairmen at the end of December. It asked: ‘Do you think that public anger about how some companies are optimising their tax affairs is justified?’
A spokesperson told Tax Journal that 25 chairmen responded to the survey but one declined to answer the tax question. The other 24 were split equally. One respondent suggested that ‘the anger is being stimulated by politicians and press, but the dissatisfaction should be directed at the tax legislation, not the companies observing it’.
One respondent said: ‘Directors have a fiduciary duty to minimise tax bills providing they are acting ethically and not inviting legal or other enforcement risks. Politicians moralise and showboat, when they should be relentlessly tightening tax loopholes.’
During this week’s House of Commons debate on corporate tax avoidance, Conservative MP Nick Gibb said: ‘Too often, directors seem to take the view that their fiduciary duty as directors stops at the maximisation of shareholder value, but section 172 of the Companies Act 2006 makes it clear that the duty of a director to promote the success of the company must be subject to a number of wider considerations including “the desirability of the company maintaining a reputation for high standards of business conduct”.'
Tough questions
Corporation tax for international corporations is ‘an elective tax’, Justin King, chief executive of Sainsbury’s, told Channel 4 News last night. King told Sky News last November that consumers who think companies are not ‘contributing to society’ have the power to bring change ‘very quickly’.
Last night he told Jon Snow that such companies can ‘choose quite legally to organise their affairs and choose to pay tax pretty much wherever they wish in the world’.
Reductions in the rate of UK corporation tax represented a ‘big step’, he said. The main rate was on a journey down to 20%, which would be ‘competitive in world terms’.
King added: ‘I think it’s now for consumers to ask tough questions of the businesses that they give their custom to, about where they choose to pay corporation tax.
‘Corporation tax is a way we invest back in the community, the country of which we are part. I think companies that wish to trade here, and enjoy the benefits of our consumers and the investment in our infrastructure, our safety and so on, should answer for themselves whether they are contributing properly to our society.’
Consumers were more powerful than governments in this issue, King said. Businesses should be paying tax that is ‘commensurate with the money they make in the country’.
In the recent debate some companies had said that ‘in truth we don’t make money’. But that depended, King argued, on ‘how you choose to fund your marketing, how you choose to pay for brand rights and so on’.
‘If companies believe what they are doing is moral, they should be very happy to lay bare what it is they are doing and open it to consumer scrutiny.’
Justin King says it is now for consumers to ask 'tough questions' of businesses
Half of the FTSE 100 chairmen who responded to a new survey believe public anger over multinationals using low-tax jurisdictions to minimise their tax bills is justified.
Business has to come to terms with the emerging reality that tax is not just a legal issue, it is also a political and moral issue, said one chairman, according to the Financial Times.
Many who thought the anger was misplaced accepted that it was genuine, but ‘said it should be directed at policy makers rather than companies’, the FT reported.
'Dissatisfaction should be directed at the tax legislation'
Korn/Ferry Whitehead Mann conducted the survey of FTSE 100 chairmen at the end of December. It asked: ‘Do you think that public anger about how some companies are optimising their tax affairs is justified?’
A spokesperson told Tax Journal that 25 chairmen responded to the survey but one declined to answer the tax question. The other 24 were split equally. One respondent suggested that ‘the anger is being stimulated by politicians and press, but the dissatisfaction should be directed at the tax legislation, not the companies observing it’.
One respondent said: ‘Directors have a fiduciary duty to minimise tax bills providing they are acting ethically and not inviting legal or other enforcement risks. Politicians moralise and showboat, when they should be relentlessly tightening tax loopholes.’
During this week’s House of Commons debate on corporate tax avoidance, Conservative MP Nick Gibb said: ‘Too often, directors seem to take the view that their fiduciary duty as directors stops at the maximisation of shareholder value, but section 172 of the Companies Act 2006 makes it clear that the duty of a director to promote the success of the company must be subject to a number of wider considerations including “the desirability of the company maintaining a reputation for high standards of business conduct”.'
Tough questions
Corporation tax for international corporations is ‘an elective tax’, Justin King, chief executive of Sainsbury’s, told Channel 4 News last night. King told Sky News last November that consumers who think companies are not ‘contributing to society’ have the power to bring change ‘very quickly’.
Last night he told Jon Snow that such companies can ‘choose quite legally to organise their affairs and choose to pay tax pretty much wherever they wish in the world’.
Reductions in the rate of UK corporation tax represented a ‘big step’, he said. The main rate was on a journey down to 20%, which would be ‘competitive in world terms’.
King added: ‘I think it’s now for consumers to ask tough questions of the businesses that they give their custom to, about where they choose to pay corporation tax.
‘Corporation tax is a way we invest back in the community, the country of which we are part. I think companies that wish to trade here, and enjoy the benefits of our consumers and the investment in our infrastructure, our safety and so on, should answer for themselves whether they are contributing properly to our society.’
Consumers were more powerful than governments in this issue, King said. Businesses should be paying tax that is ‘commensurate with the money they make in the country’.
In the recent debate some companies had said that ‘in truth we don’t make money’. But that depended, King argued, on ‘how you choose to fund your marketing, how you choose to pay for brand rights and so on’.
‘If companies believe what they are doing is moral, they should be very happy to lay bare what it is they are doing and open it to consumer scrutiny.’
