KPMG have circulated a news release following the successful meeting of the OECD in Seoul where 35 tax administrations agreed to co-operate more closely to tackle tax abuse. Loughlin Hickey, senior tax partner world-wide at KPMG called this a "missed opportunity". KPMG said the forum:

"failed to address the most basic problem of tax administration - lack of trust between taxpayers and governments."

Hickey added:

"the Seoul Declaration paints a picture of non-compliance as something outside the law - whilst acknowledging that tax minimisation is legitimate it brands an undefined part of legitimate planning as unacceptable. There is a case to be made for restraint in tax planning (through a code of conduct for example) but this cannot proceed in an atmosphere where tax administrations assert that they are the arbiters of what constitutes compliance and acceptability."

Perhaps I should spell out in the simplest possible terms what those who have to be more diplomatic on this issue cannot say, but undoubtedly think. First of all Hickey is wrong, tax authorities are the sole arbiters of what constitutes compliance and acceptability. This is called living in accordance with the rule of law, and is fundamental to the working of democracy, a point Hickey seems to ignore. And second, those authorities don't trust KPMG because it's intent is to undermine the process of tax compliance. Tax compliance is, I would add, paying the right amount of tax (but no more) at the right time in the right place. Tax avoidance on the other hand seeks to subvert at least one of these three fundamental components of tax compliance and as such will always break down the relationship of trust between taxpayer and government.

Whilst KPMG continues to promote tax avoidance, as it does, it will be in perpetual conflict with government. This is inevitable. The solution is in Hickey's own hands. He needs to accept the rule of law, the right of democratic government to tax and that the obligation of the citizen (corporate or individual) to the state in which they operate or reside is fundamental to corporate and personal responsibility (a subject to which KPMG pay token, but entirely meaningless regard whilst they persist with the arguments in this press release).

The rule of law, democratic choice and acceptance of responsibility are the bedrock on which our society is built. KPMG appear to accept none of them. Hickey's own words demonstrate this. He says:

"Multinational corporations are actively shopping around the world for the best deal on taxation and those governments that realise this are redrawing their corporate tax systems to encourage inward investment."

"Intergovernmental organisations like the OECD need to recognise and sponsor the view that a purely legalistic approach to tax law design and revenue collection is not enough. It is only by engaging in discussions with taxpayers and tax intermediaries that authorities worldwide will rebuild the trust necessary for the efficient and effective administration of the tax system - which in turn should be aligned to a wider economic purpose than simple tax collection."

Of course, what he does not say, is that KPMG are shopping around the world for the best tax deal for their clients, and that this press release is part of a process of putting pressure on those governments to do what those clients want even though government is answerable to electorates in a great many of the countries who were represented at Seoul. This is indicative of his disregard of the democratic process. Second he argues that law is not enough, and he wants concessions which go beyond that. This is unacceptable, because it's about non-compliance with the law. Thirdly, he implies quite explicitly that those who do not cooperate with his wishes will lose out; companies will go elsewhere.

Let's be clear what this means. He's saying that we have a choice now. It's between the elected governments of the world choosing how they operate their tax systems, or about them seeking the consent of the multinational corporations of the world in how they might do so. The former is about government by and for people. The latter is about government by and for capital. We have the former. Hickey clearly wants the latter. But this call by him is, quite simply, a call for the overthrow of the democratic state. Which is why it has to be resisted and why I continue to be of the view that KPMG, by promoting these right wing views is not doing so as a professional services provider but is instead putting forward a political agenda unacceptable to the vast majority in society, and as such is in my view one of the greatest threats to democracy in the world at this time.