The CBI needs to keep calm

Posted on

Richard Lambert at the CBI had a letter in the FT this week in response to their first rate editorial on tax shortly before Christmas. He said:

Your editorial “A taxing world” (December 22) made the startling comment that the payment of corporate tax has been turned “largely into a voluntary gesture by the well-run multinational”. The reality is that most companies, large and small, pay substantial amounts of tax. Corporation tax receipts are close to 10 per cent of UK tax receipts, and the overall business tax burden amounts to about a quarter of the total: business also collects more than another quarter on behalf of the government via Pay As You Earn. Far from being a soft touch, the steady exodus of multinational companies and mobile talent to other jurisdictions demonstrates that the UK’s status as an international business location is being threatened by its heavy-footed approach to business tax.

Even more extraordinary, your comment fails to tackle the arguments now being presented by supporters of UK Uncut. The idea that public spending cuts could be significantly offset if only big business were to pay its “fair share” of tax is disingenuous, and is based on numbers that are tenuous in the extreme.

Finally, the editorial confuses the issues of country by country reporting with “formulary apportionment”, a reference to the forthcoming European Union proposal for a Common Consolidated Corporate Tax Base across Europe. The latter is no panacea for resolving the complexity of the international corporate tax system.

Economic recovery and job creation in the UK over the next few years will depend on growth in business investment and trade. So it is important to build on the strengths of the UK as a business location, and to tackle head on arguments that give a misleading impression of the role that business plays in our society.

Richard Lambert,

Director-General,

CBI (Confederation of British Industry)

I think Richard Lambert needs to be a little more realistic.

First tax avoidance is real. We know it is. He should not pretend otherwise.

Secondly although the lovers of neoliberal economics say that if it were to be eliminated the incidence would all be on consumers with the very greatest of respect that is utter nonsense. It assumes that all those undertaking it are monopolists and consumer pressure has no influence on pricing. I presume Richard Lambert believes in markets, in which case a significant reason for tax avoidance is that it benefits owners of capital not consumers and its elimination would do the reverse – to the benefit of the society from which he demands so much ion order that his members can make profit.

Third, no one is saying eliminating corporate tax abuse will stop all cuts. Hitting tax evasion will have more impact and even then the issue will not be resolved by tax collection alone. But tackling avoidance, evasion and late payment will help and to deny it is just plain wrong. Nor are the numbers tenuous. They’re the best we’ve got and the Revenue agree corporations have the highest tax abuse rate – something Lambert can’t avoid. Claiming that PAYE collected somehow gets round this fact is a lot more tenuous: it’s just wrong.

And Lambert is also wrong to say because country-by-country reporting and formulary apportionments aren’t panaceas they shouldn’t be used. Tell us why not, please? And what’s your alternative?

Lambert’s letter is a spectacular case of the “man doth protest too much”. Get down and discuss the detail Richard. No one is saying what you’re suggesting. Now try and engage with the debate we are creating. That’s not too much to ask, is it? I’m open to meet at any time.