I've written this morning about new research that shows that Barclays and HSBC appear to under pay tax in the UK compared to their share of economic activity in this country. To show this Meesha Nehru and I used a 'unitary taxation approach' to allocating their profits to countries.
In December the Tax Justice Network published a paper by Sol Picciotto explaining unitary taxation. Amid rising public concern at how multinational firms ride roughshod over international tax rules, the paper advocated a shift to a system unitary tax system because under this approach the global profits of a multinational are ‘apportioned out' to countries according to the genuine economic substance of what it does in each place. Each country can then tax its share of global profits at its own rate.
Not everyone agrees, of course, so another paper, also written by Prof. Picciotto has answered ten criticisms of the approach.
What's important about all this? Well, it shows we don't have to put up with corporate tax abuse. There are alternatives. And the fact is, those alternatives would work. That's why we promote them.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Of course Unitary Taxation as envisaged by Picciotto is arbitrary He actually proves this in answers to Criticism 6, where he says agreement by countries is unnecessary. If that isn’t arbitrary, I don’t what is.
Countries don’t agree on tax now
Why impose the requirement in future?
Oh come on, what is the purpose of tax treaties? What is the purpose of the various EC Directives?
They wouldn’t exist unless there was agreement among the signatories.
And they don’t work – as the OPECD agrees
Haven’t you noticed the zeitgeist?
I’ve realised that if the current law wasn’t the way it is now and the State taxed, say, premium bond and lottery wins, more UK tax would be collected. The lucky winners have clearly received an economic benefit here in the UK on which no tax has been paid. Using your logic above – of apply a new hypothetical regime to tax payers – does this make of recipients of these currently tax free winnings immoral tax avoiders in the same way as it Barclays and HSBC? Like HSBC and Barclays, the winners are just following the spirit of the current law.
Not if the law says not
That’s not the same as shifting profits
… and where is your evidence of profit shifting other than a comparison to an arbitrary calculation. It may have escaped your attention but there was a financial crisis in 2008 and the banks have large carried UK losses.
And they mysteriously had no losses elsewhere?
Haven’t you heard of loss shifting?