I'm going to be a bore on the new KPMG report on tax and governance - but there's so much in it that it's worth it.

One of the things I always do before publishing anything of significance is to undertake a 'gap analysis'. That's a check to make sure that the glaringly obvious has not been omitted. I can only guess that KPMG, for all their experience, did not do this on their new report. Let's take an obvious word one might look for, for example, when considering a firm that operates in 42 of the world's more obvious tax havens (even if it only mentions 38 of those on its website) (source: Closing the Floodgates). That word is 'offshore'.Do you want to know how many times that turns up? Well, it doesn't, not once. 'Tax haven' does, just once.

Take another issue you'd think KPMG might discuss given their own delight in playing off legal systems, as shown by their own structure. Although they discuss the need to comply with the 'law of the land' not once do they mention that a large part of their advice is based on deciding in which land you might wish to comply with the law, whether or not your transactions really take place there. Doesn't that seem a bit of an omission in the circumstances?

And then they mention lobbying. They say:

Probably most commentators would regard such lobbying as legitimate, provided it does not involve bribery or other inappropriate inducements to comply with the company's wishes.

Well, yes so they might. But KPMG makes this into an art form. Take the KPMG corporate tax rate survey as an example. This has been published for 14 years. The 2006 report they say:

From our past 14 years' tracking experience it appears to be economically and socially desirable for countries to strive for lower corporate income taxes.

That's not lobbying. That's blatant promotion of tax competition that seeks to force governments to cut the tax rate on mobile capital. But since, as KPMG recognise in the same report:

As transport, communication, and trading links improve across the world, corporations are finding it progressively easier to site their operations wherever they can find the best combination of resources, skills, finance, security, and the effective rule of law. Tax, under these circumstances, becomes effectively a price that multinationals have to pay to make use of the goods and services that a country can provide. Like any astute consumer faced with this kind of choice, corporations are shopping around globally for the best combination of price and value.

In other words, KPMG might want lower corporate tax rates, but they also want the services tax pays for. Without saying it (they don't need to) they're endorsing the process that ends up with Macedonia charging no tax on retained profits of companies but 40% payroll tax on people earning a few thousand pounds a year. That's not lobbying: that's seeking to undermine the choices of democratically elected governments. What are the ethics of that? This report says nothing on the subject.

I'm sorry KPMG, but this report is seriously lacking. That would be OK, we're all guilty of that sometimes, but this one can't be forgiven for lacking in the areas where KPMG do much of their work. That can only be a deliberate oversight. Which makes one question whether this report is meant to be a serious contribution to the debate on the issues it claims to address.