Beleaguered banana operators this week found themselves under fire once again. As retail prices continue to languish, national daily The Guardian has alleged that the use of subsidiary companies registered in low-tax or zero-tax zones is leaving growers and governments of the fruit-producing countries out of pocket.
It's reported that on banana industry spokesperson said:
I really don't understand what they are trying to have a go at. They talk about 'driving down costs', but make no mention of the enormous pressure on price. Retails are now back down at 40 per cent of where they were six years ago. The article says 'bananas are highly profitable' but I am surprised anyone has any money to invest offshore or anywhere else. There is just no money in it.
Which is of course wholly untrue: the tax payments stated were due in relation to reported profits. Quite clearly if profits are reported the money is there.
Chiquita's director of corporate communications apparently said:
It is Chiquita's policy to comply with tax law in every jurisdiction in which it does business, including paying...all tax legally due
No doubt this is true. But as he well knows, I am sure, much tax planning is aimed at finding loopholes in the law and in finding gaps between the laws. The above statement is far from being indication of any form of compliance with good practice or corporate social responsibility. Which is why we issued our Code of Conduct.
Tellingly he added:
Chiquita does not break down earnings by country.
If he did we'd know just what was going on - which is exactly why we argue for country by country reporting.
Dole's director of worldwide corporate social responsibility Sylvain Cuperlier was even more inventive:
The article does not mention the fact that some of the banana companies including Dole have substantial debts which contribute to decreased tax payments.
He may not have noticed that profit is stated after debt charges - in which case the tax ratios are unaffected.
If that's the best response these companies can manage then it's clear that the Guardian was more than justified in drawing attention to the story. It's clear: international tax has to change.