I have already mentioned the new Action Aid report on SAB Miller and it's tax affairs . The Tax Justice Network has also covered this issue. As they report:
The Guardian notes:
"SABMiller said its companies "pay a significant level of tax", adding that in the year ended 31 March 2010, the group reported $2.93bn (£1.88bn) in pre-tax profit . "During the same period our total tax contribution remitted to governments — including corporate tax, excise tax, VAT and employee taxes — was just under $7bn, seven times that paid to shareholders," the company said. "This amount is split between developed countries (23%) and developing countries (77%)."
This looks impressive, but it needs serious unpacking. This appears to be from a concept apparently designed by PriceWaterhouseCoopers called the "total tax contribution" whereby a firm rakes in every single tax it can conceivably claim to be associated with its business, and claims it for itself.
So it will claim, for example, Value Added Tax paid on its businesses, and employee taxes. But of course much of the VAT is paid by consumers, not by PWC. Similarly, the employee taxes are paid by the employees. They are not taxes borne by the company. It is a very clever idea, and we will be seeing a lot more of this Total Tax Contribution, now that people are beginning to wake up to the issue of tax avoidance.#
Bob McIntyre of Citizens for Tax Justice does an excellent job of looking at this Total Tax Contribution framework in The American Prospect. As he summarises it:
"PwC is trying to get corporations to pretend their tax bills are bigger than they really are, by counting not just their actual taxes, but also taxes they don't pay, such as those paid by their customers, workers, suppliers, and so forth."
He looks at how ExxonMobil used this formula to claim to have paid $99 billion in taxes on just $36 billion in profits. He also cites TJN's Richard Murphy, who notes:
"This is bilge -- to put it nicely."
Murphy has more to say on the Total Tax Contribution framework here, here and here. This is one of the problems with tax, more generally. International tax is so complicated that when investigators publish excellent research on corporate tax avoidance schemes, it is relatively easy (as with the recent Vodafone story) for corporations and their supporters to publish their own re-interpretation of the same information, sowing confusion in the public mind. While it always makes sense to look at the other side of any argument, we should remember that corporations have an awful lot of leeway in presenting the facts in ways that present themselves in the best possible light.
I’d add three things.
First, that probably wasn’t my most subtle moment — and the quote got altered in translation to the US — but in short form it does summarise my feelings about the PWC Total Tax Contribution.
Second, John Whiting, who created this idea, is now head of the UK Office for Tax Simplification.
Third, this disingenuous charade is touted, often, as an alternative to country-by-country reporting. It is nothing of the sort and any reasonable person can tell that is the case. But that does not stop PWC.