I received a fascinating mail from a person I've never met called David Lucas the other day. He said:
The frustration felt because many companies are not paying their rightful tax is eclipsed when it is realised that many of these companies are making their profits from central government, local government, health service and other public body contracts, e.g. A4e.
The government seems to be incapable of doing the bleeding obvious of only giving contracts to companies that pay their tax.
I, a retired agricultural engineer, and some friends are followers of your blog and readers of your book, but are in no way experts. Out of some interesting discussions an idea has emerged which may or may not be novel, which I feel is worth passing on to you.
I believe that companies that bid for government contracts to be in the bidding are required to be ISO9001 accredited. And many well known companies are proud to proclaim their ISO9001 accreditation, Amazon for example.
If the good governance of ISO9001 were extended to include, for example, the payment of tax in the country that produced the profits, would this not solve the problem of off shoring and other tax dodges?
It seems to me, after looking at the International Organisation for Standards (ISO) web site that they are almost there.
Does this idea stand a chance of success and will ISO be persuaded to take it up? Perhaps the OECD could do the persuading.
I think the idea well worth sharing.
Anyone know more about ISO 9001 and how easy this would be to do?
And thanks to David.
Other ideas of this calibre are welcome.
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Interesting that in this blog and on your report on tax abuse and silicon valley (e.g. Apple) the point is made about not awarding government contracts to companies who abuse taxation policy/regulations. This is of course an obvious and very easily implemented policy that would have an immediate effect, particularly in countries that outsource/privatise high levels of public work. It would also have the effect of exposing the fact that the reason why private companies are often able to tender for work at ‘cheaper’ prices is because they factor in ‘tax planning’, as well of course, as the exploitation of labour.
The ISO approach is a very sensible suggestion given ISO9001 is almost ubiqitous as a ‘quality’ standard. My misgiving is that as I understand it – and it’s only something I’ve heard second hand from colleagues who teach subjects in which quality assurance/benchmarking etc are important – is that the ISO organisation (which is huge and complex) is open to control/influence by large corporations with a vested interest in the various international standards that may impact on them. I’ve just had a quick look at the ISO entry on wikipedia (which is extensive) and I see at the foot of the entry this is discussed under ‘Criticism’ with a specific example of Microsoft given.
I was a director of a company that was ISO ‘regulated’
I saw it as pretty meaningless, I admit
But it is a benchmark
I have an ISO9001 qualification as an IT auditor. I don’t think ISO9001 would be the right vehicle to deliver this, as it is primarily concerned with product quality assurance. ISO9004 would be the right one since it is more concerned with company management: http://www.iso.org/iso/pressrelease.htm?refid=Ref1263
Once upon a time I worked in a company which diverted considerable time and effort into achieving an ISO9001 certification. From what I recall, “quality” is not synonymous with “good quality” it actually meant “consistent quality” and consistent with the documented procedures and benchmarks that the organisation chose to design and adopt, with an audit trail to allow someone else to find evidence of adherence to the documented procedures and standards. An organisation could design its specification to require “All emails be printed out and then shredded without being read and the original deleted, with a matchstick being moved from a pile in the centre of the room to the bin by the door” and as long as it did that, it was ISO9001 compliant. For a standard to be worth seeking, as far as tax abuse goes, it needs perhaps to be imposed from outside?
@Spoon of Internet. I half agree with you, in the sense that what you say is quite correct, but it is only one half of the transaction, namely, that of the provider, in a purchaser (or, preferably, in ISO terms, a customer)/provider relationship.
The other side is,of course, that of the purchaser or customer, and quality is entirely defined by what the customer wants, something that is totally divroced from the normal everyday idea of quality that we might have, as of something being “first class” or “top notch”.
No, in ISO terms, or certainly in the BS5750 terms that I came across in my time working for STC and ICL, “quality” means “what the customer wants”. If the customer wants a beaten up wreck of a second-hand car, and you sell him a Daimler, that’s NOT quality service.
So, taking this, together with your quite correct analysis of the audit trail side of things, then it’s clear that BOTH sides of the equation would need to be externally defined, and backed up by such sanctions as suggested – i.e., loss of contracts and/or exclusion from the right to tender.
This is exactly what the FSA should have been set up to do, backed by statutory definitions, capable of being amended by Statutory Instruments, for reasons of flexibility, but with a massive democratic input, by the use of Citizens’ Juries and if necessary by direct referendum on a Treaty between the government and the governed, and all ultimately under the jurisdiction of a democratic mandate every General Election, at which, after the example of the USA, Propositions generated by public request could be added to the ballot.
All a bit like the chimerical “stakeholder economy” that “Tory” Blair wanted to see in 1996, but which died the death the day after he entered No. 10 in 1997 – all too much of a fetter on the freedom of action of business and his chums in the City.