The reason why big businesses aren’t taxed properly is that the will to do it does not exist

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There is a fascinating article on country-by-country reporting and the Base Erosion and Profits Shifting process in this morning's Tax Analysts (behind a paywall). There is much I could comment on but one paragraph jumped out, which said:

At a recent conference in Washington, Mike Williams, director, business international tax at HM Treasury, said he is "worried about the cost" to HM Revenue & Customs of receiving all this information [i.e. the data on country-by-country reporting] and transmitting it. The information requested by the templates will be useful to tax administrations only if they have the systems, tools, and personnel to wade through and derive meaning from large quantities of data, and most government budgets won't allow for a revamp to properly evaluate that data.

That's a very  significant claim.  What Williams is saying is that  the information to ensure that large companies do pay the right amount of tax, in the right place and at the right time could exist if country-by-country reporting data was supplied to authorities like his own, but that governments have no inclination to use that information to ensure that this right amount of tax is paid.

I readily admit that I'm not wholly objective on this issue:  as the creator of country-by-country  reporting of course I have a bias towards it,  but what we are seeing  in this comment is something that I have long suspected.   What it says is that the in-principle opposition to  country-by-country reporting does not only come from  within the business community, it also comes from within government. What  Williams is  saying  is that CbC  could increase government revenue, but that the government is not willing to use the information to raise that revenue, even though very obviously it would be cost-effective to do so.  The objection he raises to  country-by-country reporting is not then practical,  but is instead ideological.

This is of course the ideology of neoliberalism.  It is however a very perverted logic.  What Williams is saying is that country-by-country reporting  would undermine  the supposed ability of multinational corporations to compete through the use of tax abuse, tax havens, secrecy, tax avoidance and tax arbitrage  and that the UK government does not believe that, for these corporations at least, restricting their ability to undertake such activity is appropriate.

Williams is, of course, wholly wrong.  First of all the whole purpose of the Base Erosion and Profits Shifting  project, to which David Cameron supposedly so enthusiastically signed up,  is to prevent the sort of tax abuse  which country-by-country reporting should restrict through disclosure of its existence.  To now oppose CbC  or to refuse to use the data it supplies  simply reveals hypocrisy in David Cameron's position.  I would not have thought it was Williams'  job to do that,  but if it is then it is clear that such hypocrisy does exist.

Secondly,  the whole logic of this opposition is wrong.  The ability of multinational corporations to compete through the use of tax abuse, tax havens, secrecy, tax avoidance and tax arbitrage  is, of course, entirely anti-competitive.  Such a process of abuse may, of course, let these companies maximise their profits at expense to others, but in the process it also fundamentally undermines the level playing field on which all business should compete if markets are to provide the benefit to society that is it is claimed  they can deliver.  That is because this abuse undermines nationally-based companies  and smaller companies,  both of which groups do not have the advantage that multinational companies  enjoy, with the tacit support of HMRC and the UK government,  to undertake international  tax avoidance and profit shifting.

This though, in itself reveals something else which is also of significance and which many in the UK business community should note, with care.  What the UK government is, effectively saying, through Williams' words,  is that it does not believe in fair competition.  What it believes in is supporting the winners, and the winners as far as it is concerned are those who are already at the top.  What it is, then, willing to do,  is to stack the odds in favour of those already  in advantageous positions.  The result, is, of course, an increase in inequality in society at large, and within the business community. Both  cost us dear.

This is why I welcome political commitments to  corporate transparency. Such  transparency and the willingness to use the resulting data for the good of all in society is vital if we are to  create a country in which everyone can prosper, including businesses of all sizes,  which is something I firmly believe in.