I am at an ActionAid conference in the Danish Parliament this morning. Please don't think Borgen: we're talking tax, transparency and international development.
I have been asked to speak and will concentrate on why we are suffering opacity even in an era when the need for public country-by-country reporting has been proven beyond doubt, the disclosure of beneficial ownership is essential and the need to tackle tax abuse is agreed upon.
The answer is that there are four powerful forces in this world promoting opacity regarding taxation. They are called PWC, KPMG, Deloitte and EY.
These firms underpin all the world's tax havens and their presence in them is the only thing that lets multinational companies use these places.
But they do more than that: they promote tax competition that is a deliberately designed assault on the right of democratic states staged from tax havens to limit their capacity to collect the money owed to them in accordance with the mandate given to them by their electorates. In the process these firms are deliberately undermining democracy and the supply of essential services to billions of people who need them.
And by controlling the International Financial Reporting Standards Foundation these firms create the opacity in multinational company reporting that denies us country-by-country reporting in those accounts, hides all intra-group trade from view (60% of world trade) and which refuses to even recognise the need for tax reporting to be a priority in financial reporting design.
If we are to have transparency the stranglehold of these firms on policy making, on tax abuse creation, and on blocking reform through their massive lobbying power needs to be broken. They, I will suggest, are the next focus for the tax justice debate.
And defeating the abuse of these firms is also, I will suggest, key to creating fair, open and transparent markets in which all businesses can compete on a level playing field. The Big 4 are preventing the operation of fair markets. to support the monopoly profits of their clients. Their abuse does not, I will suggest, just impact on tax yields in that case. It is also limiting growth by constraining fair markets.
KPMG are on the same panel as me. It should be a fun debate.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
I’ll be at the Bernard Matthews staff party tonight so I’ll let you know how the Turkeys are feeling about Christmas. I suspect our notes will be interchangeable.
Talking of panels, you said you were in debate with Art Laffer at the Oxford Union last week.
How did that go? Did you ‘out argue’ him? Is there anywhere we can watch/read of your performance?
I had to drop out. I spent most of that weekend in bed: post op fatigue caught up with me
It hasn’t this week. Looks like I have recovered
Richard,
They’re certainly an evil influence on the subjects you mention, but they’re not alone, it’s the people in our governments and most accountants that drools when these guys talk that bother me the most, but anyway I support your point of view
I agree that the Big 4 need their wings clipped. But one must be careful with what one wishes for. A world without the Big 4 would not be tax peace and love, much activity would go completely underground, not everybody in the world plays by the Queensbury rules. And the Big 4 have raised accounting and auditing standards worldwide. And they are are partly a UK success story. The root cause is they are not regulated properly- although it is better than it was now with the Financial Reporting Council- Forget the ICAEW regulation of the Big 4- it is a paper tiger.
The Big 4 are not a success story
We need accountants
We need accounting standards
But not the ones we have got
Stephen
I would strongly disagree that the ‘big 4’ are any kind of success story. I think you may be quite a young man, in which case – good luck to you, but experience does have its benefits.
The Big 4 have created a world where the A/Cs of a PLC are far less informative & more opaque than they were 20 years ago, the auditing is far less stringent than it was 20 years ago, there is ridiculously less competition than 20 years ago.
To give one, easy, example, I’d like to think that back in the day the A/Cs of Northern Rock, with its hideously flawed, in fact almost certain to fail, business plan would’ve got a heavily qualified audit certificate saying the PLC’s continued trading was, to put it kindly, doubtful.
The other high st banks would’ve got only slightly less acerbically worded certificates.
But that was when auditors were real men (& women) & genuinely independent of the client’s management team.
If you say so Eriugenus. However, 15 years ago we had Enron. 30 years ago we had DeLorean.
And now we have the Big 4 and Luxleaks
Then the few: now the many