As the Guardian has reported this morning:
The archbishop of Canterbury, Justin Welby, has intervened in the debate about responsible business and the use of tax havens, saying he wants companies to pay tax in the countries where they have generated their wealth.
Welby is due to give a speech on “the good economy” at a conference organised by the all-party parliamentary group on inclusive growth in London on Wednesday evening.
Christian Aid issued a press release in response that I am happy to quote:
Archbishop Justin Welby's comments today about the importance of companies paying their fair share of tax in the countries where they make their money are extremely welcome, says Christian Aid.
“We are delighted to hear the Archbishop speaking out about this great problem of our time. Many big companies are abusing their power and failing to contribute their fair share back to society, both in the UK and in developing countries,” said Toby Quantrill, Principal Economic Justice Adviser at Christian Aid.
“There is a huge moral dimension to tax so it is especially good to hear Justin Welby bringing his moral authority, as well as his business experience, to bear on the subject.
“Ahead of the UK general election, we and others are challenging all political parties to commit to introducing a Tax Dodging Bill to tackle many of the problems he highlighted.”
The Archbishop of Canterbury's comments came in an interview with BBC Radio 4's Today programme ahead of a speech he will give this evening about the importance of reconnecting wealth creation with social justice.
In the radio interview, he spoke out strongly about the principle of companies paying tax where they earn their money. He also linked the misuse of the tax system to the accumulation of wealth and power that results from the growing inequality in society.
He told the BBC: "There has always been the principle that you pay tax where you earn the money. If you earn money in a particular country, the revenue service of that country needs to get a fair share of what you have earned."
Tax avoidance, and its impact in poor countries, is something that Christian Aid has campaigned on for many years. In 2014 we explored the links between tax, theology and morality, in our report Tax for the Common Good.
The campaign for a Tax Dodging Bill is supported by 17 organisations, including Christian Aid, Oxfam, Action Aid, Church Action on Poverty, the Church Urban Fund, the NUS and the Equality Trust.
Tax Research UK is now one of the supporting organisations. I wish to make that clear. I am not objective on this issue. I can quite definitely say I am wholly biased is favour of social justice. I am glad the Archbishop is too.
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Slightly selective quoting there. He also said…
“Someone said the other day that the tax system was of Biblical proportions — well, the Bible is only 1,000 pages, how many tax systems are only 1,000 pages? They are several hundred times that. There needs to be simplification in tax so that people are responsible in the right place.”
That’s something you’re against.
I have done legal deals running to many many thousands of pages too
Business never seems to have a problem with those
Grow up, is my suggestion
We’re in the 21st century now
Computer codes were also pretty short in biblical times and have grown since. Are you complaining about that too?
Simplification is fundamental to all of this. Let’s not forget that the majority of companies operate fully within the rules, so you have to address the rules if you think they are not achieving the right outcome. To be fair to Richard, I think he believes in formulary apportionment, and that is the ultimate simplification of the transfer pricing rules (assuming adopted by all on an agreed basis). Where Civil Society continues to look totally absurd is in its insistence on trying to base the foundation of a tax system on “fairness” and the idea that operating within the rules as they stand is “dodging” (if it’s within the rules, it is called “planning” or “avoidance”, and it is legal, even if you don’t like it). Implement a simpler, more effective rules-based regime, enforce it, and be done with all the whingeing. Otherwise if these institutions are all so insistent that companies pay the “fair” and “right” amount of tax and that that can be easily achieved, let’s just abolish all corporate tax legislation and replace it with a single principles-based provision – “Companies are required to pay their fair share of tax” – and see how much tax that raises.
I do believe in unitary tax
But unlike you I am well aware that tax compliance always involves choice – and they are always moral ones
All rules can be abused
And yes, we can demand corporate governance standards high enough that abuse does not happen
Why on earth do you think otherwise?
Because not every has the same “morals” that you have. So it is too subjective and you can’t expect everyone to believe your vision of the world; I would guess that 90% of people would, if offered the chance to legally reduce their tax bill, take that chance, no matter how much others might bleat about it being immoral to do so. And I think you’re just defeatist and short-sighted if you say that all rules can be abused – anyone who understands accounting and tax could come up with a system that could eliminate 99% of (what you consider) abuse. And no matter how much you keep trying to convince yourself otherwise, a rules based system will always be more robust than a principles based system; it’s why we have laws in the first place.
If anyone who understands and accounting and tax could eliminate 99% of all abuse why hasn’t it happened?
Pleas tell
You must have an answer
You know the answer to that Richard, and it forms the whole basis of your lobbying. It is all a function of our present democratic system – inept Governments (as you pointed out a couple of days ago, DPT is a bad Osborne joke, driven by politics rather than common sense or an intelligent approach), vested (and powerful lobby) interests, 4-5 year parliaments leading to short term (and again inept and politically driven) decision making and strategy, an inability by those involved to leave behind the comfort blanket of complexity and ever increasing tinkering and bolt-ons in favour of simplicity, etc, etc.
No
The answer is there is no simple answer and only those who do not understand the issue say there is