{"id":12341,"date":"2011-10-12T10:01:22","date_gmt":"2011-10-12T09:01:22","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=12341"},"modified":"2011-10-12T10:01:22","modified_gmt":"2011-10-12T09:01:22","slug":"why-corporate-abuse-of-tax-havens-matters","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2011\/10\/12\/why-corporate-abuse-of-tax-havens-matters\/","title":{"rendered":"Why corporate abuse of tax havens matters"},"content":{"rendered":"

The almost\u00a0inevitable\u00a0response to Action Aid's report<\/a> on tax haven abuse by major\u00a0corporations\u00a0has already arrived on this blog. It says<\/a> (and I have tidied the grammar a little):<\/p>\n

The whole tax haven thing is nonsense, Where do companies like\u00a0Vodafone\u00a0get the money to pay taxes? From their customers, so by asking for corporations to pay more taxes you are implicitly saying you want the cost of things you goods\/services they provide to go up in price.<\/p><\/blockquote>\n

Such claims are simply wrong. This may be how the world work's on the neoliberal economists blackboard. It;'s not how the world really is.<\/p>\n

Let me for a moment unpack some of the assumptions inherent in this claim:<\/p>\n

1) A company only generates cash inflows from customers;<\/p>\n

2) The company has no choice about paying tax;<\/p>\n

3) The company can always pass any tax charge it has to pay on to\u00a0customers;<\/p>\n

4) The company is a neutral party in all this: a rational,\u00a0automaton,\u00a0independent\u00a0agent;<\/p>\n

5) No one else but customers can pick up the tax charge placed on a company and it follows that customers get the\u00a0benefit\u00a0of law taxes.<\/p>\n

None of these things is true.<\/p>\n

First, companies are massive recipients of tax\u00a0benefits. They get trained staff, for free. Their staff get\u00a0healthcare\u00a0provided for free, meaning they turn up in the morning. When staff can't work they're cared for by the state, for free. Much of staff's pension\u00a0is\u00a0paid for by the state, not by an employer. The company enjoys the\u00a0infrastructure\u00a0of the satte, for free (or very little). Even the company\u00a0structure\u00a0itslef and the right for it to claim property is provided by the state, for next to nothing. So it's not true that cash into companies comes only from cutsomers. Massive subsidies come from the state to all business.<\/p>\n

Despite\u00a0this a company has a massive choice about where and how to pay or not pay tax, which is what Action Aid were highlighting. It can relocate profits almost at will, and as the report from the US I have referred to this morning shows<\/a>, that is\u00a0exactly\u00a0what they do. And they take these choices to\u00a0benefit\u00a0a\u00a0particular\u00a0group in society - and that's the well off and not customers.<\/p>\n

Third, there's no evidence at all that\u00a0companies\u00a0can necessarily pass on all tax they pay to customers. If\u00a0they\u00a0can then it is very obvious that competition is not working -\u00a0because\u00a0if it were that would not be true. So free-marketeers can't have it both ways. Either\u00a0competition\u00a0prevents generic passing on (generic\u00a0VAT rises perhaps apart) of the fact that tax is passed on proves that monop[oly power is in operation and a bigger issue arises of tackling it.<\/p>\n

Fourth,\u00a0companies\u00a0are biased in this. I again refer to the report from Carl Levin in the US<\/a>. If tax haven use clearly\u00a0benefits\u00a0a few at cost to the many companies choose to do that. Never ever believe any claim that companies are neutral agents: they are not. They exist to\u00a0redistribute\u00a0income to their management first and members second unless\u00a0competition\u00a0prevents\u00a0it. The evidence is clearly that the\u00a0competitive\u00a0pressure is not there - but in that case that is the issue that needs to be addressed.<\/p>\n

And finally, if real markets existed then\u00a0shareholders\u00a0would pay the cost of extra tax just as right now the\u00a0benefit\u00a0of that abuse does not flow to\u00a0customers\u00a0but goes instead to shareholders. And if the beenfits flow to\u00a0shareholders\u00a0then we need to ensure that the costs do too. But tax havens prevent that. And that's why they matter. Because they\u00a0increase\u00a0poverty. Ands that's not by chance. That's by choice. And it is a choice that has to be prevented.<\/p>\n","protected":false},"excerpt":{"rendered":"

The almost\u00a0inevitable\u00a0response to Action Aid’s report on tax haven abuse by major\u00a0corporations\u00a0has already arrived on this blog. It says (and I have tidied the grammar
 Read the full article…<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[80,10,32,97,1],"tags":[],"class_list":["post-12341","post","type-post","status-publish","format-standard","hentry","category-secrecy-jurisdictions","category-tax-avoidance","category-tax-havens","category-tax-justice","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/12341","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=12341"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/12341\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=12341"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=12341"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=12341"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}