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Solutions

The Fix

​General Anti Abuse Rule/Principle

The General Anti Abuse Rule is a broad legislative measure, aimed at prohibiting aggressive tax avoidance. It seeks to cut through the complexity of a tax system and remove the element of doubt, making it obvious which tax avoidance schemes are legal and which are not.



Its critics have pointed out that GAAR will only stop the most artificial of tax schemes, leaving most corporate structures unaffected. A General Anti Abuse Principle bill is currently being debated in parliament, which is expected to be much more effective in tackling tax dodging.

Country by country reporting

Country by country reporting is a simple idea that could have a big impact on global tax revenues. Under current rules, multinational companies do not have to disclose how much of their profits are generated in individual countries. This enables them to shield how much money they shift into offshore tax havens, as they only have to publish one, global, profit figure.

If companies were forced into reporting individual country accounts, it would become very difficult for them to legitimately shift their profits out of high tax jurisdictions.

The common consolidated corporate tax base is a proposal developed by the European Commission that would see an additional and optional tax code rolled out across the European Union. It would require a group of countries to work together to formulate a set of common rules that would determine how much multinational companies should be charged in tax.



Existing EU-based tax avoidance opportunities would be severely reduced but there are fears that CCCTB could open up new loopholes for multinational companies to exploit.

Common Consolidated Corporate Tax Base

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There’s plenty of organisations out there campaigning against corporate tax avoidance. Richard Murphy (who runs an excellent blog on the subject) UK Uncut, Action Aid and the Tax Justice Network have all made the headlines in recent years for their various awareness drives, investigations and reports on the issue. This year, a new kid is joining in with the chorus of anti-corporate rhetoric; The Rules.



Inspired by the decentralised structure of organisations like Anonymous, The Rules look set to become a force to be reckoned with in 2013, already boasting a strong global network of activists specialising in a variety of issues surrounding inequality and poverty.



Tax Dodgers Database spoke to campaigning specialist Martin Kirk, to find out how his organisation are taking the fight to corporate tax avoiders and the tax havens they use to hide their profits.

Whilst tax avoidance is a pandemic practice, there are solutions and alternatives currently being proposed that could bring about an end to corporate tax dodging. Led by Margaret Hodge MP, The Public Accounts Committee published a damning report at the end of 2012 on corporate tax avoidance, calling for stronger powers to be given to HMRC to enable them to tackle the issue effectively. Grassroots activism has already yielded results, after a vicious public backlash and customer boycott pushed Starbucks to voluntarily cough up £20 million for the UK tax man.

Activists

TDDB: You currently work as Director of Campaigns at The Rules. Is campaigning against corporate tax avoidance a big part of your organisation's plans?​

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MK: Yes. But we are not just focused on corporate avoidance. Our particular focus is on the tax haven system, which implicates plenty of corporates, for sure, but also governments and other actors. There is quite a lot of good work already going on by the likes of UK Uncut, some NGOs etc looking specifically at corporate tax avoidance, and we support that completely. And we may well do some corporate focused work ourselves but as part of trying to tell the story of the systems behind all the individual acts of tax theft, be that by corporations, or individuals, or governments; the common denominator is the tax haven system. That’s the story we want to engage people in.


TDDB: So, how do you plan to raise awareness in this area?

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MK: Through all the usual channels, like traditional and social media, through partners around the world, and using our own voice. We also spend a lot of time thinking about public narratives, and framing, and how we can challenge received logic on issues. We hope this will help us construct stories and campaigns that people find inherently engaging.
The tax planning undertaken by certain big companies is often mind-bogglingly complicated.

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TDDB: Do you think this turns a lot of people away from the issue?


MK: Absolutely. And not only this – tax is, itself, a mind bogglingly complicated and, let’s face it, a generally unpleasant subject. No one enjoys thinking about the tax they have to pay, so trying to get them interested in the tax other people pay, let alone the system that deals with it all, can be seen as a problem.



But that only holds true if we start from the point of saying, “how do we engage people with tax issues”. If, on the other hand, we say, “how do we engage people on powerful people stealing from less powerful people?” the problem takes on a very different complexion.

Martin has worked as Director of Campaigns at Oxfam, a position he now holds at The Rules

Tax is, after all, merely the channel. The act is theft and the problem is abuse of power.

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If I was on the other side of this debate, I would be trying to get as many people as possible to think about how complicated it was. I’d be thrilled with the debate about the difference between tax evasion and tax avoidance.

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It ranges from quizzical - “seriously?” - to horrified. The fact that we even have to debate this is a sign of how thoroughly this issue has been controlled by the elite for so long.

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TDDB: "I'm very proud of the (tax planning) structure we set up. It's called capitalism. We are proudly capitalistic. I'm not confused about this." - Google Chairman, Eric Schmidt. What would you say to Eric if he was here right now?


MK: Reconnect to your basic humanity. The idea that business and morality are separate is one of the deepest, most corrupting traits of our time. Providing we get through the next couple of hundred years in tact, this sort of attitude will be seen as morally bankrupt as the “I was just following orders” attitude condemned at the Nuremburg trials.


TDDB: Do you see a time in the future when big companies pay their fair share of tax?


MK: I have no idea. Society is in a state of constant evolution – we have forces pulling us in countless directions. I would like to think that we will ultimately find a path of wisdom and compassion for each other and the planet, but I don’t think it’s guaranteed. That’s why I campaign. Nothing is settled – everything needs to be fought for.


TDDB: The Rules works in similar ways to Anonymous, with a decentralised structure. Do you believe that such organisations are an effective tool in the fight against global inequality?


MK: Here’s hoping!

But seriously, there are any number of possible permeations of how an organisation can take shape. Our assessment is that right now, with the explosion of global comms and the desperate need for mass public engagement from the Global South to assume a greater position in global debates, a decentralised structure is an efficient way of going about that. That’s not to say it isn’t hard and that it doesn’t have its problems and weaknesses, but it has the potential to be empowering and inclusive, and that is something that the whole world needs a good dose of right now, we think.

"The idea that business and morality are separate is one of the deepest, most corrupting traits of our time"

It’s all a red herring, in terms of the basic story to be told. What we’re taking about is sometimes legal and always moral crimes. If we frame it that way, we automatically tap into the public mood.

Forget the ins and outs of how complicated it is. Refuse to engage with questions on that territory. Stick to the basic framing we choose, of right and wrong, and it’s really not that complicated.

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TDDB: Do you think big companies should be more transparent about their tax affairs?

MK: Definitely. Country by country reporting on profits made should be the very least we should expect. It’s outrageous that they get to make huge profits from the public and public goods (roads, education systems, stable social and political conditions etc.) and not be at the most basic level open with the people. Have you ever tried telling someone who didn’t know that companies don’t have to report by country and seen their reaction?

© 2014 Tax Dodgers Database.

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