Earlier this week, the Public Accounts Committee administered a public flogging to executives from Google, Amazon and Starbucks (let’s call them, “The GASsy Three” for short) for having the temerity, the audacity, the brass-necked nerve, to conduct their businesses in accordance with the law; the law which members of the Committee were instrumental in setting, and not to pay corporation tax if they didn’t have to.
“You’re immoral,” screamed Margaret Hodge, the Committee chair. ‘Taxation is the price we pay for a civilised society,’ the American jurist, Oliver Wendell Holmes jr. is supposed to have said, and which she might more soberly have said instead.
Morality of course is a tricky subject for a Public Accounts Committee to preach. Instead of sitting back and taking a right sticking from Lady Hodge, perhaps The GASsy Three should have given her back some of her own with interest: a bit of ‘let he who is without sin cast the first stone,’ as a helpful aide memoire for the next time she happens to be having a cosy chat with her brother, Ralph, chairman of Stemcor which is also alleged to be paying rather less tax at the moment than it might.
Many commentators have been quick to say that it is because the issue is so manifestly a legal and not a moral one that The GASsy Three are in a bit of a bind. Their boards have a duty to act in the best interests of their shareholders. So if the law allows them to pay less tax if they can be bothered to find their way through the labyrinthine rules, well then they should jolly well do so, shouldn’t they? What better way to serve the long-term health and future of a company than to keep as much profit as possible out of the clutches of the revenue and to invest it instead in growth and jobs. And after all that, if there is more in the pot to pay dividends, well then it will be taxed in the hands of the recipients.
Public opinion might therefore conclude that a change in the law is the answer. That if the UK government desires to tax The GASsy Three based on their activities in the UK, then some form of sales or operating tax will be required. This is rather easier said than done. In the international age, changing not just the tax code, but the whole basis on which tax is levied is not a straightforward overnight matter, particularly when any new approach to taxation will have to mesh properly with other countries’ tax laws which like ours currently look to tax profits earned by legal entitles. So the chances are that a change in the status quo will be a long time coming.
But that is not the end of the story. Back to the Committee hearing earlier this week: one of The GASsy Three representatives, the floggee from Starbucks, Troy (as in, “the siege of”) Alstead, put on a hang-dog face as he was a bit sad. He said he felt terrible about the negative publicity Starbucks was getting because of all this. Therein lies the best solution. Were the public to so turn against The GASsy Three (and others like them), by boycotting their products and shunning their services in vast numbers; well then the directors of The GASsy Three might have to have a rethink about what is really in the best interests of their shareholders.
Or as Oliver Wendell Holmes jr. put it: ‘The life of the law has not been logic, it has been experience.’