"Big firms...seen as detached from society"
A fascinating interview with GlaxoSmithKline boss Andrew Witty in today's Observer newspaper, reveals that he is scornful, "to the point of contempt", of businesses that threaten to shift their headquarter operations for tax reasons.
"I really believe one of the reasons we've seen an erosion of trust , broadly, in big companies is they've allowed themselves to be seen as detached from society" says Witty, "and they will float in and out of societies according to what the tax regime is." Well said, that man, and there's more:
Businesses, according to Witty, have "allowed it to be perceived that it's all about money. It shouldn't be about that...we want to make a return, yes - we're not a charity. We want to make a good return for our shareholders. But we're going to do it by being in step with society."
Witty is scornful of companies who use offshore structures to create the pretence that they are "mid-Atlantic floating entities". Citing the case of his own company, which in the past fought a major tax battle between US and UK revenue authorities over transfer pricing rights, Witty points out: "While the chief executive of the company could move, maybe the top 20 directors could move, what about the 16,000 people who work for us? Its completely wrong, I think, to play fast and loose with your connections with society in that way."
This is very much how Tax Justice Network sees things, and we're delighted to read these views coming from such an important and influential quarter. Witty, in addition to being chief executive of GSK, is also a non-executive director of the British government's business department. He is therefore well placed strategically to push for measures to reduce the temptation to create artificial legal structures for tax avoidance purposes. Such measures include the European Union's current proposals to move towards a harmonised EU tax base - the clumsily named Common Consolidated Corporate Tax Base proposal. The CCCTB, which has broad support from within the business community itself, is a step towards taxing corporations on the basis of their genuine economic activities rather than on their ability to manipulate their accounts so that taxable profits have apparently been generated by two staffers sitting in a tiny office in an offshore tax haven.
You can read the Observer interview here.
"I really believe one of the reasons we've seen an erosion of trust , broadly, in big companies is they've allowed themselves to be seen as detached from society" says Witty, "and they will float in and out of societies according to what the tax regime is." Well said, that man, and there's more:
Businesses, according to Witty, have "allowed it to be perceived that it's all about money. It shouldn't be about that...we want to make a return, yes - we're not a charity. We want to make a good return for our shareholders. But we're going to do it by being in step with society."
Witty is scornful of companies who use offshore structures to create the pretence that they are "mid-Atlantic floating entities". Citing the case of his own company, which in the past fought a major tax battle between US and UK revenue authorities over transfer pricing rights, Witty points out: "While the chief executive of the company could move, maybe the top 20 directors could move, what about the 16,000 people who work for us? Its completely wrong, I think, to play fast and loose with your connections with society in that way."
This is very much how Tax Justice Network sees things, and we're delighted to read these views coming from such an important and influential quarter. Witty, in addition to being chief executive of GSK, is also a non-executive director of the British government's business department. He is therefore well placed strategically to push for measures to reduce the temptation to create artificial legal structures for tax avoidance purposes. Such measures include the European Union's current proposals to move towards a harmonised EU tax base - the clumsily named Common Consolidated Corporate Tax Base proposal. The CCCTB, which has broad support from within the business community itself, is a step towards taxing corporations on the basis of their genuine economic activities rather than on their ability to manipulate their accounts so that taxable profits have apparently been generated by two staffers sitting in a tiny office in an offshore tax haven.
You can read the Observer interview here.
posted by TJN at 3:08 am
2 Comments:
Good to hear someone like him talk like that - though there is a struggle to be had with the Govt as its latest corporate tax changes on overseas earnings seem to be going in the opposite direction to the European proposals.
The impact of Corporate tax avoidance could be substantially reduced by cutting corporation taxes and raising the same amount of revenue from the UBR instead.
And incidentally, nobody seems to have challenged the tax avoidance scheme usually described as constructive vandalism - demolition to avoid having to pay UBR on empty property.
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