Globalisation: almighty clash of ideas has reached its zenith over tax

Guest blog: Meesha Nehru, Fair Tax researcher:

Tax is not just about morality: it’s about the battle for our future

Last Thursday Margaret Hodge said that ‘Google is evil’ when it comes to its tax avoidance. By cleverly twisting the company’s own ethically-motivated slogan, the leader of the Public Accounts Committee made it clear that pushing the law to the extreme to avoid contributing millions of pounds worth of tax to governments is not only immoral but also just plain wrong.

Over the last couple of years, the call for a moral crusade against tax avoidance and evasion seems louder with each passing day. In the face of increasing financial pressures, concerned citizens are waking up to the Injustice of how companies and wealthy individuals flagrantly flout the rules, as well as to the impact that such behaviour is having on both developed and developing countries.

Yet despite the mounting outrage, representatives of big business are adamant that tax has nothing to do with morality. Facing daily revelations about the tax avoidance of Apple, Google, Amazon, Starbucks and others, business leaders have shown that they are as quick to shift the blame, as they are their profits. Sir Roger Carr of the Confederation of British Industry insists that tax avoidance isn’t the fault of business but of the broken rules. Governments must fix the system. Tax cannot be about morality “there are no absolutes”, he says.

Sir Roger is right yet he still misses the point. Tax avoidance is not about morality in the sense that some in media like to portray it – as greedy immoral fat cats engorging themselves on all the cream whilst the morally-upright and scrupulous yet financially downtrodden taxpayers suffer the consequences. Capitalists have morals too – how else do we think they sleep at night – they just operate within a different framework.

More than being a matter of principle, tax provides the most important focal point for the defining ideological battle of our age. This almighty clash of ideas, bubbling away during the last thirty years of accelerated globalisation but as old as capital versus labour, has reached its zenith with the current debate over taxation. Underneath the rhetoric about morals is the issue that business leaders and zealots alike are missing (or choosing to ignore). We are at a crossroads and there is no going back.

Our dysfunctional economic system is creaking and whilst finance and big business try to carry on as usual - and pull all their powerful strings in order to do so - there is also an increasingly vocal movement working on the ground to build a new, more equitable future less reliant on finite resources. Taxation, and the government that collects it, is nothing less than the key battleground where control over the direction of the coming transition will be contested and won.

Far from being as simple as getting companies to pay what they owe or closing certain loopholes, what is at stake is the very nature of our democracy: from the global to the local and all of the institutions in-between. Nation-states must attempt to reassert some power over rampant global capital – creating new regulations may stem some of the financial flows but it will be taxation that reins in the unfettered and highly unequal accumulation.

History has shown us that governments won’t do this alone. For the last thirty years they have gone in the opposite direction for both ideological and practical reasons. Wealthy career politicians faced with the problem of administering an increasingly complex global society happily defer to the so-called efficiency and experience of their friends in the private sector. Now is the time that the rest of us get a look in.

This means continuing pressure to get companies to pay their fair share of tax and to get governments to close down the schemes and locations that facilitate its avoidance. But more importantly, it means holding businesses to account for the way in which they are run and holding the nation-state to account for the way in which the newly collected revenue is spent. It is not enough to rely on elections and weak mandates to make all the decisions during a time of momentous change.

The issue of fair taxation requires a different kind of moral crusade – one that insists that government is invigorated and that all taxpayers, regardless of their financial standing, are empowered with the tools, space and voice to have real say in how their money is spent. Whether we like it or not, tax as a topic is here to stay, the sooner we recognise it as fundamental to our future transformation, the better.