Thursday, August 04, 2011

PWC seems caught deceiving in tax competition case

From the St. Petersburg Times/, via Offshore Watch:
"In a surprise reversal, PricewaterhouseCoopers on Wednesday withdrew a controversial application for $1.1 million in public subsidies tied to maintaining and growing its Tampa operations. Despite the change, the firm's attorney said it will go ahead with construction of a $78 million building in West Shore."
Tampa Bay councillors had, apparently, already approved the public subsidies for PWC in July, after the company had extorted them from local lawmakers under the threat that it would relocate elsewhere if it didn't get the subsidy.

So why did the company then withdraw its application for the subsidy? What could this be all about? Well, apparently they got rumbled. Here's the nub of it (and the original story is here):
'A PricewaterhouseCoopers executive said the firm hadn't planned to move its operations center regardless. "We never considered moving those 2,000 jobs out of Tampa," the firm's Florida market managing partner Mario de Armas told the St. Petersburg Times.

That turned out to be a million-dollar quote. It contradicted a written application made on the firm's behalf saying it had competing offers from South Carolina, India, Singapore and Argentina."
Companies don't just flit from one jurisdiction to another at the drop of a tax inspector's hat. They depend on well educated workforces, the rule of law, and all those other tax-financed things. Tax rates almost always come some way down the list. In fact, that's exactly what the PWC employee said: as important as tax was
"Tampa's business environment and the education and stability of the work force."
Those incontrovertible facts don't stop companies from dissembling and making threats, though, it seems. As a separate story notes:
"A total of 1,633 jobs were "at risk," city and county officials said. "That's how it was presented to us, that they were relocating outside of this area," County Commissioner Kevin Beckner said."
There are a couple more complexities, including different incentives tied to different packages, and some arguments as to exactly how the threats were presented - read the story for the full details. And there's this not-so-insignificant detail, about a series of earlier layoffs:
"Throughout the downsizing, the firm continued collecting tax rebates from Tampa, Hillsborough and the state under a 2005 incentive package tied to creating 320 high-paying jobs in Tampa."
Overall, it has a happy ending for Tampa employees and the government: the company is staying - expanding, even; it won't get the subsidy - and local lawmakers have now got more appreciation of how this tax competition game works.
"What happened here will not happen again, not while this council's here," said council member Yvonne Yolie Capin.
Let's hope not. Although we don't of course have the full details in this case, this does look very much like deception from PWC, to obtain material benefit, (and the withdrawal of the application looks rather like a tacit admission of guilt.)

If this is what it looks like it is, then we should turn to for a word, whose definition goes like this:
"deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage."
The word that fits these definition fits is this one. It also seems to fits the Wikipedia definition. Have we interpreted this fairly? From where this blogger is sitting, it looks as if the cap fits in this case. And indeed, PWC would be far from alone in this: it would be an appropriate word to use in a large number of similar so-called tax competition cases.


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