Sainsbury Management Fellows

Can we make tax work?

It is estimated that profits that could raise £4.3 billion of corporation tax was legally ‘transferred’ out of the UK to tax havens between 2011/2012. That’s around 10% of the annual corporation tax bill and this figure is estimated to rise to £5.8 billion in the next four years.

Sainsbury Management Fellows held a debate whether it’s possible to engineer a tax system that promotes the development of intellectual property and overseas investment whilst retaining the majority of profits in the countries where consumers spend their money, rather than profits being diverted to tax havens.

The debate opened with panellist sharing their views on the obstacles preventing governments from collecting higher levels of corporation tax, then guests SMFs joined in a stimulating and wide ranging debate that touched on everything from the morality of tax evasion to country by country reporting as a solution to the problem of tax evasion.

Watch the video clips for a glimpse into the discussion and proposed ideas. A full length version of the debate is available on request – contact cathy.breeze@smf.org.uk

"We look at how IP and financial innovation can lead to substantial losses in tax to government."

"Tax is paid voluntarily"

"Give fewer incentives to business?"

"Countries want to keep their sovereignty regarding personal and corporate taxation and countries will compete"

"From an economic perspective, it’s an entirely rational exercise and perhaps not immorally objectionable to maximise their profits"

"Is tax avoidance inevitable"

"The duty of directors is to run the company in good faith for the benefit of the shareholders"

"Where does culpability lie for tax avoidance"

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"Is there any justification for tax havens to exist?"

"Tax havens deliberately use their right to legislate to undermine the regulation of another state"

"400,000 companies disappear without any enquiry by HMRC or Companies House. They are simply struck off because they fail to send in a set of accounts or an annual return. No enquiry is made as to whether they owe tax"

"There is a moral hazard in saying to another country you shouldn’t have a low tax rate"

"Ultimately our major trading partners are going to dictate how we each share tax of profits between ourselves"

"What is it that allows deviant behaviour?"

"Public country by country reporting needed"

"The idea that companies should be blamed for looking to avoid taxes is not the right way to go about the debate"

"What’s the best way to value companies?"

"Can we expect clever people not to find their way around the problem that is called tax?"

"Is there such a thing as profit maximisation?"

"The buck stops with the Exchequer"

"There are five reasons for tax"

"If we go to far companies have the ability to vote with their feet"

"Only £5 billion is due to tax havens and only £10 million at most is due to large companies. The rest is SMEs!"

"We need country by country reporting"

"It seems that the legal structure pushes you to have an obligation to avoid tax."

 

 

 

 

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