The SMFs use their engineering and business insights to debate key issues facing society and highlight possible routes forward. Below are details of three recent debates on tax havens, bitcoin and women on boards.
Can we Engineer a Tax System that Works?
The Fellows use their engineering and business insights to debate key issues facing society and highlight possible routes forward. We held another stimulating debate tackling the subject of failing tax systems. Can we engineer a tax system that works? One that promotes the development of intellectual property and overseas investment while keeping the bulk of profits in the countries where consumers spend their money, rather than being diverted to tax havens.
It is estimated that profits that would otherwise raise £4.3 billion* of corporation tax was legally ‘transferred’ out of the country to lower tax regimes between 2011 and 2012.
That’s around 10% of the annual corporation tax bill.
This figure is estimated to rise to £5.8billion* in the next four years.
Where does the buck stop in fixing a system that structurally allows evasion and avoidance on such a grand scale?
As beneficiaries of low tax regimes, it is highly unlikely that corporations will voluntarily change where they headquarter their businesses. And in stable times, tax havens have no imperative to diminish incentives that attract corporations to their shores.
We could argue that it is the job of companies to create innovation and wealth and the role of countries to compete for their intellectual property (IP) by attracting businesses to set up in the most tax efficient locations.
But when the incentives to establish headquarters in tax havens prevents a government from collecting taxes in the country where the consumers reside, we must ask if the balance of power has tipped too far in favour of corporations over communities.
In most cases the community benefits from the free movement of capital, but the free movement of capital also equates, under current accounting rules, to the free movement of tax to the lowest cost countries.
We could also argue that headquartering IP in low tax regimes and the abuse of transfer pricing mechanism has destroyed the credibility of the taxation system, distorting intra country politics and making losers of individuals and shareholders alike. Ultimately everyone feels the brunt of the tax gap, as a country’s infrastructure starts to haemorrhage. With major shortfalls in tax receipts, the only option left to governments is to perpetually increase sales tax. This is not a sustainable model.
Sainsbury Management Fellows is hosting its latest topical debate to explore if it's possible to engineer a better way to reward and tax wealth?
SMF is a network of professional engineers with business skills and experience who lead or help to run successful national and global businesses. The Fellows use their engineering and business insights to debate key issues facing society and highlight possible routes forward.
*Public and Commercial Services Union Tax Gap Report 2014
The Debating Panel
Debate Chair: Sainsbury Management Fellow, Dr Chris Martin, CEO, ADC Therapeutics.
Dr Martin is an entrepreneur who has grown a number of successful businesses in the medical technology, energy and environmental sectors. He contributes at board level in technology fund management in the seed, venture and public capital markets. He plays an active role in the UK economy’s exploitation of science and technology from bench to market.
Richard Murphy FCA, Director, Tax Research.
Richard is a chartered accountant and political economist and director at Tax Research LLP. He is a prolific blogger. Richard was a founder of the Tax Justice Network and is an advisor to the TUC and many NGOs, think tanks and political parties on taxation and economic issues. Richard created the concept of country-by-country reporting and has been an active opponent of tax haven activity. Amongst his books are The Courageous State (2012) and Tax Havens: how Globalisation Really Works (2010). His next will be The Joy of Tax.
Professor Balázs Békés
Balázs Békés is Assistant Professor at Pázmány Péter Catholic University in Hungary and Practice Leader, Hungary, Central and Eastern European Operations, Ryan Tax Services. Professor Békés is a specialist in international tax planning, European tax law, and cross-border transactions for domestic and multinational corporations. He was previously a partner at Deloitte and has worked in Budapest, Vienna, London, New York, Paris and Moscow dealing with domestic and international aspects of taxation. Professor Békés was also a member of the Cabinet of the Commissionaire Responsible for Taxation in Brussels. He is a member of the Budapest Bar Association, the Council on State Taxation and the Society of Trust and Estate Practitioners.
Stephen Smith, Legal Director, Olswang Tax Group. Stephen provides tax advice on corporate transactionals including corporate sales, joint ventures, de-mergers and restructurings, often involving private equity financing and/or businesses in the leisure and retail sector. He also advises individuals on personal tax matters including in relation to wealth structuring, share and business ownership, employment and capital gains tax. Read Stephen’s lasted blog: Battling offshore tax evasion – a bigger toolkit.
Jamie Parker is a Cambridge University undergraduate, in his second year studying a History Degree. Jamie is joint winner in Paying for Tomorrow Prize for Students, sharing a £20,000 prize. The competition asked How to change the UK tax system to improve future employment prospects and drive the UK economy?
Richard Cha a Cambridge University graduate (BA Land Economy Degree), is the other joint winner in PwC’s sharing the £20,000 prize. Commenting on the inspiration for entering the PwC tax competition which tackled the question How to change the UK tax system to improve future employment prospects and drive the UK.
Sainsbury Management Fellows and IDDAS Host Women on Boards Debate
To mark the second anniversary of Lord Davies’ Report Women on Boards and the publication of Cranfield’s report The Female FTSE Board Report 2013, Sainsbury Management Fellows’ Society and boardroom consultancy, IDDAS, hosted a debate entitled The Tipping Points in Women's Leadership Career Development – Is it About Better Planning?
Cranfield’s latest report shows that whilst there was a great deal of activity after Lord Davies’ Report, with 44% of new FTSE100 appointments and 36% of FTSE250 posts going to women, over the last six months the level of appointments has fallen significantly to 26% and 29% respectively.
The Tipping Points debate was hosted by SMF President David Falzani and IDDAS Chairman Helen Pitcher. The other panellists included James Raby, Trustee, Sainsbury Management Fellows; Anne Richards, Chief Investment Officer at Aberdeen Asset Management; Nicola Winn, COO Finance Infrastructure, Deutsche Bank; Jenny Young, Manager of Diversity, Royal Academy of Engineering and Caroline Cake, Director of 2020 Delivery.
The aim of the debate was to identify critical 'tipping points' in a woman's career and how a proactive career plan can overcome 'obstacles' and seek ideas for how companies can increase the number of women on their boards, and the pace of that increase.
Key points arising from the debate were:
The debate covered the importance for women of having a discipline behind them, whether it is engineering or a broader arts degree. This background provides a way of looking at the world, which gives them an increased amount of business credibility when seeking senior level roles.
A key discussion point looked at self-belief and self-limiting beliefs, which sees women think ‘maybe I can’t do this?’ An interesting comparison was drawn between the panel’s experiences of working in America. The panel felt that there is a much higher expectation of women achieving board positions in the USA compared to the UK.
The importance of networks and why they are so important was debated. In the experience of the panel, women view networking as non-core to their job. It is seen as something that women have to do in their own time and juggle with other responsibilities. Whereas talking to the majority of men, networking is seen as a vital part of their jobs – its where they build important contacts and exchange knowledge. In short it is important for women to regard networking as a business activity that enables them to build their contact base, learn more and broaden their perspective
Mentors are becoming increasingly important - it is essential for senior women to be prepared to be mentors for junior colleagues and for women to seek career sponsors.
A fuller press release on the debate can be viewed here.