The reality, however, is that for most directors the question is not so much whether dabbling in tax avoidance is right or wrong but where to draw the line. As the Independent's expose of Rupert Murdoch's tax affairs has shown, the opportunities for tax avoidance by big multinationals can be many and varied. A recent survey by Ernst & Young found that nearly half the multinationals questioned were subject to transfer pricing inquiries. It might be said that if so many apparently respectable organisations find transfer pricing, one of the most controversial forms of tax avoidance, perfectly acceptable practice, goodness knows what else they are getting up to.
At its most sophisticated, multinational tax avoidance uses highly complex chains of intra-group transactions, sometimes involving letter-box companies in offshore tax havens. The effect is not only legitimately to avoid tax, but also, just as important, to confuse the tax authorities. By using such techniques, companies can decide for themselves where and when to pay tax. It often takes years for the Revenue to find out what is going on; by the time the loophole is blocked, the tax lawyers have moved on to other wheezes.
But it is not just the morality of rinky-dink tax avoidance that should give cause for concern. According to the Institute for Fiscal Studies, corporate tax accounts for a lower proportion of the total tax burden in Britain than in almost any other OECD country. This is not necessarily evidence of wide-scale tax avoidance; low corporate taxation rates have been pursued as a deliberate act of policy by the Conservatives. Tax avoidance may well be a part of it, however. The Inland Revenue, which last year set up a Large Groups Office specifically to address the problem, clearly hopes so.
Furthermore, the use of tax-avoiding techniques distorts the market, for they amount to a hidden subsidy for those prepared to use them against those who do not. In some cases, the effect on competitors is devastating, for past tax losses can be used as a way of subsidising predatory pricing in an unrelated business. In Mr Murdoch's case it may be part of the explanation for the price war he has unleashed on the newspaper industry - a commercially suicidal initiative for any stand-alone newspaper.
The evils of tax avoidance are one thing; what to do about them quite another. The tax system remains complex and big corporations one of the last great bastions of secrecy in an increasingly open world. In the long term the only solutions are a wholesale reform to simplify corporate taxation and much greater transparency of company accounts.
Public works on the never-never
This may go down in history as a Budget on the never-never. The Chancellor wants to persuade the private sector to finance what in the past would have been public infrastructure projects, so the Government can rent them back again on hire purchase. For the construction and contracting industries, already in a state of near terminal gloom, that will probably be read as never- never a full order book again.
Companies fear a double whammy. Every department in Whitehall was told in the public spending round to produce a list of options for replacing public capital outlays with Private Finance Initiative projects, in which private contractors finance and operate new investments. But three years of experience with the slow progress of the initiative have taught industry that PFI really stands for Postponing Fixed Investment.
The Treasury is well aware of this deep scepticism, and will follow the Budget with a propaganda offensive to persuade industry that the programme is at last about to take off. The forecast figures will sound good. Including road and hospital contracts which are genuinely on the point of being signed this month or next, the present total of PFI projects is only pounds 1.3bn. But the target for projects to be signed by next March will remain at pounds 5bn, of which roughly half will be the one-off Channel Tunnel Rail Link. The Chancellor may promise a further pounds 5bn in the following year, a doubling of the rate at which bread and butter PFI projects - excluding the rail link - are processed and approved.
Although project approvals are undoubtedly about to be stepped up substantially, there are two reasons for scepticism. One is the justified accusation by contractors that with few exceptions - the health department is one - Whitehall lacks the expertise to negotiate transfers of financial risk to the private sector.
The other is that Britain has too few large companies willing, able and with the capital backing to put together large PFI proposals-- and to shoulder the operating risks once they are finished. The UK needs experienced and well capitalised public-works contracting companies the size of Hochtief in Germany and Compagnie des Eaux and Lyonnaise des Eaux in France to make the PFI succeed.
A small step in this direction was taken last month when Tarmac took over Wimpey's contracting business. Laing is also well capitalised and chasing PFI contracts. In contrast, Taylor Woodrow, Costain and Sir Alfred McAlpine are not in the same league.
McAlpine's brief flirtation with Amec came to nothing yesterday, as Kvaerner of Norway put in a hostile bid for Amec. If nothing else, this will put a permanent "for sale" sign over McAlpine. Equally, Taylor Woodrow and Costain may lose their independence and few tears will be shed. As part of larger groups, UK or foreign, they might, however, have the clout needed to help turn the Chancellor's PFI promises into reality.
Buyer needed for BBC transmitters
The BBC has long fought against the Government's plan to privatise its transmission services but has now conceded that the advent of digital TV might have required too much investment in transmission facilities for it to cope. The private solution could be best after all. But who is to take on the division? NTL, the privatised transmission company formerly owned by the Independent Broadcast Authority, certainly wants to bid. That would lead to a near-monopoly on transmission services in the UK. BT would probably want a look in, although why the Government would want to encourage the telecoms giant to grow yet more powerful is difficult to comprehend.
By far the best solution would be for another completely independent buyer to come up with a decent bid. Otherwise, we shall have to rely on Oftel, which now regulates NTL, to umpire a rowdy game between customers and yet another privatised monopoly.