Chalk up another victory for the PR departments of the global investment banks. Some – including Goldman Sachs – are reportedly considering deferring bonuses for their UK staff until after 6 April to take advantage of the lower top rate of income tax. The prospect of too-big-to-fail banks using such a sly bit of avoidance to save their already over-remunerated staff a tax bill – and at the expense of the struggling British Exchequer – has understandably provoked disgust. Labour's Chris Leslie has warned them to "think carefully" about their reputations.
Sadly, one suspects that if the banks were capable of being shamed out of this kind of antisocial behaviour, it would have happened long ago. In any case, there's something unsatisfactory about politicians urging corporations to do the moral thing on tax. The same was true of Starbucks' recent announcement that it would pay £20m in corporation tax. The coffee giant sounded as though it was making a generous donation to the UK's collecting tin rather than discharging its obligations.
What Britain needs is a robust and unambiguous tax system that requires corporations to pay their share, without the need for negotiations with HMRC, or moral urgings from politicians, or gestures of largesse by pressurised managements. On income tax, it was particularly foolish of the Chancellor to delay the 45p rate for a year. He was warned this would create an incentive for people to defer registering income. And so it has proved.
On corporation tax, what is required is international co-operation to close down tax havens and to prevent multinationals from artificially shifting profits between jurisdictions. Ed Miliband's proposal to require corporations to publish a single figure showing how much corporation tax they pay is sensible. The objective of all politicians should be to eradicate opportunities for aggressive avoidance and sharp practices by multinationals and their employees. A tax regime that relies on corporations choosing to do the right thing is not tenable.
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