Taxing questions

Quote

“The government’s view of the economy could be summed up in a few short phrases:  If it moves, tax it.  If it keeps moving, regulate it.  And if it stops moving, subsidize it.”  Ronald Reagan

News

Weeks of negative media exposure about the failure of Starbucks to pay UK corporation tax for years has brought about a U-turn in the company.  What the Starbucks board had perhaps considered an accounting success – posting a notional loss on their £400 million turnover in UK– has become a scandalous liability.

British toleration of tax avoidance is wearing thin, especially as the prospect of five more years of austerity is affecting millions of people, by squeezing incomes and heaping pressure on family relationships.  Increased tax revenues are in everyone’s interest, especially the poor who rely on welfare.

As the law currently stands, multinational companies can effectively choose how much corporation tax to pay in a jurisdiction, without acting illegally; it illustrates the glaring discrepancy between the letter and the spirit of the law. 

The anger generated over this underscores the reality that laws are intrinsically relational, since they act to establish or protect certain relational ideals.  Breaking the law involves an offender and a victim, and damages the relationship between the two parties; so tax avoidance is more than just an accounting device, it is harmful relationally as well.

It is perhaps awareness of this which is driving Starbucks to change their corporate accounting.  Up to now they have prioritised the relationship with their shareholders, by maximising net profits, and assumed that their rapport with customers and local communities would be unaffected.  But this no longer looks sustainable as consumers and the media join politicians in criticising the company.  Starbucks may be willing to pay some corporation tax now, but a deeper cultural change may be necessary to restore trust and respect in the other relationships on which the business depends.

Read on…

The Cambridge Paper ‘Render unto Caesar? The dilemmas of taxation policy’ offers a perspective from the Bible on taxation in the context of modern democracies.  Though the statistics are dated the principles aren’t; read the paper here.

Walk the talk

Tax avoidance schemes won’t be an issue for most of us, but the plight of those around us who are struggling due to the recession should be.  Might you volunteer some of your time at a debt counselling centre, a foodbank or another caring initiative towards those who struggle materially or relationally?

The last word…

From the Bible, Luke chapter 20, verses 21-25: “ ‘Teacher… Is it right for us to pay taxes to Caesar or not?’  Jesus saw through their duplicity and said to them, ‘Show me a denarius. Whose portrait and inscription are on it?’
‘Caesar’s,’ they replied. He said to them, ‘Then give to Caesar what is Caesar’s, and to God what is God’s.’ “