Oxfam tax report critical of Reckitt Benckiser

 

It’s easy to be righteous about corporate tax avoidance and demand big businesses pay their “fair share”.

It’s what Oxfam demanded of Reckitt Benckiser this morning in the report Making Tax Vanish. Avoidance arrangements by the household goods giant deny developing countries millions of dollars a year, the charity claimed.

But there’s a problem with its logic: RB’s tax arrangements are legal, as Oxfam acknowledged, so doesn’t the Harpic maker already pay a fair share?

There are other flaws in what the charity demanded today – like reform of the “global tax system”. There’s no such thing. And if there were, it’d be unworkable for myriad reasons, not least its size. The UK’s tax code alone is whopper; it achieved record size only five years ago at 687 pages.

Of course, that “fair” amounts of tax be paid is not a practical demand but largely a moral one. At the moment, “fair” is down to the mind of the individual person or corporation. Nations’ tax set-ups are too mercurial to offer clear answers. Morality is, you could say, a consensus of what is proper.

And rule of law is what interprets that consensus, no? So, there’s no reason, in principle, governments could not consent on a shared tax regulation or two (if not a one-world code). That was the apparent thrust of Paying a ‘Fair Share’: Multinational Corporations’ Perspectives on Taxation, an economic brief published in May by the University of Sheffield.

Of course, not everyone will agree with a particular outcome, and any system will be subject to abuse – often in legally grey areas (and tax is splattered with legal grey areas). Artificial avoidance is one such current example. Many big companies are ‘guilty’ of it.

That is not to suggest RB is. In fact, the household goods giant today stated its commitment to the OECD’s already-legendary-in-tax-circles BEPS Action 13 report – the overarching desire of which is for country-by-country reporting of ‘revenues, profits, taxes paid and certain measures of economic activity’.

That means transparency – and a great step towards satisfying both the pragmatic and the principled.