Thursday, 9 December 2010

Is tax avoidance socially responsible?

Tax avoidance is getting on the nerves of people I certainly oppose violent actions against retailers but it is crucial to recognise that tax avoidance might be legal, but it is not an ethical business practice. I previously blogged on the fact that £9 in every £100 that should be paid in taxes goes missing people people and corporations are very efficient at avoiding tax.

The commissioning by the Coalition Government of a study into a General Anti Avoidance Rule (GAAR) is certainly a step in the right direction but overall, the deliberate choice of ethical practices as part and parcel of daily business practices by all our corporations is what we should be encouraging.

Corporations have a social responsibility to the communities where they operate. What they do, impacts at home and abroad. This is why the Church of Scotland is supporting Christian Aid’s Trace the Tax campaign highlighting the effects of tax avoidance on developing countries.

Adherence to tax legislation is of course compulsory, but corporate social responsibility goes beyond that. It is actually a new business model where becoming a part of the community is seen as a business opportunity. These ideas are not pie in the sky. Several companies such as Marks and Spencer’s or IPC Media (publishers of some of our favourite magazines) are actively involved in one or all of the main areas of corporate social responsibility : the environment, the marketplace, the workplace and the community.

A business model based on corporate social responsibility makes corporations intricately involved in the sustainability of the communities in which they do business. In the short term it might seem profitable and simpler to relocate corporate headquarters to a tax haven; however, in the long term such practices damage the sustainability of any economy. Damaging our economy by evading taxes undermines our economic recovery. That is surely bad business.

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