The long and winding road to tax justice
After the UK charity ActionAid accused SABMiller in December 2010 of tax dodging in some of its emerging markets, many thought the campaigners had scored a victory when western governments in 2013 promised they would put an end to this practice by forcing multinational companies to disclose what they earned and paid in taxes in all the countries they operate in.
But after all the political swash-buckling, the Organisation for Economic Co-operation and Development (OECD), a club of 34 rich industrialised nations with headquarters in Paris, came out with a proposal in January 2014 which campaigners could only call “lame”.
Incidentally, the first to comment were the accountancy firms, warning unisono that the proposals might place an unreasonable burden on companies.
Campaigners on the other hand, complained that the proposals were not going far enough. Richard Murphy, who works for the left-leaning think-tank Centre for Labour and Social Studies, remarked on 21 January 2014: “The G8 called quite explicitly for country-by-country reporting for tax purposes and the G20 endorsed that call. But, if you go to what is called the Base Erosion and Profits Gifting Action Plan that the OECD has produced … you’ll find something quite extraordinary. Country-by-country reporting is not mentioned at all in that plan. … Far from there being a plan for the full set of accounts that country-by-country reporting demands, just the sales, labour cost, profit and tax paid figures may be disclosed, and then only to tax authorities, and not to the public. So the OECD watered down their response to the G8 demand before they even got to work.”
He concluded: “We should be worried. And civil society should not rest on its laurels. Getting tax justice onto the agenda was one thing. Actually achieving it may be something that is much harder to secure.”
When asked by BRAUWELT International to comment on the OECD’s proposals, ActionAid Tax Policy Adviser Mike Lewis was less scathing in is criticism. He said on 11 February 2014: “The simple idea that multinationals should report their tax affairs in each country where they operate was considered unthinkable by many governments and large companies just eighteen months ago. That some form of ‘country-by-country reporting’ is now on the table at the OECD shows how far the global tax justice debate has come in a short time.”
But he too harboured reservations: “ActionAid’s investigation of SABMiller showed that, while transparency is important, it is international tax rules themselves that ultimately need to change to ensure that southern governments are not deprived of much needed tax revenue as a result of corporate tax planning. Those rules can’t be equitably reformed without involving those countries most vulnerable to tax avoidance – the 154 developing countries that don’t have a seat at the table in the on-going OECD negotiations.”
This proves to show that governments’ grand announcements don’t always make it into fine print.
