Does responsible tax matter? That’s the question BBC Business Correspondent Joe Lynam asked our panel at our latest Great Business Debate event (20.10.15). Speaking to a live audience of students, business representatives and journalists, our panellists were:
- John Cridland (CBI)
- Nuria Molina (ActionAid)
- Sarah Prior (Lloyds Banking Group)
- Dr Rowan Williams (Christian Aid)
From John Cridland, we heard about the importance of transparency and responsibility — businesses need to own the issue of tax. This message was echoed by Sarah Prior, who argued that businesses are an important part of the tax puzzle and suggested that businesses shouldn’t just keep their heads down. From Nuria Molina we heard about the human story behind ActionAid’s campaign for tax justice, while Dr Williams emphasised the wider debate about the value that business creates for wider society.
Scroll down to read a full summary of what our panellists had to say.
John Cridland (CBI) kicked off the debate by suggesting that directors should look at themselves in the mirror on tax. He suggested that if Directors can convince themselves in the mirror about the credibility their tax affairs, then they stand a good chance of convincing somebody else.
He went on to argue that the debate about tax is a great example of the juxtaposition that many businesses face today. “We have gone global” he said “but need to think and act local”. He explained that when boards of directors and their tax experts are making their decisions, they must live up to the expectations of their ‘licence to operate’ in every community.
John emphasised two key steps for taking forward a more grown up debate about tax: First – business needs to take responsibility for the issue. Firms should set out clearly what they pay, in layman’s language, he said. Second – there should be much more transparency. Most companies go out of their way to pay the right tax – paying £175bn in total last year – but lack of transparency means people don’t know it.
— CoVi (@COVIthinktank) October 20, 2015
Want to hear more from John? Listen to his full statement here.
Nuria Molina (ActionAid) spoke next, beginning with the human stories that are behind ActionAid’s campaigning for tax justice. Nuria shared an anecdote about a young pregnant woman in Nairobi who died as a result of poor healthcare facilities. An effective global tax regime would help ensure that developing countries have the funds to provide things like healthcare, she explained.
Nuria went on to emphasise how far conversations about businesses paying tax had come in the last decade. From tense secret meetings, to yesterdays (20.10.15) Great Business Debate. She praised the positive journey that business had come on and urged government, businesses and NGOs to continue their fruitful engagement. She finished by highlighted that Christian Aid and ActionAid will be putting forward a new paper explaining what good tax behaviour looks like.
Want to hear more from Nuria? Listen to her full statement here.
Speaking next, Sarah Prior (Lloyds Banking Group) highlighted recent CBI/Ipsos MORI polling showing that the general public underestimate the tax that business pays and over estimate the amount of avoidance.
Sarah emphasised that business does need to care about what the public thinks about tax. Like any other cost, tax is borne by a wider group of shareholders including employees, shareholders and customers. It means the man and woman on the street really does have a stake in the tax that businesses pay.
Businesses have choices on tax, she said, and they must consider those wider stakeholders in making them. Taking the example of Lloyds Banking Group, she explained that they aim to make sure that everything they do – including their approach to tax – aligns with their organisational purpose of helping Britain prosper.
Many companies are publishing their tax strategies, Sarah said, but the challenge is in making the leap to real awareness. Sarah suggested that business has tended to keep its head down, but argued is not serving business well, nor the wider debate. Business is an important part of the puzzle of educating people about tax, and moving forward will mean not being scared of being part of this debate, she argued.
— Tim Law (@TimLawTax) October 20, 2015
Want to hear more from Sarah? Listen to her full statement here.
Dr Rowan Williams (Christian Aid) was the final panellist to speak. Dr Williams opened by referring to the ‘disturbing news’ about the UK steel industry in the North East. For Dr Williams, despite those companies’ positive ethical records, it pinpoints the way in which business tends to be perceived. For example as ‘big business’, as business where people don’t feel they have a stake and as business where decisions are taken at a distance from people’s reality and interests.
Dr Williams went on to argue that business needs to answer the question about how it creates real wealth for society – independence, creativity and autonomy – not just wealth as numbers on a screen. If the tax regimes of developing countries are not adequate for providing support for things like healthcare, education and infrastructure then states will fail, said Dr Williams. As well as being a terrible consequence for the nation, it’s also bad for business, he explained.
To build confidence in its affairs, Dr Williams called for proactive transparency, willingness to work with developing countries and measures of whether business tax incentives are justified by their results. Finally he said there was a question of education of the public, who are ‘often as suspicious of business as they are of organised religion’ and as liable to generalise.
In the ensuing audience Q&A, key themes included the role of the government, employee and the customer in the debate about tax, the need to simplify the tax system and the balance between doing the right thing and more regulation.
Want to hear more from Dr Williams? Listen to his full statement here.