The BBC’s Robert Peston says that ‘There does seem to be evidence that companies which think of themselves as British - by dint of who owns them - are more squeamish about minimising the tax they pay in the UK’ – without, unfortunately telling us what that evidence is or where we might find it
That the idea - that capital has no nationality, the world economy works more efficiently when it is allowed to move freely to where the returns are highest, and ‘we’ benefit from selling UK assets & businesses to the highest bidder - should carry with it such dangers was something that Ha-Joon Chang, for example, warned about in his book 23 Things They Don’t Tell You About Capitalism.
Such dangers were certainly well known to developing & newly independent countries in the 1960’s when multinational became a dirty word.
Aided by vertical integration, that other fashion of the time, a multinational had plenty of scope as to where to allocate costs to minimise their exposure to local taxes. They owned the mine, the local first-stage processing plant, the electricity station to generate the fuel which that process required (with a surplus to be sold to local consumers) & the ships which carried the intermediate product to a more developed country for the most valuable stage of manufacturing final outputs.
As someone who was sometimes involved in tense negotiations with multinationals to try & get a more equitable settlement I don’t know whether to laugh or cry at the idea that British people are now so outraged by the idea that companies can behave this way.
Might we also look forward to protests about UK companies which seem to be paying lees than their fair share of taxes abroad?
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