Nick Shaxson ■ Quote of the day: on corporate tax policy making


SwagFrom Martin Hearson:

What my clients are concerned about,” said my friend, “is political interference in corporate tax policymaking.” I found this quite startling. Is it possible that businesses consider corporate tax policy to be a matter for private negotiations between them and the government, rather than the subject of public (and even parliamentary) debate as part of the government’s budgeting process?

This is a question of profound and fundamental importance, and the nonchalance with which it is seemingly uttered is testament to the remarkable degree of ‘political capture‘ that large multinational corporations have achieved in the United Kingdom, a country with a large and boisterous democracy and a (fairly) effective press. For an example of the egregious anti-democratic processes at play, you only need to look at this brief summary entitled The Principles of Tax Policy at the UK parliament. Hearson continues:

“The UK’s corporate tax regime has been dramatically overhauled over the last ten years, with a plummeting corporation tax rate and vast swathes of the multinational tax base exempted. This is a serious structural change in our tax system, yet there’s been barely a peep about it in public debate. And we continue to sign tax treaties, with only a cursory discussion in parliament each time.

The more we can bring democratic debate into these issues – not just in rich countries like the UK but in developing countries too – the more the veil of secrecy can be lifted, and the more accountable and representative the tax policy making will be.

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