The Greatest Invention: tax and the campaign for a just society
A Tax Justice Network (TJN) Production
£12.99 ISBN: 978-0-9931616-3-6
This is an excellent series of short, easy to read essays stretching back over a decade from the Tax Justice Network, the body which has done the most to change attitudes towards tax and the rich and powerful's aim to avoid paying their proper share of it. If you need any persuading, or just want it reaffirmed, that the UK - and even the developing economies - can afford a decent standard of living, and properly resourced public services, for all their citizens then this book is a must read.
Multinational companies dominate the world economy with many firms having bases right across the globe. This has allowed them to avoid paying tax by employing transfer pricing whereby one part of the business that is based where tax levels are highest overpays for a product from another part of the business based in a country where tax levels are low or if it is a tax haven then non existent. These practices result in the latter being the most profitable sector of the business and en-sures much less tax being paid than should be.
When the TJN investigated in 2002/3 they found that plastic buckets from the Czech Republic were costing $973 each, $585 more than the cost of bulldozers from Venezuela. And whilst many national tax authorities treat such tricks as tax evasion the sad fact of the matter is that many others don't have the resources to properly scrutinise companies' books to identify such transactions.
This drive to avoid tax by multinationals is part of a corporate culture that has seen them ruthlessly exploit many of the countries in which they are based. In Nigeria the oil companies have employed armies of accountants and auditors to effect tax evasion on their huge profits. To facilitate this process, and also secure major construction projects, the multinationals have subverted the political process by paying politicians and public officials to 'look the other way.'
In countries where it's not (regularly) possible to openly operate so corruptly that hasn't prevented cheating by big business and the wealthy who, with most politicians, at best, too afraid to challenge their power, have developed a network of tax havens and tax avoidance and evasion schemes. The sums of money involved are incredible, trillions of £s remain untaxed, resulting in countries slashing the public services their citizens rely on.
The centre of much of these practices is the City (of London), with its network of investment bankers and the big four accountancy firms that all also operate a revolving door policy that takes politicians into lucrative posts and financiers into governments. Thankfully, the fantastic work of the TJN, which remains massively under resourced, means we now know much more about these problems and the book is packed with examples of the discoveries that this remarkable organisation has made and publicised.
To help tackle these abuses, morally repugnant actions and crimes, the TJN has worked with an impressive array of human rights activists, environmental groups, economists and politicians - including John McDonnell, Labour's shadow chancellor - to formulate a series of ideas, political and practical objectives that can help chart the way ahead to a more efficient, socially productive and fairer society.
Widening the terms thus forms the latter part of the book. In the UK, amongst many other needs, it is time to rebalance the economy towards manufacturing and away from state subsidies on the likes of PFI projects that see taxpayers in the North and West overpay for projects that are built by companies largely based in London. Far better to have a publicly funded infrastructure development programme under which revenue streams accrue to the regions around the developments with the subsequent boost to the local economy.
Internationally there must be greater financial transparency, the abolition of shell companies, automatic exchange of tax information worldwide and a requirement of every multinational company to report their sales, profits and taxes paid in each country in which they operate. This would also prevent the activities of criminals such as terrorists, traffickers and money-launderers.
Finally, the book appendix includes the Tax Justice Network's various declarations the first of which is dated in March 2003 and signed by nine people. There are no people who signed the latest one emanating from the April 2015 conference in Lima but that's only because they've been replaced by over 100 organisations, some of significant standing. Such a huge increase in support is welcome but more is needed so please read the book, bring it to your fellow Unite members attention and consider supporting the TJN.
Want to comment on this book? Email Mark Metcalf at email@example.com