Exchange of the Week – The Week Issue 901 page 18

To the Independent

A major factor to take into account when evaluating the “goodness”, or otherwise, of any particular tax is the extent to which it merits the objectives that the tax setters had in mind when setting it. If the objective of UK Corporation tax as applied to multinationals (including Starbucks, Amazon and Google) is to raise revenue directly, then it is clearly a bad tax. Being not fit for this purpose it should be abandoned in favour of an alternative tax designed specifically to achieve this objective.

But if the objective is to attract and retain multinationals then it might be seen as a good tax. In this case rather then fuel arguments about morality of tax avoidance (as distinct from evasion), our political leaders could better devote their energies to drawing the attention of those who do pay their taxes to the benefits which flow from the presence in our economy of multinationals (including employment creation, VAT revenues generated, income-tax and National Insurance receipts from employees, supply-chain effects and so forth)

The chancellor can’t have it both ways: so come on George Osborne, make it clear to us whether your objective is to raise revenue or retain foreign-owned firms within these shores?

Professor David Sapsforth, University of Liverpool