Morality - Governments and Multinationals

“We are not accusing you of being illegal; we are accusing you of being immoral.”

These were the words of Ms. Hodge from the Public Accounts Commission during the questioning of Google, Amazon, Starbucks.

After hearing this quote, a scattering of thoughts ran through a mind in the very chaotic fashion written below.

As the news spread via the press with all its negative connotations, there began a public outcry against the evil multi-nationals that come to the shores and take the profits away with them without paying their just dues. 

Boycotts and anti-corporate slogans are promoted, requests to turn to the forgotten local businessman or woman who is the victim to the devil from across the seas.

Corporations create employment, employment creates wealth, wealth creates spending power and spending makes the economy go round.  In a time when we are all asked not to save but help turn the cogs of the economy - jobs help create that motion, can the smaller business do that at the same speed as the as the corporate giant?

In it’s most simplistic view – the corporation is playing within the rules – no illegal activity has been proven or even brought into question.  There is a clear acknowledgement that the rules allow the activity that has been undertaken. 

Is the individual who decides to put his or her savings into an ISA in the UK not ‘avoiding tax’?   

While the UK government continues to reduce the corporate tax rate, is that not immoral to the countries that cannot do so?  Is the government reducing the rate to help struggling businesses alone?  Will foreign organisations not look at the UK rate and find it more attractive than that of the US for example?  Will the Patent Box not entice developers and thinkers from other jurisdictions to consider what their financial position would be in the UK compared to the nation that they reside in?  What of the morality of a government and its responsibility to global economics?  In the current climate do we do away with global responsibility?

Treaties and agreements can be reached in many instances.  But if the government signs up to Transfer Pricing Guidelines as put forward by the OECD in 1995 then 2010 does it still have the power to change the rules as quickly as it would like?  Leading governments will not want to disrupt the balance, even in this time of what in some cases is desperation. 

What if the Spanish authorities decide to lower its corporate tax rates to such a level that foreign organisations find it too difficult to resist – Spain speculates and then in time accumulates.  Is it immoral to plan for the future for that nation for its people?  Or is the answer that if a government does act competitively then it’s ok; if a nation makes a profit its ok.

In government and business where is the line of morality when both work on making profit?

Is it not up to the governments to collaborate and change the playing field? 

The answer, for me, is that the authorities need to change the rules and until such an action is undertaken, they should not accuse the organisations of ‘immorality’.  In order to change the rules there needs to be global consensus, as all the jurisdictions are shareholders of the world economy.

The question is how likely is this.