Jan 10 2013

Sainsbury’s boss Justin King slams tax avoidance

Posted by: Nick Shaxson in: Thoughts

Justin King, CEO of the UK supermarket Sainsbury’s, was on blistering form last night on Channel 4 News, delivering a fantastic lesson on corporate tax avoidance. Who could argue with him? I consider the intellectual argument to be won. Now all that is left in the way of true reform is the power of multinational corporations, which have effectively been able to dictate multinational tax policy in the UK and in many other countries. (If you don’t believe that, read Sections 9-12 here.) The interview is here; my transcript of the relevant section is below it.

First, the context. Sainsbury’s is huge in the UK, but it’s a domestic company, not a multinational.

“We are entirely domestic, we pay our tax in the UK; I think by the last count we were the 12th biggest taxpayer in the UK and we are proud of our taxpaying record.”

Good for them. I haven’t checked the numbers, but I’ll take his word for it.

Corporation tax for international corporations is an elective tax. they can choose quite legally to organise their affairs and choose to pay tax pretty much wherever they wish.

Indeed. More interestingly, though:

“I think it now for consumers to ask tough questions of the businesses where they take their custom about where they choose to pay their corporation tax. Corporation tax is a way in which we invest back in the community and the country of which we are part. I think that companies that wish to trade here, enjoy the benefits of our consumers and of the investments in our infrastructure, our safety and so on, should answer themselves about whether they are contributing properly to our society.”

Quite right. And my colleagues at the Tax Justice Network, responding to request from campaigners, are putting together something just like this, for the long haul. But now something else very interesting.

“The consumer are more powerful than governments in this. The vote that you make with your wallet will move the decision making of corporations much quicker than governments will ever be able to do.”

And King has a challenge to corporations to be transparent.

“If companies believe what they do is moral, they should be very happy to lay bare what they are doing, and open it to consumer scrutiny, and we are quite happy to do that, not just on the issue of tax . . . . companies should open themselves up and be counted on the things that they stand for. And of course if they really believe what they are doing is in the interests of their consumers, they shouldn’t have any difficulty in answering those questions, should they?

Quite so. The mood in the UK has really changed dramatically on tax avoidance.

To illustrate the changing mood, take a look at the contrast between this astonishing footage – which happened a few years ago but seems to have bubbled up today or yesterday – and this.

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[...] the parapet to complain about the unfair advantage being gained by some companies. Companies like Sainsburys, John Lewis, Costa, Mothercare, Dixons and Lush are all prepared to publicly criticise companies [...]

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