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O Canada!

January 8, 2016

Now if you ask me, this is how you do a consultation!  The Canadian authorities start now, with an accessible invitation to citizens to come on board with their thoughts as to what should be in their next Budget.  (Hat tip to Jill Rutter at the Institute for Government for the original mention on twitter:

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You might also like to look at her old blog post commenting on the adequacy of our own dear Treasury’s “budget suggestions portal”)

Because, actually, who has a right to be involved in the conversation about tax? If you are a regular reader of this blog you can probably guess my answer: we have.  We, the citizens, the tax muggles, the taxpayers, have a right to take part in the conversation about tax; it’s not a topic that should only be addressed by “experts”.

What has wound me up about the topic today?  This consultation about the tax deductibility of corporate interest expense.  It closes on 14th January: I was going to make it my first consultation response of the year, and then I thought I might not bother, and then I skimmed the first few paragraphs, and then I got

r e a l l y   a n g r y…

Here’s the rubric on the consultation page:

This consultation will look at:

the key aspects of the OECD recommendations regarding best practices in the design of rules to prevent base erosion through the use of interest expense
how specific issues could be addressed in a UK domestic policy context.
This consultation is open until 14 January and the government will consider responses in the development of a future business tax roadmap.

OK, so we know the government is developing this “business tax roadmap” (because business needs “certainty” about tax, whereas the rest of us will be happy with the usual government mess of making it up as they go along?)  And I’d heard of BEPS – the base erosion and profit shifting project – which is one of the things that I vaguely meant to get on top of one day, but essentially is the international project (in the Organisation of Economic Co-operation and Development – OECD) to stop multinationals from pretending they have to pay all their income from selling you (say) coffee in (say) Sheffield to some corporate knowledge bank in (as it might be) The Netherlands, because no-one else knows how to make coffee…

Now I thought David Cameron was all in favour of BEPS – that the UK was setting the agenda and taking the lead...

Which is why I’m a bit surprised that

we are publishing this document now to seek views from all stakeholders on how best to respond to the OECD proposals. We are interested in the views of all stakeholders on how to address BEPS issues involving interest expense in an effective and proportionate manner. The results from this consultation will be considered in the development of a future business tax roadmap. [David Gauke’s introduction to the consultation document]

“Effective” and “proportionate” are, I imagine, code words for “impotent” and “ineffective”?

To me this looks like an attempt to take the principles that tax justice campaigners have worked for – ending the erosion of the tax base, ending profit shifting to tax havens, introducing country by country reporting – and letting the poachers work out the rules of engagement that will bind the gamekeepers.

Look at the slide set from the “stakeholder event” held on 14th December last year.

(Incidentally, one of the objectives of the day was

  • To encourage and facilitate constructive written responses to the public consultation

because god forbid we should get unauthorised muggles giving their views!)

You will see from the first page of notes (after slide 16) that there is a description of the “stakeholders” attending the meeting.

There were 73 representatives from a wide range of business sectors including manufacturing, retail, services, oil and gas, utilities, telecoms, publishing, infrastructure, real estate, banking, insurance, and fund management, as well as from accountancy and legal firms, regulators, trade associations, civil society organisations and academia.

Now: who in that list represents you?  What stakeholder was protecting the interest of the ordinary taxpaying citizen?

Perhaps it would be easier to look at the list of the actual organisations represented:

Association of British Insurers (ABI)

Action Aid

Association for Financial Markets in Europe (AFME)

American International Group (AIG)

Alternative Investment Management Association (AIMA)

Allen & Overy

Alvarez & Marsal

Amazon

Anglican Water Group

Anglo American

Asos

Association of Investment Companies (AIC)

Association of Real Estate Funds (AREF)

BAE Systems

Baker & Mckenzie

Balfour Beatty

Barclays

British Bankers’ Association (BBA)

BDO

Base Erosion and Profit Shifting (BEPS) Monitoring Group

BG Group

BHP Biliton

BP

British Property Federation (BPF)

British Land Corporation

BT

Confederation of British Industry (CBI)

Chartered Institute of Taxation (CIOT)

Deloitte

Diageo

Disney

Duff and Phelps

Evans Property Group

EY

Ford

Freshfields Bruckhaus Deringer

G4S

General Electric (GE)

Grant Thornton

GlaxoSmithKline (GSK)

Heathrow

HSBC

Institute of Chartered Accountants of Scotland (ICAS)

Informa

InterContinental Hotels Group (IHG)

Investment Association

Investment Property Forum

Johnson Matthey

KPMG

Liberty Global

London School of Economics and Political Science (LSE)

Microsoft

National Grid

Nomura

Norton Rose Fulbright

Ofwat

Oxfam

Pearson

Pinsent Masons

Prudential

PwC

Rolls Royce

RSM

Santander

Severn Trent

Shell

Slaughter & May

Tesco

Unilever

United Utilities

Vodafone

XL

(incidentally I make that 72 and not 73)

Now, if I had been David Gauke, I would have had a few select financial journalists in for a chat and made it clear that we were looking to be, and to stay, at the forefront of the BEPS project and tried to get them excited about the idea of a proper consultation, with taxpaying citizens and not just the Usual Suspects.  And then I would have emulated the Canadians and organised a google hangout and a webpage and a hashtag and a Facebook page and an appearance on Jeremy Vine and…

I’d have asked us.

It would have taken some explaining what the question was, but I don’t for a moment believe that the taxpaying public is incapable of understanding the question nor uninterested in the answer.

Who’s for a google hangout to thrash out a Muggles’ Charter?  The government wants to “encourage and facilitate constructive written responses” so let’s answer the call.

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