Business, Civil Society and the ‘New’ Politics of Corporate Tax Justice
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Business, Civil Society and the ‘New’ Politics of Corporate Tax Justice

Paying a Fair Share?

Edited by Richard Eccleston and Ainsley Elbra

Since the financial crisis the extent of corporate tax avoidance has attracted media headlines and the attention of political leaders the world over. This study examines the ‘new’ politics of corporate taxation and the role of civil society organisations in shaping the international tax agenda and influencing the tax practices of the world’s largest and most powerful corporations. It highlights the complex and multi-dimensional strategies used by activists to influence public opinion, formal regulation and corporate behaviour in relation to international taxation.
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Chapter 7: Paying a ‘fair share’: multinational corporations’ perspectives on taxation

John Mikler and Ainsley Elbra

Abstract

Multinational corporations (MNCs) can legally minimise the tax they pay by shifting their profits to states where they do not actually earn them. They can do this because their economic power puts them in a strong position to make choices about where and how much tax they pay, without necessarily shifting their operations. However, what is possible, and legal, is not necessarily desirable from a reputational point of view. If corporations understand that their reputations are precious assets that they may jeopardise if they are widely perceived not to be paying their ‘fair share’ of taxation, this may affect their perspectives on aggressive tax minimisation strategies. After establishing the market and geographical concentration of MNCs, and demonstrating why it supports a liberal preoccupation with shareholder value rather than voluntarily paying more tax, in this chapter we analyse indices of corporate reputation to demonstrate how financial indicators outweigh social responsibility as indicators of corporate performance. We also consider Apple and Google’s responses to recent inquiries. These indicate that a liberal ideological belief in free markets, a focus on shareholder value, and adhering to legal requirements dominate corporate leaders’ conceptions of MNCs’ legitimacy. We therefore conclude it is unlikely MNCs will voluntarily pay their fair share of tax, but that in declaring their right not to do so they have undermined their legitimacy and left national and international regulation that forces them to do so as the logical alternative.

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