There has been a big kerfuffle lately in the press about various big brands not paying as much corporation tax as newspaper reporters seem to think that they should. Is this likely to result in consumer rebellion against these brands and can the brands involved use advertising at all to stave off any such action?
It’s not, of course, just newspaper reporters who think that a lot of big companies are paying a lot less tax than they should. The Chancellor of the Exchequer thinks so as well, and you can see why.
It’s wonderfully easy to get enraged by all this and harrumph about companies’ "moral obligation" to pay millions of pounds worth of tax when, technically, they don’t have to.
A very long time ago, I did a couple of Question Times and was ashamed to discover in myself the deadly attraction of audience approval. Today, a panellist has only to thunder on about the rapacious greed of multinationals to be certain of thunderous applause. The Question Time format doesn’t favour the impromptu articulation of a complicated truth.
If a company chooses to pay more tax than it is legally obliged to, it raises all sorts of open-ended implications. How does it decide how much more to pay? Does paying tax, in part therefore, become discretionary? And what about the shareholders?
I once asked a man who knows about these things whether, theoretically, shareholders in any given company could instigate a class action against its management for voluntarily giving away vast sums of money that might otherwise have benefited the dividend pool. His confident answer was, yes, theoretically, they could.
In other words, it could be illegal to behave morally. A Question Time panellist making such a point would not be rewarded with thunderous applause. I doubt if you’re applauding me now.
So I have great sympathy with those chief executives who say: "I’d much rather not have to make such decisions. Just get the law right, just make sure the playing field is level, and I’ll not only conform but I’ll do so with a sense of profound relief."
But for reasons too tedious to itemise, that ain’t going to happen; and nobody pretends that it is. So, as a second-best corrective, the "big kerfuffle" is no bad thing. It’s a bit like putting miscreants in the stocks so that more righteous citizens can make their feelings felt through the accurate disposition of rotting vegetables.
If the law can’t stop companies from legitimately starving their host countries of the very revenues that make those countries attractive to do business in, then bring on the stocks. Once the brand has endured the ignominy of rotting vegetables – once it gets contaminated or is threatened with contamination – then the intelligent chief executive should be delighted. Instead of having to decide between the hard and the soft – between measurable shareholder return and some nebulous concept of morality – the choice is now between the hard and the hard.
There doesn’t have to be a widespread consumer rebellion; if it can simply be shown that there are marketplace penalties to be paid for overzealous tax-planning, corporate behaviour will change: not for legal reasons, not for moral reasons, but for reasons that even hard-headed corporations will recognise. As Ralph Nader sagely observed: "Power can be exercised responsibly only so long as it remains insecure."
I can’t see advertising coming into it at all.
The Cannes Festival is almost upon us and I’m taking several of the UK agency team over for a mix of client meetings, seminars and, hopefully, some awards collection. In between, we’ll hopefully find some time for the odd glass of rosé and a spot of lunch. Given we’ll be attending a variety of events, some with our senior clients, what kind of dress code do you think will be appropriate for the team? And should I ask the team to co-ordinate along the same style lines? Sports casual is a favoured look of mine, but I’m not sure the creative director is a big fan of chinos.
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