Tax is a social contract with society and businesses have a duty to pay their fair share
Tax avoidance is one of the public’s biggest concerns when it comes to corporate conduct. Offshore tax havens, complex schemes, household names which grow bigger and bigger and yet their contribution to the Exchequer seems to diminish.
Rightly, the public are demanding large businesses are held to account. That the rules and standards that HMRC applies to them are stringently applied to businesses too.
Fair Tax Mark polling this week has confirmed again just how much the public cares. In fact I describe the public as seething with anger at the alleged tax avoidance of some companies. If ever there was an example of how ‘we are not all in it together’ it is the notion that those with the powers of wealth and power can pull those levers to their own advantage. This is hugely damaging to society.
What I find frustrating is that a few bad apples can tarnish the reputation of so many. Profitable companies like SSE create hundreds of thousands of direct and indirect jobs, build and upgrade essential infrastructure to keep the lights on and its tax contributions help support the services we all need to thrive. Tax pays for the schools we learned in, the hospitals that treat us, the roads that get our goods to market and the security we get from emergency services.
Tax is a social contract with society and it goes without saying it is businesses’ duty to pay their fair share.
SSE was the first FTSE 100 company to be accredited with the Fair Tax Mark in 2014. It took the decision to seek independent verification that is pays the right tax, at the right time and in the right way as a response to the growing public mistrust in corporate behaviour.
The values espoused through Fair Tax Mark accreditation – give a signal of the sort of economy and society we believe in.
And we want more companies to join us.
Businesses concerned about the connection they have with their customers, might want to consider carefully the role a progressive stance on corporation tax might make to their relationship with their customers.
Companies can’t focus simply on rules and compliance. They need to focus on ethical values too. A firm’s position on responsible tax, accredited by an independent third party – is a statement loaded with values and – I believe - helps support the reinforcement of a healthy, ethical business culture and gives a platform for balanced, inclusive economic growth in every part of the British Isles.
Finally, if customers and business ethics haven’t yet persuaded some companies to have a positive position on tax then perhaps their shareholders might.
Increasingly shareholders and institutional investors are looking at this issue and the material risk to businesses. There’s been a very significant shift in shareholder appreciation of a company’s wider impact on society and the environment and how positive impacts can generate wider value for shareholders and society. Investors have told us at SSE that our tax position is something they consider to represent the good management of political and regulatory risk.
Momentum is growing but more businesses should be taking a careful look at what more they can do to be transparent on tax and the Fair Tax Mark would be a good place to start.
Rachel McEwen, SSE’s Director of Sustainability, spoke at the Scottish Parliament today outlining why more businesses should join the fair tax movement.