Financial Morality and International Tax Laws

Here in the UK Amazon’s last year tax payment was announced and Margaret Hodge is furious. Hodge is chair of the influential Public Accounts Committee of the House of Commons (PAC), which is “seen as a crucial mechanism for ensuring transparency and accountability in government financial operations...” While selling goods worth £4.3billion, Amazon only paid £4.2million in taxes last year. Amazon is able to pay such low taxes because when UK consumers buy products from amazon.co.uk “the payment is taken by a subsidiary based in the low tax jurisdiction of Luxembourg.” While shoppers go to amazon.co.uk to buy, their bill will show Amazon EU S.á.r.l.

Actually, Hodge always seems furious at someone or something: bankers, multi-national corporations, etc. She wants people and corporations to be financially moral. In the case of Amazon, financially moral means paying more taxes than the law demands. Her position and anger are laudable, but here’s a mental exercise for you. You’ve been paying X amount of tax for years but this year you hired a tax lawyer who tells you you have been paying more tax than you need to. The tax lawyer says this year you only have to pay Y amount of tax. You say: “No, no. I want to pay more tax than I am legally required to do. That’s how much I love my society!” Or you say: “OK.” To demand corporations to be financially moral is somewhat naiveté.

The thing is, while Amazon’s behaviour is despicable and in a common sense way immoral, it is not illegal. Amazon is simply utilizing national and international tax laws. These laws were written and passed by elected official in numerous countries. They didn’t one day drop out of the sky from God. They are not a force of Nature. They are laws created and passed by politicians to fulfil certain purposes. I doubt those purposes were to satisfy our sense of what is fair and just.

If, like Margaret Hodge, you don’t like the way Amazon and other multi-national corporations pay taxes in the various countries they do business, then you could email or call your elected official, but I suggest it would be a waste of time.[1] While politicians will make a lot of noise about international tax laws, they are not going to do anything about them anytime soon. First, they tells us that the issues is very complicated and second that it requires international cooperation. For example, it is no good for the UK to change its laws if the U.S., Germany, Ireland, Luxemburg, Hong Kong, Singapore – well, you get the idea – don’t change theirs. Yes, international tax law is complicated and demands international cooperation. But I’m assuming it was complicated and necessitated cooperation to write and legislate the current tax laws.[2] So what gives? It’s hard not to believe that something else is in play here.

To assume that our elected officials will change international tax laws so that multi-nationals pay a fair share of tax in the countries they make millions in various currencies will only lead to anger and heartache. Our politicians are themselves either members of the 1% or are so beholden to the 1% that they will do what is required. I’ve come to the conclusion that the only way things will change is through mass movements, protests and boycotts. Politicians need to be voted out of office and replace by those who agree to pursue the policies we support. If you don’t like the way Amazon is paying taxes around the globe, then follow Margaret Hodge’s example and boycott the company. It is still possible to buy our books, CDs, DVDs and goodness knows what else from other companies (though in ten years it may be very difficult to do so). Yes, you may have to pay more for your book and let your Kindle sit idle until Amazon gets the message, but it’s put your money where your mouth is time. If you don’t want to stop shopping through Amazon, then don’t complain about corporate taxes.

For Amazon to reconsider its position would take a massive boycott, which would in turn take organisation, sacrifice and time. If coupled with a real threat to politicians to change the laws or be voted out of office, then progress could be made. But the key word here is massive. Amazon is too big, too rich and too powerful to take notice of the occasional short-lived protest or the fury of a solitary politician. It would take lots of people over a long time.

Boycotts, protests and movements. More of that later.

Copyright © 2014 Dale Rominger

---

[1] I should qualify that statement. I believe it would be a “waste of time” if your sole purpose is to get your elected official to change the laws. On  the other hand, emailing or calling does serve the purpose of getting your position on record and taking a principled stance, both of which are not a waste of time.

[2] In the area of international tax laws, complication and cooperation seem to overwhelm our politicians while complication and cooperation in, say, waging international war can be overcome. Go figure.