Corporation Tax-Dodging: How Do We Solve The Unsolvable?

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Disclaimer: The views expressed within this article are entirely the author’s own and are not attributable to Wessex Scene as a whole.

News broke in September that Amazon had become the world’s second trillion dollar company. However, with their refusal to pay sufficient tax coming under continuing and heavy scrutiny, how can international governments reclaim power from such corporations?

Apple, Starbucks, Amazon. Three examples of huge companies who it is difficult to imagine living life without, but who are also using their knowledge of this fact to bargain with international governments and pay a laughable amount of tax. This tax-dodging is certainly no secret, with many other sizeable corporations paying minuscule amounts and getting away with it due to the power they hold in the life of consumers. Even the Panama Papers scandal in 2015, which lifted the lid on the true extent of tax-dodging and offshore account manipulation by the powerful, was quickly brushed under the carpet by the very same people it was supposed to have exposed.

The sheer power that these corporations hold in both national and global economies means that individual governments offer substantial leniency to these organisations. This is why they pay a percentage far below any nation’s individual business tax threshold (Google’s infamous 3% UK tax deal comes to mind) and yet they continue to evade prosecution. Can international government co-operation deal with this in any way?

I believe that this should be the next major focus of international political co-operation. Just as the United Nations was established to try and counter the perils of war and political extremism, a similar institution is now needed to counter the danger of corporations. This issue may seem insignificant when paired against the aforementioned threat of war, but this problem has quietly been on the rise for a long time. Economic inequality has been on a sharp incline since 1977, partly due to the powerful rise of economic liberalism which has been at the forefront of western politics since the 1980s.

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Establishing an International Taxation Regulation Bureau (ITRB) could well be a solution when it comes to enforcing universal taxation laws. Such an organisation could be created using a cross sectional delegation of international ministers in order to ensure that corporations obey the laws of taxation within their respective countries of operation. This step alone could well eliminate the bargaining power corporations hold of being able to cease operations and move abroad when faced with the prospect of legal action.

Of course, this tax crackdown would not get anywhere without first of all gaining transparency of corporation accounts and business practices. Having an international mandate to provide clarity in this area would at least demystify the aura of dishonesty and poor ethics that often surrounds large companies. Additionally, it could help put an end to the existence of slave like conditions that corporations create by outsourcing to impoverished labourers across the world.

Once transparency of corporation accounts within each country of operation is achieved, the ITRB could then use this knowledge to ensure that multinationals are paying the required amount of tax within every single one of these countries. The existence of this organisation could therefore help reduce the bargaining power of corporations, put an end to their tax dodging, and most importantly of all, take the balance of world power away from big business and back towards the rightful institutions of sovereign governments.

This suggestion is simply theoretical, but aims to offer an insight into how this problem could be tackled. The actual creation of the ITRB would require sustained inter-governmental co-operation in order to uncover the facts regarding corporation accounts and tax statistics in each nation. This unity would have to be maintained by ever-changing governments and tax thresholds worldwide. In addition to the practical demands, there are also issues such as corruption, authoritarian practices, and possible breakdowns in international government relations. The risk of creating this organisation is amplified by the fact that other international organisations, such as the UN and EU, have many proven flaws.

However, despite all these potential teething problems, the establishment of international taxation standards has to be seriously examined to counter the ever increasing power of corporations. This power means that the tax issue is often thought of as being unsolvable, and that may well be the case. However, if international teamwork on this scale is ever achieved, it should be geared towards tackling this problem.

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