The Business Ethics Blog

The Guardian had an interesting editorial on corporate social responsibility and tax avoidance, Saturday:

Tax Gap: Corporate social responsibility.

Here are a few key paragraphs:

Public companies do frequently claim to practise “corporate social responsibility” (CSR), and most leading businesses boast of charitable and green activities in their annual reports.

Barclays Bank calls itself a “responsible global citizen”, with concerns ranging from carbon emissions to credit card fees. It even has a reputation committee, chaired by deputy chairman Nigel Rudd. But nowhere does its policy mention Barclays’ tax avoidance schemes.

The advertising group WPP, before moving to the Irish Republic last November to cut its taxes, boasted six different kinds of “corporate responsibility”, including minimising its environmental impact and only engaging in “ethical marketing”. Tax did not figure in the list.

It’s a hard question, or at least harder than it looks.

Clearly, if the question were “does business have a social responsibility to pay the taxes it is legally obligated to pay?” then the obvious answer is “yes.”
And if the question were “does business have a social responsibility not to use valid deductions put in place by government for various public-policy reasons?” the answer is probably “no.”

The harder question is in between those two: “does business have an obligation not to find innovative ways to reduce or avoid paying taxes, ways that follow the letter but not the spirit of the law?”

To understand the complexity of tax avoidance, and just how far some companies have gone beyond merely using valid exemptions, it’s worth taking a look at the Guardian’s series: Tax Gap.

(This is also a good example of the damage done to the vocabulary of business ethics by the capturing of the phrase “corporate social responsibility” by those who choose to capitalize the 3 words that make it up. Those 3 words ought to signify a topic for discussion: what are a corporation’s social responsibilities? Instead, they almost always imply a statement: these are a corporation’s social responsibilities. Why does this story use that phrase? Why not just ask if tax avoidance is unethical?)