E&Y managing partner issues riposte to tax avoidance critics

by Calum Fuller

More from this author

28 Jan 2013

  • Comments
Conservative prime minister David Cameron

POLITICIANS should "stop banging on about morality and change the law" on tax avoidance, according to Ernst & Young's managing partner for Europe, Middle East and Africa Mark Otty.

Responding to calls for businesses to "pay their fair share", Otty said a moral code is unlikely to work, given that they have a duty to pay the lowest rate permitted.

Speaking last week at the World Economic Forum in Davos, Switzerland, the prime minister (pictured) said companies paying little or no tax, such as Starbucks, have to "wake up and smell the coffee".

"I am a low-tax Conservative, but I'm not a companies-should-pay-no-tax Conservative," he said. "Individuals and businesses must pay their fair share."

Following Cameron's remarks, Otty told the Telegraph the "only way" to resolve the issue is "through legal code".

"I don't see how you can have any assessment on payments of tax other than what is in the statute," he said. "The simplest solution is to stop banging on about morality and change the law."

Public outrage has mounted throughout the past year over tax contributions made by multinationals, which often move profits from one country to another, frequently resulting in lower tax rates. Amazon, Google and Starbucks in particular have been the subject of public ire over the use of the method, known as transfer pricing.

Recently, Starbucks has threatened to suspend multimillion-pound investments in the UK after repeatedly being the subject of attacks from both politicians and the media over its low tax bills. Investment bank Goldman Sachs, too, has drawn criticism for its tax practices, something chief executive Lloyd Blankfein said risks stigmatising "every right-thinking person who organises his or her affairs in a sensible way".

For its part, E&Y would not be altering its tax practicesm, according to Otty.

He said: "It comes back to the law. A company has responsibility to its shareholders, its staff and society.

"In days gone by, it was a much easier argument. Now there is this morality test. For an organisation, it becomes very difficult ... you don't know what the rules are or who the arbiter is."

Starbucks agreed with Cameron that all companies should pay their fair share of tax.

Visitor comments

blog comments powered by Disqus

Add your comment

We won't publish your address

By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication

  • Send

Charterhouse Accountants

Finance Officer

Charterhouse Accountants, Beaconsfield, Permanent, Full Time, £ Competitive




Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials


Search for jobs
Click to search our database of all the latest accountancy roles

Create a profile
Click to set up your profile and let the best recruiters find you

Jobs by email
Sign up to receive regular updates with the latest roles suitable for you



Why budgeting fails: One management system is not enough

If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.


iXBRL: Taking stock. Looking forward

In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.