Cause for complaint - Diageo's Paul Walsh
Diageo’s chief executive has added his voice to growing criticism of the government’s corporate tax regime
Former accountant and Diageo chief executive Paul Walsh has become the latest
high-profile figure to put pressure on the government over the corporate tax
regime.
What’s happened?
It never rains… The government is preparing for the Budget and a general
election but the old bugbear of what the current regime has done with the
corporate tax system just won’t go away.
Walsh is not the first to complain – but it is rare to get the head of a
FTSE100 company to come out quite so strongly with their views. Perhaps he was
feeling confident because of the strong results the drinks maker reported last
week, but he really took no prisoners.
He was widely quoted saying Diageo, the makers of Guinness, had no plans to
relocate its business, “but the government should not take us or any other
multinational company for granted”.
He said if Diageo continued to experience rises in corporate and personal
taxes it would look at other options.
It’s unlikely that Alistair Darling’s plans for the UK would have been derailed
by the comments of single City CEO, but it might have given him pause for
thought.
Walsh, a trained accountant, entered brewing in 1982 when he moved to
Watney, Mann and Truman as an accounts manager and became FD of the brewing
division four years later.
A year after that he got his first CEO’s post for Pillsbury in the US. He was
COO of Diageo before occupying the chief executive’s seat in September 2000.
What happens next?
Executives such as Walsh will keep on reminding chancellors that the system
isn’t working for them until something is done. With an election looming there
must be some hope that a new government will bring in new policies.
The problem is that any winner of the election will have to tackle the UK’s
fiscal deficit and will be reluctant to ease up on corporate tax if they plan
making life a little harder for personal taxpayers.
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Companies will either have to put up or shut up. Though a handful have
relocated, we have yet to see large numbers packing their bags. That said, every
time a top CEO comes out to criticise government tax policy it is damaging.
This week the Institute of Economic Affairs claimed that British business is
paying £20bn annually for tax compliance and administration.
With numbers like that businessmen like Walsh can go on bashing the
government over tax for a long time to come. But, if they get a result, it wil
be worth waiting – as they say in the Guinness ads.