Murphy and CBI clash over business taxation

TAX CAMPAIGNER Richard Murphy and the Confederation of British Industry traded barbs yesterday as they discussed how best to tax business.

The activist and the business lobby group clashed over the economy and the possibility of raising business-related taxes in an online debate.

Business has been in the spotlight over its tax affairs over the past few years, after several large multinationals including Google, Starbucks and Amazon were found to be paying very nominal amounts in the UK by shifting their profits to subsidiaries in low-tax jurisdictions.

The OECD’s Base Erosion and Profit-Shifting project has sought to curtail the problem and in a report in September last year revealed seven detailed recommendations to address it.

In a contribution to the Great Tax Debate, Murphy (pictured) welcomed “the CBI’s late arrival in the tax debate that has been going on in civil society for more than a decade”.

He added the primary purpose of tax is not to pay for government spending – a position he suggested the CBI holds.

“Unless the CBI changes its position on this issue it will remain peripheral to any discussion,” he said.

He held that there are five reasons to raise tax: to redistribute wealth; to correct market imperfections; to rebalance the economy; to raise democratic representation and; to raise money.

For its part, the CBI said it was “prepared to talk candidly” on the issue and noted “honest conversation cannot mean just talking to yourself”.

“That’s why we’ve invited opinion pieces and challenge from key stakeholders on all of our focus areas, including Richard Murphy,” the lobby group’s chief economist Rain Newton-Smith wrote in response.

“The government does have a role to stabilise the economy through tax and public spending, particular when other levers to stabilise the economy, such as lowering interest rates, have already been pulled as far as they can go. However, sustainable public services are only possible through the government balancing its budget over the economic cycle.”

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