Elodie Brian: Why we all lose if businesses don’t pay their fair share
For the public to have a harmonious relationship with business, an essential ingredient is trust.
And there is nothing more corrosive to that trust than large corporations looking for loopholes to avoid paying tax.
Under the auspices of the Prince of Wales’ Business in the Community initiative, a nine-week campaign, Responsible Business In Action, is underway, showcasing ways in which corporations can genuinely make a difference at grassroots level – whether it’s through carbon reduction, building skills, employing ex-offenders or charitable partnerships.
All of these are worthwhile activies but they can be fatally undermined if the business behind them is seen to be falling short of its responsibilities in terms of contributing to the Exchequer.
Tax avoidance remains stubbornly top of the league table of public gripes with big business according to the Institute of Business Ethics, which found last year that 33% of the public feel that corporate tax avoidance needs addressing – putting it ahead of excessive boardroom pay (24%), poor work-life balance (23%) and exploitative labour conditions (21%).
There is always pressure to manage a company’s finances efficiently. But there is a distinction between responsible tax planning and aggressive tax avoidance – the latter meaning complying with the letter of the law but doing everything possible to subvert its purpose.
I’m proud that my company, Go-Ahead Group, was the first FTSE 350 company, and is still one of only 3 constituents, to hold the Fair Tax Mark – a certificate that recognises organisations that pay the right amount of corporation tax, at the right time, in the right place. The scheme works with technical experts to determine the standards that businesses need in order to achieve accreditation.
To hold the Fair Tax Mark, a company must shun off-shore tax havens; it must be clear and transparent about its ownership and payments; and it must follow the spirit, rather than just the letter, of the law.
These are reasonable standards and it is right that Government, as well as the public, should expect business to meet them: after all, the annual cost of tax avoidance is estimated by the House of Commons library to be £1.7 billion to the Treasury – enough to pay the salaries of 76,000 nurses, 47,000 police constables or to fund the UK’s entire foreign aid programme in Asia.
Fair tax payment is not just the right thing to do – it makes sense in commercial terms because a poor public reputation for corporate responsibility will put off customers.
At Go-Ahead, we have identified five areas for focus in terms of acting as a responsible business: working in the community, tackling climate change, developing a sustainable supply chain, addressing air quality from our buses and trains, and recruiting a diverse workforce.
We pay all our staff the living wage. We recognise trade unions, and we recently published a charter on standards we expect from our suppliers. We’re a member of the FTSE4Good ethical index and we’ve been awarded Carbon Trust Standard tripe certification for environmental standards.
When our buses or trains run late, and we fall short in getting passengers to work on time, we are rightly and justifiably criticised. But I never want us to be criticised for failing to contribute our fair share, or for refusing to do our bit to be a responsible, ethical company.
Elodie Brian is Interim Chief Financial Officer of The Go-Ahead Group