84% of Britons believe “Erm, yes, that sounds like a good idea”

Yesterday the Evening Standard published results of a survey carried out by BMG Research into British attitudes to tax transparency.

They found that over 80% answered “yes” to their two questions. The problem is their questions weren’t the best ones, and I suspect the results are therefore less them meaningful.

With rhetoric like “publicly shame corporate giants seen by many as cheating the country out of millions in tax”, the blunt instrument of “they are all at it you know” seems at work here.

So can we glean anything from this piece? I think so.

Firstly, what did they ask?

Well, the first question was:

“Should multinational companies operating in the UK be forced to publicly declare where they pay their taxes, so consumers can decide whether to buy them or not?”

I see three problems with this question.

• What does the question mean by “operating in the UK”?

If you ask HMRC, and assuming we are only talking about corporation tax here, they probably mean this:

“Does the company have a UK subsidiary, or a UK permanent establishment?”

If you ask the public, as this poll did, they probably mean this:

“Does the company sell to me as a UK consumer, or have that gut feel that it is doing things here in the UK?”

• It calls for a declaration of “where they pay their taxes”.

This is a mixture of poor drafting (presumably they mean how much tax they pay, and where) and poor understanding (the amount of tax paid is only part of the story).

• It suggests that consumers would use this information to make buying decisions.

If consumers are going to make buying decisions based on a business’s approach to tax, that is perfectly reasonable. However, the evidence proposed by this question would not allow a consumer to make that decision.

So the question is flawed. That is not unique in polls, particularly those relating to tax. Richard Murphy appears to agree in pointing out in his blog that in his opinion public county-by-country reporting is what is really needed.

The second question was:

“Should the Chancellor set up a public register showing whether multinational companies operating in the UK are paying their taxes here (in the UK)?”

This suffers from one of the same problems as the first question. It isn’t clear what “operating in the UK” means.

If a company meets the HMRC test, but is not paying taxes in the UK, then perhaps there is a question to ask of that company. There may still be perfectly valid reasons for it not paying tax in the UK. Perhaps it is genuinely making a loss.

If the company does not meet the HMRC test, but is perceived to meet the “public test”, we are in danger of creating a register of companies, many of whom are doing nothing wrong. We risk creating a cottage industry of unfounded speculation.

The article says that “a public register would lay bare which companies, including some brazenly trading on their Britishness, are not paying UK corporation tax.”

I can grasp the concepts of a business trading on being British, but I’m not sure this is the right measure for taxing a company.

This risks stoking the fires of mistrust in multinationals, rather than narrowing the focus onto businesses that are not paying the tax they owe.

The results of the survey do not surprise me at all. In effect people were asked a “no brainer” question in the current climate. It is only when you scratch the surface and ask exactly what the question means that you start to think that “yes” might not be the right answer.

If I had been surveyed I would probably have responded “don’t know”. Not because I don’t have an opinion of tax transparency, but rather that I don’t know how to answer the question they have put. Do I say “no”, as the question is flawed? Or do I say “yes” because I think there is some truth somewhere in the concept they are trying to explore? I don’t know.

So what can we conclude from this survey? Four things:

1. The public are clearly of the opinion that transparency is part of the answer;
2. The use of “operating in the UK” can mean different things to different people, and is in fact the crux of the matter in some cases;
3.  There is nothing like a survey to muddy the waters;
4. Reports of this kind will continue to be packed with anti-corporate rhetoric, with little (or in this case no) reference to the thousands of companies who take a responsible approach to tax.

What remains clear is that responsible companies need to get better at talking about their approach to tax.