An examination of the political salience of corporate tax avoidance: A case study of the Tax Justice Network

Abstract

Corporate tax avoidance (CTA) has become a high profile issue despite being a complex area of accounting practice. One reason for this has been the civil society campaign opposing tax avoidance. The paper provides a case study of one key civil society actor: the Tax Justice Network (TJN). Existing accounting analysis offers little to explain how some accounting issues acquire political attention and media coverage. To address this, the concept of political salience is introduced into accounting analysis – understood as the creation of focal points in campaigns – to consider how the TJN contributed to the political profile of CTA.

Keywords:

• Corporate tax avoidance
• Politics
• Civil society
• Tax justice network

Acknowledgements

My thanks to all of the interview responses who participated in the research for their detailed responses to questions. I would also like to thank the anonymous reviewers, and Adam Leaver and Julie Froud for helpful comments provided on earlier drafts of the paper.

Notes

1 In terms of what we mean by tax avoidance, it is important to initially distinguish it from tax evasion. Tax evasion is a criminal offence which can be contrasted with tax compliance when a company or individual seeks to comply with the law in all the countries in which they operate, makes full disclosure to relevant authorities, and seeks to pay the right amount of tax (Palan et al., 2010: 9). The grey area between full and active compliance and evasion is tax avoidance. In an oft-quoted line the former Chancellor of the Exchequer, Denis Healey, is reported to have said that the difference between tax avoidance and tax evasion is the ‘thickness of a prison wall’ (Shaxson, 2011).

2 It is worth emphasising that newspaper references to CTA do not provide a complete picture of its political salience. Many articles may refer to the issues around CTA but refer to it in different ways, such as by using the term ‘tax dodging’ or ‘tax cheating’ depending on the article. However, it does provide a clear longitudinal impression of the differing levels of attention that the TJN and the issue received in different years in the UK media, which is a key point of comparison for the empirical analysis.

3 Some participants consented to being recorded but asked not to be identified by name or for certain parts of the interview to be omitted from any subsequent research, these expressed wishes have been followed in the analysis presented.

4 It is important to emphasise that the campaign against CTA is extremely wide ranging encompassing issues around gender (Christian Aid, 2014), human rights (International Bar Association, 2013), poverty (Mosselmans, 2014), international tax law (Picciotto, 2012), money laundering (JustWorld, 2002), and others. However, the focus in the case analysis here is on one NGO type network that has been at the centre of the campaign.

5 Also reflecting this focus on tax havens, at least in the early years of the campaign, the first item to appear on the AABA website was a leak of the Edwards Report – a critical government report on financial regulation in the Crown Dependencies (Jersey, Guernsey and the Isle of Man). The report was commissioned in 1998 and published in 2003, a few weeks after the leak through the AABA.

6 In April 2016 the European Commission proposed a version of public CBCR although limited to companies with revenue over €750 million and only including the public disclosure of multinational subsidiaries within Europe (and not presently subsidiaries outside) (European Commission, 2016). While there are limitations to this version of public CBCR it does clearly illustrate that the proposal is making significant progress at an EU level.

7 I thank reviewer 1 for raising this point.