It's fair to say that there is real public anger directed towards people and companies who are not playing fair when it comes to tax. While tax is a complex issue, it can appear as though there is one rule for some and another rule for everyone else. With month after month of headlines about tax avoidance, it is clear to me that responsible tax is the Corporate Responsibility issue of our time.
For a while there was a growing movement in favour of much greater philanthropy from the business world. Ten years ago there was a head of steam in favour of a ‘1%’ club, where altruistically minded companies would donate 1% of their profit to good causes. This is great and continues to be a laudable aim. But it sort of misses the point if people are not playing fair with the taxes paid on profit.
An attitude of mind
SSE’s tax manager, Martin McEwen, describes tax as an attitude of mind, not simply a set of rules to obey. I couldn’t agree more. Individuals have a deal with the society they live within. In exchange for having a national health service, being educated in schools, colleges and universities and having our communities policed – we all contribute back though our taxes. It is no different for companies. SSE directly benefits from its employees being taken care of if they are sick, from the educational achievements of our people, and from the infrastructure that means we can get people and services to our customers. So, SSE’s tax manager is right when he says “it’s an attitude of mind”. SSE needs the public services provided in the UK and Ireland – without them, we couldn’t possible be as successful as we are. So that’s why we seek to be a responsible tax payer.
Fair Tax: the new Fair Trade
Of course SSE does not seek to overpay tax but we have ruled out the sorts of practices that mean we could avoid tax. We will not use tax havens and we will not use artificial profit shifting mechanisms. We seek to have a constructive relationship with the tax authorities in each of the countries we operate in. We also publish significant details on our accounts about the taxes paid, and have published a ‘country by country’ report for the past two years.
By doing these things, we have achieved the criteria set out by the Fair Tax Mark. We are pleased to have achieved this, but, as the only FTSE100 company with this responsible tax credential, it is getting a bit lonely. It would be great if more would join us. I like to think of the Fair Tax Mark as the new Fair Trade Mark. It always takes time for kite marks to get going, but when they do, they can be a significant force for good, making both business sense and having a wider impact on communities.
I think our customers are making it crystal clear what makes an irresponsible business – those that avoid paying tax on profit, damage the environment and pay poverty wages. For companies that aspire to greater heights of responsibility, not doing these three things would be a decent start.