Now that Cameron supports tax justice, what must he do about it?

We can’t just rely on companies cleaning up their tax affairs. We need international, intergovernmental action on tax justice, and the UK should deliver it.

When the Prime Minister stands in front of television cameras and uses your campaign slogan, you know something is happening.

On Tuesday in County Armagh, setting out his priorities for the G8 summit that the UK will host next June, David Cameron put the fight against tax dodging at the top of his international agenda:

“I want to us to achieve tax justice in our world, so that big companies pay their taxes”.

The focus on tax is not entirely a surprise. This year’s mountain of news stories about big companies accused of not paying their fair share is reaching a breaking point. But tax justice is bigger than Starbucks, Amazon or Google. The clever accounting that allows some companies to opt out of the tax system – both in the UK and in some of the poorest countries in the world – is made possible by two features of the international system itself.

This is why Cameron putting tax justice on the international agenda marks a new, important and hopeful shift in the government’s previously underpowered response to the global haemorrhage of public revenues.

First, international tax rules are desperately ill-equipped to meet the challenges of globalised business. They are powerless to stop profits being shifted into tax havens, and out of the countries where real sales are made, real people employed, real goods produced. Last week’s public scrutiny of UK high-street companies has lifted the lid on a bizarre world of goods bought via Swiss subsidiaries, and management services purportedly provided by firms operating from a post-box in the Cayman Islands. This world is dishearteningly familiar to ActionAid researchers, who have traced how multinational companies have used exactly the same strategies (pdf) to shrink their tax bills across Africa and Asia. The tax avoided by just one UK-headed multinational we investigated could, we estimate (pdf), pay to put a quarter of a million children in school in the developing countries where that company operates.

Second, this profit-shifting is possible and profitable thanks to the abusive offshore tax regimes of tax havens (pdf), whose secrecy rules also confound tax inspectors’ attempts to unpick clever accounting tricks, or to locate wealth simply stashed illegally in shell companies and anonymous trusts. Tax havens are not just a drain on scarce public finances. They are an affront to democracy, a deliberate block on legitimate governments’ efforts to raise their own revenues and prevent the corrupt theft of public funds.

On both counts – rebalancing the rules and shutting the tax havens – international agreement and concerted diplomatic muscle is needed. The G8 has come under criticism in recent years. But it remains unusually well-placed to push real international tax reform and prise open the tax havens – 40 per cent (pdf) of which are closely linked to the G8 countries themselves.

How could this be done? First, the G8 could use its weight to make tax havens disclose the wealth and assets that foreign companies and individuals funnel into their jurisdictions. The agreements to do this already exist. Tax havens should sign them, or face serious financial countermeasures. Second, we need to unlock the corporate "black boxes" into which tax haven-held assets are currently stuffed. To tear down the veil of offshore secrecy we need a legally-binding global standard, simply requiring the real, human owners of anonymous companies and trusts – their "beneficial ownership" – to be put on public record. A transparency convention with this standard at its heart, launched and signed by the G8, would be a game-changer not just for tax revenues, but for the fight against corruption, money-laundering and international crime – making us better-off, and keeping us safer.

And finally, Cameron has stressed that the G8’s approach to global injustice cannot be about "rich countries doing things to poor countries". It must be about "us putting our own house in order and helping developing countries to prosper". The spring clean must start at home. Before we get to Lough Erne in June, the UK’s own tax avoidance regime needs to be made fit for purpose: capable of protecting UK revenues, and closing the UK tax loopholes (pdf) that leach money out of developing countries too. The budget next spring is the place to do it.

This is a fight that could transform the UK’s public finances, ensure that scarce UK aid is not undermined by the haemorrhage of developing countries’ revenues, and ultimately allow those countries to fight poverty and hunger with their own resources. In Fermanagh next year we must seize the opportunity with both hands.

Image: ActionAid

Mike Lewis is a tax justice campaigner at ActionAid

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How Facebook and Google are killing papers and transforming news

If journalism is to survive, it needs either to cut costs (read: sack journalists), or build revenues.

When I started work at the Daily Mail in 2005, there was often a discussion among the men who decided the running order of stories about which pages should be printed in black and white. Not all the presses used colour, and God help the unthinking journalist who placed a story about a man painting his entire council house with replica Michelangelos on a page that would end up in “mono”.

That story makes me feel very old (I’m 33), but it highlights the accelerated pace of change in the news industry in the past decade and a half. I also remember the cuttings library, and a time when headlines were written to fit arbitrary spaces on a page, rather than having to be stuffed full of searchable keywords. Those days are gone.

The first newspapers were printed in the 17th century, and the methods of both their creation (movable type) and their distribution (on paper) remained broadly unchanged for three centuries. When Marxism Today’s published its New Times issue in 1988, that system was unravelling. Computers had arrived and the print unions’ insistence on sharply delineated workplace roles was under threat. This had already led to the Wapping dispute of 1986, in which Rupert Murdoch moved his newspapers to new headquarters to break the collective power of the printers. It took 13 months and 1,262 arrests, but it ended with thousands of men in effect accepting that their skills were obsolete.

That trend has merely continued. Today’s journalism students are encouraged to become jacks of all trades – they learn how to make videos, record podcasts and use databases, they master Photoshop, they understand social media and, yes, they even write and edit stories.

On one level, the world of news now seems gloriously open: anyone can start a blog, anyone can publish on the Huffington Post (if you don’t mind not being paid) or Medium, and anyone can build a following on Twitter or Facebook. But there are new barriers to entry. Where many of my older colleagues at the Mail had started work at 16 – often on local papers, because NUJ rules demanded you spend two years there before heading to Fleet Street – young journalists increasingly have postgraduate qualifications as well as degrees. That privileges the middle class and those whose parents live in London, and who can therefore live at home while trying to break in to the industry.

Local newspapers, once the training ground for young reporters, are dying out: there has been a net loss of 198 since 2005, according to the Press Gazette. Their classified adverts have gone online or gone altogether, and some of those titles that remain are consolidated into remote industrial parks, far from the communities they serve. So there is less reporting of court cases and of the petty corruption of councillors (Private Eye’s Rotten Boroughs, which still covers that ground, is never short of material).

In place of independent papers are glossy PR puffs produced by councils. In December, the editor of the Hackney Citizen complained that the local authority was producing its own fortnightly freesheet, Hackney Today. The latter sells advertising space, making it a direct competitor to independent newspapers, and the council pays for 108,000 copies to be printed by Trinity Mirror and distributed to households every fortnight. It is produced by a press office.

National newspapers are also struggling. Print circulations are falling and the returns on display advertising online can be pitiful. Most online adverts are “programmatic”: sold in real-time auctions on a CPM (cost per mille, or thousand clicks) basis. Users hate them for slowing page loads or interrupting their reading. Unsurprisingly, the use of ad-blocking software has risen steadily.

The industry has tried to fight back by expanding the types of adverts it sells. That is why everyone became so excited about video a few years ago: publishers could place an unskippable advert before a video clip and charge pounds, not pennies, using CPM.

The internet-only news organisation BuzzFeed had another strategy: from the start, it didn’t sell display advertising, only “native ads”: what used to be called advertorial. The theory was that users might be irritated by display ads but they wouldn’t object to a pet-food brand sponsoring a heart-warming video about life with a pet. In at least one case, this paid off handsomely – BuzzFeed’s 2015 collaboration with Purina led to a video called Puppyhood, which racked up four million views in two weeks. The challenge is to repeat that winning formula again and again.

Other publishers tried the start-up mantra: build it, scale it fast, hope the revenues turn up at some point. Medium, a cleanly designed blogging platform, was launched by the Twitter co-founder Ev Williams in 2012 and attracted big-name publications and writers. But on 4 January Williams announced that he was “renewing Medium’s focus” by cutting a third of its staff, because it was not financially sustainable. “It’s clear that the broken system is ad-driven media on the internet,” he wrote. “The vast majority of articles, video and other ‘content’ we all consume on a daily basis is paid for – directly or indirectly – by corporations who are funding it in order to advance their goals. And it is measured, amplified and rewarded based on its ability to do that.”

If journalism is to survive, it needs either to cut costs (read: sack journalists), or build revenues. Hence the proliferation of sidelines: conferences, round tables, business-to-business operations, events, sponsored supplements and the rest. Some companies are trying a more direct approach. The heavily loss-making Guardian is investing in a membership scheme, and the radical US magazine Mother Jones has a pledge to fund in-depth reporting. (Individual journalists are trying this, too: the Patreon website offers readers a chance to fund writers directly, at a set cost per month or per piece.)

Of course, someone is making money out of the great flowering of content on the web. Facebook has 1.86 billion monthly users, and in the third quarter of 2016 its net income was $2.38bn, up from $896m a year earlier. Along with Google, it controls two-thirds of the online advertising market. “Facebook is the new town hall,” Mark Zuckerberg told investors. Unfortunately for him, that role in public life is what made Facebook the focus of the row about “fake news” after the US election. For millions of people, Facebook is where they get their news; its editorial decisions and inbuilt biases shape our common understanding of reality.

You might not have to get your words past the print unions any more, but you do have to pander to what Facebook’s and Google’s guiding algorithms deem important. Zuckerberg has more power than anyone who bought ink by the barrel ever did.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 16 February 2017 issue of the New Statesman, The New Times