I like that tax is headline-grabbing these days: if for nothing else, people are much less apprehensive now when I tell them I’m doing a PhD on tax law! On Sunday, Simon Bowers reported in the Guardian on the OUCBT Annual Summer Conference and the “controversial” remark made by Philip Baker QC on Corporation Tax. Baker, an international tax expert and one of its most entertaining orators opined that governments do not drive corporate tax policy, but rather that companies do:
“I don’t think in the last 20 years or so one can say that governments have driven corporation tax policy. It’s the large companies that have driven the direction of corporate tax policy”
A skilled advocate, Baker’s comment is laden with nuance: he did not say that corporations make tax policy, nor that governments wholesale adopt measures recommended by companies, and importantly, he refused to say that governments have absolutely no autonomy in the matter, citing the DPT as an example of such independence. The important emphasis in the excerpt is on the idea that corporations “drive” the direction of policy. In our globalized world, in which the revenues of some corporations surpass the GDPs of developed countries (for instance, Walmart is bigger than Norway), it should come as little surprise that they have considerable bargaining power. Of course governments today are cautious about unduly upsetting corporations as a result and so indirectly, mobile corporations exert influence on governments to adopt measures which are not contradictory to their interests.
And so it might be said that Baker’s controversial statement isn’t actually all that controversial…