I am a bit reluctant to write about the ethics of tax avoidance by big multinational companies. The issues are too topical and others have written or said much that needs saying. I didn't consider there was anything I could add significantly to the debate. But I was driving home a short while ago listening to a discussion on the radio. One expert from some think tank was discussing with a pundit from another think tank. The only duty a company has, he offered, was to its shareholders. And that was the end of the matter. Legally that may be true; ethically it certainly is not!
Duty ethically relates not only to the set objectives, maximising profit and dividend, but to all incidental outcomes of actions taken to achieve that. Rather than considering maximum gain, a company to act ethically should consider optimum gain; that action which achieves the best balance between obligations to shareholders, to their workforce, to their customers and to the citizens of the communities in which they operate. In relation to the latter, tax avoidance is significant and unethical. From a duty view a set of criteria or imperatives should be applied to the actions taken regardless of outcome. Maximizing profit and dividend regardless of other obligations most often results in exploitation of poorly paid staff and avoidance of social obligations and short-term gain over long-term benefit. Ends alone do not justify means other than from a narrow utilitarian perspective.
This is not simply a matter of 'fairness'; or simply that 'we all pay taxes and so should they', although 'fairness' is certainly part of the ethical balance. It isn't simply 'like for like' taxation. Taxation should reflect the impact of a company's actions on and the benefit they receive from society. A company that pays little or no tax nevertheless benefits from, for example, the transport infrastructure; the roads and bridges, the trains and buses. It benefits from a cheaper labour force subsidised through the welfare system and from the education system and libraries; from waste disposal, from lighting in the streets; the list is long. They may pay local business tax; but most of these services are heavily subsidised by the taxpayer nationally. They have a duty ethically to contribute to that vast subsidy and we are right to be angry when they do not; that duty should also, in fairness, be made also a legal obligation. Companies do not operate free of dependency on society; in that sense they are all heavily subsidised, and more so if they avoid tax.
Listening to the radio discussion it struck me how central the concept of obligation to corporate shareholders was to the debate. I am no expert in UK corporate law; but law there is, spelling out these obligations. Ethics is certainly distinct from law; ethics is not a legal framework. It considers behaviour and choices in circumstances where choices can be made. It thus considers behaviour in the light of intention and free will. It considers any conflict in moral or other imperatives relating to those choices. Corporations could choose to act unethically, or to restrict their consideration to their shareholders. We as consumers also make choices, from whom, when, where and how we purchase our goods or services. If the corporations are not willing to consider their actions beyond that of the dividends, then we must consider the ethics of our choices and act through parliament to ensure ethical standards in obligations to pay taxes.