PWCs Total Tax Contribution eviscerated

by admin on September 7, 2006

in Tax and Ethics

Sometimes people send me emails saying: ‘ Blimey, that was harsh.’ My response: define harsh. I’d like to think it means something along the lines: ‘True but did you really have to use those words?’ And yes, sometimes when calling to account, strong words are required because they express the passion I hold for a particular issue. So when I read Robert McIntyre’s critique of PWCs Total Tax Contribution, harsh was not on the list of words that came to my mind. Eviscerated fits much better:

Amazingly, PwC is trying to get corporations to pretend their tax bills are bigger than they really are, by counting not just their actual taxes, but also taxes they don’t pay, such as those paid by their customers, workers, suppliers, and so forth.

Robert then goes on to cite advertising by ExxonMobil as an example of PWC’s dishonest thinking where it claims:

“Last year, ExxonMobil earned about $36 billion, but incurred $99 billion in taxes worldwide.”

As Robert points out, this is untrue. Yet this is the kind of advertising PWC is encouraging. I’d like to know whether the advert, which appeared in The Washington Post, was partly funded by PWC, Exxon’s auditors. If not directly funded, it could not have been compiled without PWCs assistance.

Richard Murphy picks up the beat:

PWC asked me if I’d comment on behalf of civil society on the [TTC] issue, on a more formal basis. They’d already asked Bob McIntyre of Citizens for Tax Justice in the USA his views. He declined, and now he’s said why.

It doesn’t take a rocket scientist to realise that PWC is attempting to neuter the activities of the small but determined network of tax justice activists in bringing abuse and tax corruption to the public’s attention. What surprises me is that PWC has apparently become so arrogant as to think the public will be swayed by flagrant deceit. It’s not even subtle about its approach, referring to:

‘misconceptions around tax planning…might be usefully woven into…PR and marketing campaigns…lobbying campaigns’

Is it any wonder that when one of the Big Four comes out with cynical attempts to subvert the tax system, that HMRC gets up on its hind legs and attacks the easiest target? The small guy who tries to do his best. Is it any wonder ICAEW, dominated as it is by the same Big Four, is unable to bring an ethics programme to the education of its students? What is worst of all however is the implication that PWC will ‘consult’ with clients on TTC, charging them for what amounts to their own political agenda. That’s unforgivable.

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Richard Murphy September 7, 2006 at 11:47 am


The sad bit about this is that the people behind the TTC appear genuine. They honestly seem to think they're doing somehting useful. And yet it's so obviously designed to mislead.

What really worries me is the dicohotomy this presents. Can the profession even see the wood for the trees? I do wonder.

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alastair September 7, 2006 at 12:37 pm

Richard, I can't help thinking of the phrase "pot calling the kettle black"! In this regard I am thinking of the efforts you appear to be making to demonise tax avoidance.

Dennis Howlett September 7, 2006 at 2:24 pm

Not really Alastair. PWCs position is ludicrous. I"d hardly say that's true of Richard's – and TJN is being consulted in some very high places. They don't just beat up on the Big Four – they also have a crack at HMRC for its systemic problems. At least he's fair.

alastair September 7, 2006 at 5:06 pm

i'm not defending pwc's position! and i'm not suggesting there is any direct comparison, but simply that the attack on tax avoidance is unwarranted and misguided, so in that sense is similarly ludicrous.

Richard Murphy September 7, 2006 at 5:18 pm

Plato wrote:

"When there is an income tax, the just man will pay more and the unjust less on the same amount of income" (The Republic, bk. I, 343-D)

So, OK, the problem of tax abuse has been around for a long time. But does that mean supprting the just man is wrong? I don't think so.

Why do you argue for injustice Alastair?

Dennis Howlett September 7, 2006 at 5:32 pm

We're not going to get agreement but it sure is fun to watch you guys duke it out. i'm calling time on this one – mark it down as a draw. :)

alastair September 8, 2006 at 9:09 am

perhaps the just man is a fool? Or perhaps he he is simply altruistic? What different sorts of motivation do people have to pay more or less tax? It is an unchallenged opinion much touted by political based research that people like to pay less rather than more, and HMRC seem to think that people will be dishonest by default. This would be an interesting research topic?

Dennis Howlett September 9, 2006 at 9:22 am

I can say with a fair degree of certainty that given any sort of choice, taxpayers will seek to avoid. Think Stamp Duty, a low rate tax that draws many to avoid.

When I was active on the avoidance front, it is true to say, the more they had, the more they wanted to avoid. That's a question of attitudes. Richard's research seems to imply that large organisations are more active than ever.

I can conclude from that the tax gap arises from a difference between what companies say about corporate social responsibility and how they execute against that thinking. A case of bi-polar disorder?

alastair September 11, 2006 at 9:40 am

"corporate social responsibility"!

unfortunately I think I know what you mean by this. It is always dangerous when people hide behind the institutions they inhabit. Unfortunately weasel and woolley words are a biproduct of the political times.

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