Tax business

Readers' Views No 243, May 2004
OECD Observer

Letter to the editor: A shade over two years ago, you wrote in this magazine (Taxation in a global environment, OECD Observer No.230 January 2002) that the time was ripe for a new social compact between governments and citizens. You wrote that the former would provide services in an efficient and cost-effective manner, while the latter would pay their taxes. Aggressive tax planning “would be considered socially unacceptable”.

It’s a timely reminder as ministers gather for the OECD’s midterm summit later in May. They might not be aware, for example, that in April the United States General Accounting Office revealed that almost two thirds of American companies paid no tax between 1996 and 2000, despite the economy booming and profits hitting record levels.

As a result, US corporate tax receipts as a percentage of the overall tax base were at their second lowest ever in 2003, accounting for 7.4%, or US$132bn (£71bn) of federal receipts.

It is difficult to label this as anything other than aggressive tax planning, so much so that the actual rates of corporation tax being paid are beginning to be flagged up as a central measure of Corporate Social Responsibility (CSR). Previously, CSR was limited to mitigating the social and environmental risks incurred by high profile multinationals operating in the developing world. But in recent months, pressure groups and NGOs have started to recognise a financial dimension to CSR. The argument goes that the fair and transparent payment of tax is at the heart of the social contract between business and civil society.

The perceived injustice of corporations paying well below the effective tax rates in countries where they operate could reverberate louder and longer as a citizenship issue.

A recently established coalition, the global Tax Justice Network, believes this amounts to a hidden fault line running through the reputation of high profile multinationals. If so, it is conceivable that tax performance could become a source of operational risk, as critics of big business begin using CSR to leverage a boardroom response while demanding governments investigate revenue shortfalls.

That is not a comforting scenario for the publicity-shy multi-billion dollar tax-planning industry. Its work may be legal, but explaining away hundreds of millions in non-tax payments through the creative deployment of transfer pricing, avoidance vehicles and tax havens should, at the very least, make for an entertaining addition to company CSR statements.

—Marc Lopatin, London,

©OECD Observer No 243, May 2004

Economic data


Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive print editions delivered to you directly

Online edition
Previous editions

Don't miss

  • Africa's cities at the forefront of progress: Africa is urbanising at a historically rapid pace coupled with an unprecedented demographic boom. By 2050, about 56% of Africans are expected to live in cities. This poses major policy challenges, but make no mistake: Africa’s cities and towns are engines of progress that, if harnessed correctly, can fuel the entire continent’s sustainable development.
  • “Nizip” refugee camp visit
    July 2016: OECD Secretary-General Angel Gurría visits the “Nizip” refugee camp, situated between Gaziantep and the Turkish-Syrian border, accompanied by Turkey’s Deputy Prime Minister Mehmet Şimşek. The camp accommodates a small number of the 2.75 million Syrians currently registered in Turkey, mostly outside the camps. In his tour of the camp, Mr Gurría visits a school, speaks with refugees and gives a short interview.
  • OECD Observer i-Sheet Series: OECD Observer i-Sheets are smart contents pages on major issues and events. Use them to find current or recent articles, video, books and working papers. To browse on paper and read on line, or simply download.
  • Queen Maxima of the Netherlands gives a speech next to Mexico's President Enrique Pena Nieto (not pictured) during the International Forum of Financial Inclusion at the National Palace in Mexico City, Mexico June 21, 2016.
  • How sustainable is the ocean as a source of economic development? The Ocean Economy in 2030 examines the risks and uncertainties surrounding the future development of ocean industries, the innovations required in science and technology to support their progress, their potential contribution to green growth and some of the implications for ocean management.
  • OECD Environment Director Simon Upton presented a talk at Imperial College London on 21 April 2016. With the world awash in surplus oil and prices languishing around US$40 per barrel, how can governments step up efforts to transform the world’s energy systems in line with the Paris Agreement?
  • Happy 10th birthday to Twitter. This 2008 OECD Observer interview with Henry Copeland said you’d do well.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Once migrants reach Europe, countries face integration challenge: OECD's Thomas Liebig speaks to NPR's Audie Cornish.

  • Message from the International Space Station to COP21

  • The carbon clock is ticking: OECD’s Gurría on CNBC

  • If we want to reach zero net emissions by the end of the century, we must align our policies for a low-carbon economy, put a price on carbon everywhere, spend less subsidising fossil fuels and invest more in clean energy. OECD at #COP21 – OECD statement for #COP21
  • They are green and local --It’s a new generation of entrepreneurs in Kenya with big dreams of sustainable energy and the drive to see their innovative technologies throughout Africa.
  • Pole to Paris Project
  • In order to face global warming, Asia needs at least $40 billion per year, derived from both the public and private sector. Read how to bridge the climate financing gap on the Asian Bank of Development's website.
  • How can cities fight climate change?
    Discover projects in Denmark, Canada, Australia, Japan and Mexico.
  • Climate: What's changed, what hasn't, what we can do about it.
    Lecture by OECD Secretary-General Angel Gurría, hosted by the London School of Economics and Aviva Investors in association with ClimateWise, London, UK, 3 July 2015.
  • Is technological progress slowing down? Is it speeding up? At the OECD, we believe the research from our Future of ‪Productivity‬ project helps to resolve this paradox.
  • Is inequality bad for growth? That redistribution boosts economies is not established by the evidence says FT economics editor Chris Giles. Read more on
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .

Most Popular Articles


What issue are you most concerned about in 2016?

Euro crisis
International conflict
Global warming

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2016