An examination of the political salience of corporate tax avoidance: A case study of the Tax Justice Network (original) (raw)

corporate tax paper.docx

Corporate tax avoidance (CTA) has become a high profile issue despite being a complex area of accounting practice. One reason for this has been the civil society campaign opposing tax avoidance. The paper provides a case study of one key civil society actor: the Tax Justice Network (TJN). Existing accounting analysis offers little to explain how some accounting issues acquire political attention and media coverage. To address this, the concept of political salience is introduced into accounting analysis -understood as the creation of focal points in campaigns -to consider how the TJN contributed to the political profile of CTA.

The Australian campaign against corporate tax avoidance: agenda-setting, narratives, and political opportunities

Australian Journal of Political Science, 2020

In recent years, Australian tax justice campaigners have increasingly focused their efforts on the issue of tax avoidance by corporations operating in Australia. This article analyses the Australian tax justice campaign and explains its role in propelling the issue of corporate tax avoidance onto the public agenda. Drawing on campaign documents, media reporting, and interviews, we analyse the contributions of the key civil society actors and how they framed the Australian campaign. We show that the campaign encompassed a coalition of diverse groups that harnessed the 2014-15 Federal Budget to frame the issue as a 'revenue problem'. They espoused an interest-based narrative to localise the campaign to resonate with the Australian public, helping make corporate tax avoidance a prominent national debate. Despite its initial strong rejection, the Australian Government adopted the activists' framing of the issue as one of revenue raising and went on to address significant corporate tax loopholes.

Tax Avoidance: A Threat to Corporate Legitimacy? An Examination of Companies’ Financial and CSR Reports

The British Tax Review, 2016

While there have been regular debates on corporate tax avoidance, a distinguishing feature of the current interest is the involvement of a wider audience which includes society in general. By analysing both tax related disclosures in company annual reports and corporate social responsibility reports the authors examine how managers of companies who have been subject to specific criticism of their alleged tax avoidance respond to such criticism. Using a legitimacy theory framework to identify four disclosure themes: explicit tax philosophy, implicit tax philosophy, tax conduct and tax contribution, companies’ reports for the 11 year period 2004–2005 to 2014–2015 have been analysed. The authors have found what appears to be evidence of inconsistency on the part of managers in identifying appropriate responses which the authors attribute to uncertainty as to the status of tax avoidance. The uncertainty is apparent in variation over time both within companies and between companies and i...

Does Tax Transparency Tackle Tax Avoidance? A Stakeholder Perspective

International Journal of Advances in Management and Economics, 2018

The present work approaches the research question: Does tax transparency through mandatory corporate tax return disclosure tackle tax avoidance? Tax avoidance has far-reaching social implications. The aim of this study is to shed light on tax avoidance and to help mitigate its adverse social repercussions. The research is inspired by The United Kingdom Corporate and Individual Tax and Financial Transparency Bill, which was proposed, albeit unsuccessfully, during the 2010-2015 UK Parliament. The implications of a tax return disclosure regime are assessed against the WPP Group, a major UK public company listed on FTSE 100. The stakeholders affected by corporate tax return disclosure are analysed using the Power-Interest-Matrix. Their power is assessed through financial indicators derived from the company’s financial statements. Their interest is scrutinized through vocabulary analysis with the Form-Oriented Content Analytic Method. The impact of the disclosed tax avoidance on the stakeholders and their response are mixed. There are numerous pathways available depending on the stakeholder group and their incentives. Also, stakeholders of the same group do not behave unanimously. These findings are supported by empirical evidence from Europe, Asia and the USA. In order to channel dispersed stakeholder activity the study makes a proposal to introduce a threshold for parties interested in corporate tax information. The author is not aware on any tax avoidance research combining the Power-Interest-Matrix and the Form-Oriented Content Analytic Method. This enhances the originality of the study and may encourage other scholars to enrich their research inventory through these instruments.

Ideological Presuppositions in Media Coverage of Corporation Tax Policy in the UK and Ireland: A Critical Discourse Analysis

American Behavioral Scientist

This paper argues that the state’s capacity to tax corporations in order to fund itself is reaching crisis proportions. Following decades of trade liberalization, deregulation, and globalization, large multinational companies have been able to take advantage of tax competition between states in order to avoid taxation and offset their obligations. This crisis, arguably, has been facilitated by state actors and exacerbated by non-state actors: we explore the ways in which multi-national corporations (MNCs) manipulate their capital, assets, and supply chains to minimize their tax burdens; and we further consider the ways in which media narratives construct this issue and whether they challenge the practice or intensify it. Discourse surrounding taxation plays a huge part in what is considered acceptable. While the old adage that “death and taxes” cannot be avoided, it has become clear that large companies, helped by a tax avoidance industry do indeed manage to do just that. Discourse ...

Back from oblivion? The rise and fall of the early initiatives against corporate tax avoidance from the 1960s to the 1980s

Tax havens and tax avoidance have gathered much interest, e.g., in the United Nations (UN) negotiations on the post-2015 development goals. The analyses of initiatives against corporate tax avoidance typically focus on developments from the mid-1990s onward. This article shows that contrary to the common perception, the country-by-country reporting initiative and many of the other contemporary policy responses had already been developed and discussed in the 1970s by the United Nations Commission and Centre for Transnational Corporations. I demonstrate how the weakening of the policy community of the UN and the failure of the Organisation of Economic Cooperation and Development (OECD) to refer to the earlier discussions, not only in the UN but also in the OECD, contributed to the passing into oblivion of these ideas. Other factors were the reframing of the UN work on multinational enterprises to human rights issues and the transformation of academic theories of the firm. The examples demonstrate how ideas shape world politics and how the oblivion of certain ideas can have concrete impacts on the power relations between its actors. The oblivion of the earlier debates paved the way for the triumph of more business-friendly discourses centred on the anti-corruption and corporate social responsibility arguments.

Journal of Finance and Banking Review A Theoretical Review on Corporate Tax Avoidance: Shareholder Approach versus Stakeholder Approach

Objective-Although corporate tax avoidance is a widely discussed topic in the literature, conflicts do emerge when it is analyzed through the context of primary corporate duty. Should companies, in managing their taxes, solely honor their obligation to increase shareholders' wealth or should they cater to the interests of all their stakeholders? Such conflicts are especially evident in the inconsistent empirical observations on how corporate tax avoidance relate to corporate social responsibility (CSR), which makes the dearth of theoretical analysis on this issue even more conspicuous. Taking into account the socio-political nature and human elements in corporate tax avoidance, theoretical analyses from social sciences' perspectives are becoming markedly crucial. Methodology/Technique-This paper critically reviews the extant literature for discussions on how corporate tax avoidance is influenced by the dissenting approaches towards primary corporate duty. Findings-By allowing an insight into how people act and the world they live in, these analyses form a constructive tool to rationalize and foretell managerial actions towards shareholders and stakeholders alike. Novelty-It focuses particularly on the theories that are widely used to lend supports for such approaches. These theories are the agency theory, stakeholder theory, and legitimacy theory.

The Social Boundaries of Corporate Taxation

International Corporate Finance eJournal, 2016

Historically, the tax law distinction between corporate and conduit treatment drew primarily on doctrinal understandings, treating state-law corporations as corporate for tax purposes and classifying unincorporated legal entities based on their resemblance to conventional state-law corporations. More recently, commentators and Treasury have abandoned these doctrinal touchstones in favor of efficiency, broadly construed, as the guiding principle in determining an entity’s tax classification. This Article argues that, while important, efficiency considerations should not function as the sole arbiter of the boundary between corporate and conduit tax treatment. First, classical corporate taxation is, in many ways, deeply embedded within a larger network of legal and social meanings. Classical corporate taxation operates in concert with, rather than separately from, these legal and social meanings. For this reason, the rules governing entities’ tax classification should take these interr...

Shareholder’s Political Motives and Corporate Tax Avoidance

2015

This paper describes the relationship between shareholder’s political motive and corporate tax avoidance using the Fraud-Risk Theory framework. Many corporate shareholders around the world actively participated in their country’s political arena, either as politicians or as donors to political parties. In order to maintain their political activities, they need easy, cheap and large sources of funds. One of the possible sources of funds is the undisbursed income tax payment to the government. However, this predicament has aroused the suspicion of taxation authorities on the extent of shareholder’s corporate tax compliance. Since corporate tax avoidance and shareholder’s political motives are attached to two different entities (corporations and individuals), it is not possible to measure the direct relationship between the variables. However, in this case the relationship will be partially measured. The first part measures the relationship between corporate ownership and corporate tax...

Planned Economies? : Corporations, Tax Avoidance and World Politics

2018

approaches, the key question I pose here is how should the world-political role of corporations be understood? An interesting departure point for this is the work of Roberto Mangabeira Unger, who has defined politics as a "struggle over material and passionate relationships over resources and arrangements of our everyday lives" (Unger, 1987, p. 145). This differs from the widely used conception of politics by Chantal Mouffe, who has defined it as an "ensemble of practices, discourses and institutions which seek to establish a certain order and organize human coexistence in conditions that are always potentially conflictual because they are affected by the dimension of 'the political'." The political in turn is characterized by a "dimension of antagonism that is inherent in human relations" (Mouffe, 1999, p. 15). Compared to Mouffe's account, Unger's conception directs the attention more to the material issues rather than to searching for "antagonisms" in society. However, by taking into account our "passionate relations", Unger avoids defining politics in entirely materialist terms. Giddens (1984, pp. xxxi-xxxii) introduced the concept of "transformation points" that "translate" private property and a cluster of ownership rights into industrial authority or modes of sustaining managerial control. I maintain that the strict separation of states and markets is a key element sustaining this transformation and preventing its opening up to competing claims of authority. Specifically, understanding corporations as potentially political actors could expose them to demands that are normally valid only in the democratic sphere. In this sense, my dissertation includes a normative aspect. By raising new questions on the nature of corporate power, this project could also be seen as emancipatory (Sayer, 2000, p. 18) or liberating (Manicas, 1987, p. 321). Unger's conception of politics allows us to transcend strict and somewhat artificial state-market divisions (Teivainen, 2002). Specifically, I focus on corporate tax avoidance mechanisms to demonstrate how not only states, but also companies can engage in struggles over material relationships. For example, a major mining company in a small developing country might have a large influence over that state's ability to decide on material relationships through normal democratic processes. I also draw on the tradition of critical realism, which emerged initially from a rigorous critique of positivism in the natural sciences. In line with positivists, critical realists are "naturalists" in the sense that it is "both possible and desirable to study social phenomena 'scientifically'" (Potter & López, 2001, p. 8). However, even though there are causal mechanisms at play in our shared world, our understanding of them is always shaped by language. Therefore, we can never obtain completely neutral information about the world. As Sayer (2000, p. 16) has noted, "typically, social scientists are dealing not only with systems that are open but ones in which there are many interacting structures and mechanisms." "This creates the risk of attributing to one mechanism (and its structure) effects which are actually due to another." Consequently, there is