‘Fair’ taxes?

Posted on November 28, 2012 by Madsen Pirie

I really dislike the notion that firms should pay ‘fair’ taxes, as opposed to those the law stipulates. Who is to decide what counts as ‘fair’ taxation? The answer seems to be that it should be self-appointed custodians of the public good, as opposed to judges interpreting what the tax laws actually stipulate.

It is true that firms seek out low tax jurisdictions if they can. They have an obligation to operate as efficiently as they are able to, but none to voluntarily pay more taxes than the law requires. The European single market encourages firms to locate in one EU country in order to have access to the markets of all of them. It was designed to do that.

If we resent countries like Luxembourg and Ireland making themselves attractive to businesses, we have the option of doing the same ourselves. That is what we should be doing. If our complaint is against firms that locate elsewhere and pay too little tax here, the best answer is to entice them to locate here and pay the taxes to us instead.