Speaker profile: Richard Murphy on tax, ethics and economics

With tax avoidance again on the news agenda, leading tax expert Richard Murphy examines tax, ethics and the challenges co-operatives are likely to face in coming years.

Richard Murphy is perhaps the UK’s most influential tax specialist and campaigner. He is an informal economic adviser to the Labour leader, Jeremy Corbyn; is the architect of a range of tax and economic policies; has authored cutting edge research and a series of books including, most recently, the Joy of Tax; and in 2013 was the seventh most influential person in global tax according to International Tax Review.

He was speaking ahead of his session on tax governance for co-operatives at the finance strand of our Practitioners Forum event on 19 November (2015), a one-day event designed for co-operative professionals working in a range of business areas: finance, HR, governance, membership and communications.

Q: With businesses of all kinds working hard to show their ethical credentials, what can co-operative and mutual businesses do to demonstrate their differences?
A: Actions speak louder than words, but actions have to be evidenced. Logos, like the Fair Tax Mark [a new mark for business to show a fair and transparent approach to tax], with which I am associated, are useful, but so is clear and precise explanation to stakeholders. Small numbers of interested people have the ability to influence the behaviour of large numbers of others, so it is worth investing in getting clear, precise, and accurate messages across, including in things like annual financial statements.

Q: What do you think will be the most significant initiatives in the coming years for businesses to demonstrate their social and ethical differences?
A: At present many businesses still seem to think that social and ethical concerns are a tack on extra to their core objective of making money. In the coming years this will not be true. Business success will be dependent upon providing goods and services in ways that appeal to a new range of consumers for whom values matter as much as consumption. Green will become real, simply because the world has no choice but face up to it. In that case the businesses that survive will be those who can prove that they add value in this very different circumstance.

Q: Is it possible for businesses to be tax efficient whilst also paying their fair share?
A: Of course! Tax efficiency simply means paying the right amount of tax, but no more, at the right rate, in the right place and at the right time. So, tax efficiency is about making sure that all the allowances and reliefs that are available to a business are used, so long as that is within the spirit of the law. What tax efficiency is quite explicitly not about is taking tax risk, which usually comes at cost to co-op members. Communicating how the choice has been made between these two is the key principle of tax governance, which is where many businesses need to improve their performance.

Q: What do you think are the biggest challenges facing businesses like co-operatives over the coming year?
The short-term challenge for co-operatives is different from the long-term need. In the short term the challenge is in providing value to a very wide range of households will be facing very significant reductions in their disposable income over the next year or two as government spending cuts begin to seriously reduce the disposable income of many families in the UK. This is going to have significant consequences in the retail sector, in particular, where a new concentration on value will be vital to short-term success. But be warned: value and cheapness may not be the same thing and a massive consumer education programme may be needed on this issue.