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Home / Tim Worstall /It’s amazing how disinformation persists among the tax campaigners

It’s amazing how disinformation persists among the tax campaigners

Summary:
Tax campaigner here has a meaning, someone who insists that someone else should be paying lots more taxes. That is, after all, the cry of most of the Tax Justice this, Tax that and so on. Today’s example is from The Ecumenical Council for Corporate Responsibility - or perhaps their sideshow, Church Action for Tax Justice . They have a report out insisting that the tax system is most unfair. Their international example is Zambia and its copper exports. The Big Bad International Capitalists are misinvoicing and thus spiriting money that should righteously be taxed out of the country:There are a number of different mechanisms but two common practices that are alleged to have taken place in relation to Zambian copper are abusive transfer pricing, and trade misinvoicing. [16] The first of these

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Tax campaigner here has a meaning, someone who insists that someone else should be paying lots more taxes. That is, after all, the cry of most of the Tax Justice this, Tax that and so on.

Today’s example is from The Ecumenical Council for Corporate Responsibility - or perhaps their sideshow, Church Action for Tax Justice . They have a report out insisting that the tax system is most unfair. Their international example is Zambia and its copper exports. The Big Bad International Capitalists are misinvoicing and thus spiriting money that should righteously be taxed out of the country:

There are a number of different mechanisms but two common practices that are alleged to have taken place in relation to Zambian copper are abusive transfer pricing, and trade misinvoicing. [16] The first of these involves the mining company in Zambia selling its copper to a related company in another country, usually a tax haven. When these two companies are both subsidiaries of the same multinational company then the price for the transaction is meant to be set by an “arm’s length principle” in which the cost of sale is the same as it would be on the open market between two unrelated companies. Abusive transfer pricing occurs when in reality the mining company sells the copper to the company in the tax haven at an artificially reduced cost, thereby avoiding, if not evading, paying tax in Zambia. The company in the tax haven then sells on the copper at a much inflated price but also pays little tax because the country in which it is located is a tax haven. In this way, the Zambian Revenue Authority is deprived of much needed income.

The reference for this happening is this War on Want report, which itself references some research done by the Centre for Global Development. Done by Alex Cobham for the CGD in fact.

The problem with this is that the claim was shown, by Maya Forstater, to be an entire nonsense soon after it was first published. Which is one of the reasons - so we’re told at least - that Alex Cobham no longer works at CGD but runs the Tax Justice Network instead and Maya went to work for the CGD for a time.

The claim was that Glencore exported copper from Switzerland at a much higher price than it exported it from Zambia. Thus billions going missing. Reality was that Glencore, occasionally, exported a few or a few tens of kilos of copper from Switzerland as samples. The hundreds of thousands of tonnes leaving Zambia went at world prices. The samples - because this is how customs declarations work - included the cost of the copper plus the price of the courier services delivering the few kg. That, literally, was it, in toto.

Copper plus the price of DHL is higher than copper without the cost of DHL. From which the entire tale of billions going walkabout is woven.

Even though this has been disproven, the CGD has withdrawn the report (and Mr. Cobham has, ahem, moved on) The tale still persists though, doesn’t it? An absolute and complete untruth is still a rallying cry for more tax.

There are other problems with the report as well but we’ll leave those for another day. Except for just the one observation, question perhaps.

The claim is made that an NHS nurse pays a higher average (ie, as a percentage of her total income) tax rate than some people earning tens of millions a year. We don’t agree that she does - the report relied upon doesn’t handle corporation tax properly - but let’s just run with the idea that she does indeed do so. What should be the answer then?

Well, why not call for lower taxation of people on smaller incomes? As we do around here in fact, as we have done for decades and as we’ve even aided in making occur with the rise in the personal allowance. That is, why is it that Justice in this field always seems to mean more tax rather than less?

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

One comment

  1. Our response, which shows how this article is misleading, is available here:
    https://twitter.com/ChuActTaxJust/status/1347833806191996928
    Justin Thacker, Church Action for Tax Justice

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