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Margaret Heffernan

Margaret Heffernan

GE: Forget CSR, Pay Your Taxes

Posted: 03/28/11 06:47 PM ET

Rejecting the gloom and that which so many corporate antics inspire, business writers of late have taken to praising the companies that pursue purpose, articulate values and see for themselves higher values than just boosting the bottom line. And we admire those who embrace corporate social responsibility (CSR) and attempt to give something back to their communities through volunteering and charitable donations. I'm all for this -- though there will always be a part of me that still wonders that we celebrate those who simply try not to be evil.

But it seems to me that before we start celebrating all these added extras, we should require of our corporations that they do one basic thing: they should pay their taxes.

This seems obvious to most of us. But it isn't obvious to everyone. GE is not alone in making no tax contribution to the American economy. I have worked with several companies now whose stated aim (at least within their treasury departments) is a $0 tax return. And when the creative bean counters achieve this, there are slaps on the back all round and big bonuses.

In the UK, there's now a movement to identify and shame companies that pay no UK tax. Some leading retailers, like the popular Top Shop and Fortnum & Mason, have been the target of mass consumer protests; in other instances, shoppers have simply demanded that since the company doesn't pay tax, they shouldn't have to either.

Kraft's decision to move some of its operations to Switzerland to avoid tax, Merrill Lynch's move to Monaco, Barclay's sacking of a whistleblower unhappy with the bank's tax policy: these are all corporations using 'shareholder value' as the excuse for refusing to contribute real value to society. The implication of these policies is that the businesses themselves have no role and no connection to society.

This is dangerous stuff. No business is an island; every company depends on society for it to function. Every business has a deep, vested interest in a community that is legal, decent, honest, peaceful, healthy and educated. Without that, it has no employees, no customers -- and no need of lofty, higher purposes.

If businesses believe they can separate themselves from society, they invite the response that we are beginning to see on UK streets: a profound hatred of business, and a belief that unless you are a social enterprise, you must be an anti-social corporation. If this trend is allowed to continue, no amount of CSR or citizenship websites will restore faith in business.

GE prides itself on making a difference "ethical actions, beyond formal requirements" and that's nice. But I'd prefer to see it pay its taxes. For the rest of us, that is a formal requirement. Only, apparently, for large corporations is it an optional extra.