Radical reshaping of tax system could have positive impact across society
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Focus on taxing corporate profits needs to widen if we are to encourage ethical and sustainable business behaviours
Governments need to look beyond profit as the basis of taxing companies and consider their impacts on the environment and society if we want businesses to support a sustainable future.
A new paper from ACCA (the Association of Chartered Certified Accountants), https://stories.accaglobal.com/tax-and-ethics/index.html">Where next for tax and ethics in the 21st century? argues that the current focus of most tax systems across the world on financial profits is too narrow.
Its author, Jason Piper, Head of Tax and Business Law at ACCA, argues that: ‘If behaviours that have negative impacts such as profligate use of water, energy or carbon-intensive resources are taxed directly, then there will be an incentive for businesses to find models that consume the least of these assets.’
Another example cited in the paper is that of businesses harming the local environment without bearing any costs of clean-up or remediation.
Piper says: ‘Corporations could be taxed on a basis that tries to reflect their overall impact rather than just their financial results. Up to now profit has been seen as the best basis for taxing enterprises. But now it may be t