Tax is, of course, one of the things that needs to be accounted for locally. It can only be paid in that way. But tax is paid on profits, which is always a residual of economic activity. As a result, people want an indication of the scale of the activities of any company with whom they engage in the place that they are.
That means the local reporting of sales, on both a source and destination basis, for the group that is preparing the report; details of the number of people employed in a country, and their total pay; information on key sensitive data that is likely to influence profit shifting, such as interest paid on intragroup loans, royalties and management charges;and local profits declared and information on taxes due and paid on both a current and deferred basis, for each and every jurisdiction in which a multinational company trades. All this information is vital if people are to have a chance to understand the activities of the companies that they engage with.
The great joy of the market system is that we don’t actually have to worry about these things if we don’t want to. We can just look at the price of bananananas in Tesco and make a decision, Y/N. We don’t need to know the producer, the owner, the tax situation, anything else: all the information we need is boiled down into that price system.
And I’m sure that some of these varied nonsenses being foisted upon us, from country by country reporting through the various know your supply chain initiatives to Fair Trade and the rest are coming from people who just don’t like that market and price system. They hanker for the days when people like them could indeed tell people what to buy where and how according to their interpretation of what other people should be doing.
As an example I’ve had a long conversation with the people at Global Witness. This conflicts minerals stuff is one thing but they really do see that as just a wedge in the crack. They want everyone to be able to track their entire supply chain all the way through the entire global economy. To the subcontractors’ subcontractors’ subcontractor and beyond. They simply don’t grasp why we actually have this “free market” system at all. Which is that that level of knowledge simply isn’t available in an economy that at any one time has billions of different things available for sale. They’re hankering after the planned economy again, failing to realise that the Socialist Calculation Problem really just doesn’t have a solution.
Ritchie’s only a small part of it but I am indeed convinced that this is a part of what is going on.