He is getting rather overheated:
“If the minimising of Indian tax revenues is ‘standard’ for British investors, that’s not a justification, it’s a condemnation,” said Alex Cobham, the chief executive of the campaign group Tax Justice Network. “India needs its tax revenues for schools and hospitals. We must hope that the chancellor himself is committed to the progressive taxation of wealth and top incomes, or the UK will only see the deepening of the stark individual, racial, gender and regional inequalities that the pandemic has laid bare.”
This is about people investing in India through Mauritius. Entirely and wholly legal by the way. And which does reduce Indian tax payable in the event of a profit.
So, the defence is? Well, investment in India benefits the Indian economy. A reduction in tax upon the success of an investment increases the likelihood and amount of investment. Thus offering tax breaks – whether they be to foreign investors directly, or by double taxation treaties of this type – thereby benefits the Indian economy.
The correct people to be making this decision – whether to offer such breaks or not – are the Indian government. Not colonialists like Alex Cobham.
Cobham would no doubt start to insist that Kim Clausing proved that this doesn’t work. As Kim Clausing has expressely and specifically denied she has done.
For those who have difficulty following the point – or are Cobham or Murphy, but I repeat myself – if corporate taxation changes the amount of investment that is done then the above at the top point about changing taxation changing the volume of investment is true. Clausing showed that she can’t see any change in the amount of investment as a result of changes in corporate taxation. Then goes on to agree that the reason for this is that investors are already not paying those local corporate taxes because they use offshore, double taxation treaties and the like. Therefore we cannot see the change in investment as a result of changes in tax because the tax isn’t biting upon the investment.