THE BLOG
22/06/2012 12:57 BST | Updated 22/08/2012 06:12 BST

Time for Tax Dodging Multinationals to Learn From Jimmy Carr

Good for Jimmy Carr. In the face of a national outcry and a Twitterstorm of protest at revelations that he uses tax havens to pay as little as 1% income tax, the acid tongued comedian has seen the error of his ways and apologised.

After being outed in an investigation by The Times newspaper the issue of tax dodging has been lighting up airwaves and twitter feeds all week. Even Prime Minister David Cameron has come out saying that what Carr has done is 'morally wrong' (although he has refused to be drawn on the tax dodging practices of Gary Barlow and others).

It's good to have the PM's condemnation on the record, coming hot on the heels of George Osborne's statement that aggressive tax avoidance was "morally repugnant". The question now is what are they going to do about it?

But back to Jimmy. Now he's come out and admitted his "terrible error of judgement" and pulled out of the K2 scheme which saw his millions stashed in the tax haven of Jersey, a similar act of contrition should be made by multinational corporations.

If it's worth the time and money for moderately successful stand-up comics to employ accountants to squirrel away the odd million quid, just imagine what global companies worth billions of dollars are doing. There have been recent high profile cases of thriving companies dodging their UK tax responsibilities.

But if Her Majesty's Revenue and Customs in the seventh richest country in the world cannot keep on top of tax dodging multinationals, how are the world's poorest countries expected to enforce tax laws for companies operating in their country?

In Britain we can imagine what these lost millions do to the national coffers. How much more so for the world's developing countries which desperately need these tax revenues to build hospitals, schools and infrastructure. The Government of Zambia for example, recently suggested that mining companies might owe the country as much as $1 billion in tax.

Christian Aid campaigns on the issue of global tax dodging and estimates that developing countries lose out on $160 billion a year from the practice. As a report in the New Statesmanpoints out it's hard to imagine the sheer size of these numbers. But to put it in perspective, a million seconds is eleven and a half days, while a billion seconds is almost 32 years.

Unscrupulous multinationals are known to do this by manipulating internal corporate trading in a way that poorer countries have neither the expertise nor resources to counter. Companies using such strategies need to understand that there is a growing recognition that while aggressive tax avoidance schemes may be legal, they are morally reprehensible.

Both Cameron and Osborne have now said the practice is wrong. It's time they act on those words and close the loopholes that lets this kind of activity to go unchecked, particularly when it allows corporations in rich countries to have such a damaging impact on peoples' lives in poorer countries.

And let's hope Jimmy's example can be followed by these multinational corporations. If a public outcry over one man's tax dodging can bring about change, companies which sell stuff to the public should be aware they might be the next target of a justified moral backlash.