Since 2012, politicians have waged a public offensive campaign against multinationals which have been accused of not paying their 'fair share' of tax. This long running campaign has been accepted by the public as being inherently true and several well-known corporations, whose services are enjoyed by New Zealanders, have been made the poster children for the problem.

This co-ordinated attack is not unique to New Zealand as many other developed countries have levelled the same assertions against multinationals in their jurisdictions. Not surprisingly, no country has come forward to say that they over-collect tax from multinationals!

In recent years this campaign has given life to the OECD’s base erosion and profit shifting (BEPS) reform programme. That programme has resulted in numerous exposure drafts and consultation documents which propose a plethora of new rules and Tax Treaty amendments.

Like apple pie and exercise, such reform must surely be good – after all, faceless multinationals can’t get away without paying their fair share.

But like all overhyped marketing campaigns, a small amount of critical examination reveals a different picture. This is a view that may not please the politicians or the IRD officials who regularly jet off to Paris.

First, let’s look at the target group. Multinationals. It is true that they have substantial resources available to arrange their affairs. But as a general rule, given their public profile, multinationals go to great lengths to make sure that they follow the strict letter of the law. Tax is just another law and so the assertion that they are abusing or failing to comply with our tax laws is lacking in substance. In fact, there is a far greater risk of local companies and sole traders not understanding their obligations and thereby failing to pay the correct amount of tax than there is for multinationals.

Second, it is important to understand the size of the problem. Recently the Government put the figure at $100m per annum, which certainly seems a lot to the average voter, but is only 0.1% of Crown’s annual income. Hard to see that it’s a gaping hole in the revenue base that merits the disproportionate response.

Finally, look at the 'fair' concept which is at the centre of this campaign. It has long been said that there is no morality in tax and it is simply a mechanism by which the Government of the day collects sufficient funds to pay for the public services that it wishes to provide (concepts such as tax being a means for redistributing wealth and altering behaviour have largely fallen out of favour in New Zealand in recent decades). In that context there is no fair amount of tax for multinationals or anyone else to pay. We are all expected to pay the amount of tax that the law dictates – no more and no less.

Terminology such as "fair amount of tax" is a cynical attempt to demonise the target group so as to smooth the way for the reforms being implemented. A more honest discussion would involve admitting that we simply want to take more money from multinationals.

Whether that’s fair or not.

This article was written for the NBR (June 2017).