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Consumers can change multinationals’ tax strategies very quickly, says Sainsbury’s boss

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Corporation tax is an elective tax for multinationals but consumers who think companies are not ‘contributing to society’ have the power to bring change ‘very quickly’, according to Justin King, chief executive of Sainsbury's.

King was talking to Jeff Randall at Sky News a week after Andy Street, managing director of John Lewis, called on the government to examine the UK taxation of foreign multinationals.

Street had told Randall: ‘If you actually improve your business by investing, what that means is you have got less money to invest if you are giving 27% of your profits to the exchequer than … if you are domiciled in a tax haven and you've got much more. So [companies domiciled in a tax haven] will out-invest and ultimately out-trade us, and that means there will not be the tax base in the UK, so I do think it’s an issue that needs to be examined.’

Earlier this week tax campaigners welcomed David Cameron’s announcement that next year’s G8 conference in Northern Ireland will address the ‘growing problem … that some businesses and some individuals hide their taxes away and don’t pay them fairly’.

‘‘There are too many tax havens, too many places where people and businesses manage to avoid paying taxes,’ Cameron said.

‘It’s a customer issue’

Randall asked King last night: ‘What about that row over corporation tax – can these multinationals keep getting away with it?’ King said the government had done ‘quite a lot’ and it was reducing corporation tax rates.

‘Corporation tax, to all intents and purposes, is an elective tax. Quite simply, companies can choose in which country they’re going to pay their corporation tax,’ he said.

‘We are a domestic, UK-based business, we pay our corporation tax in the UK. As William [Butler-Adams, managing director of Brompton Bicycles] said [in an earlier interview], it’s a customer issue.

‘I think customers have got to be demanding of the businesses that they spend their money with. Ask whether they do pay their dues in our country – are they contributing to our society?

Randall suggested that protests by groups such as UK Uncut were ‘not enough’, adding: ‘Look at Amazon’s numbers – it’s clearly having a laugh.’

King replied: ‘I think if you keep pointing at the government, it makes it feel like it’s their fault and they’ve got to do something about it … But this is an international issue, and if we wait for the government to get together with international governments to sort out this issue we’ll be waiting a very long time.

‘I think we as consumers can make this change much quicker than the government. The vote that you make with your wallet is the most powerful vote you have at your disposal …

‘If you send a clear message as a consumer to any business that you don’t think pays its dues in the UK, you can bet your bottom dollar they’ll make a change very quickly.’

In a further sign of disquiet among UK-based businesses, The Booksellers Association launched a poster campaign this week to tell consumers that ‘we pay our taxes’.

‘Overseas-registered bookselling companies doing a lot of business in the UK, but paying little – or no – tax put our members who do pay taxes at a competitive disadvantage,’ said Booksellers Association chief executive Tim Godfray.

NIC holiday

Justin King has called for a 12-month national insurance contributions holiday for employers on ‘new positions created’, Retail Week reported. It would be ‘a real incentive for job creation’, he said.