Glaxo Boss Attacks Firms That Quit UK to Avoid Tax
From Observer (UK) (March 20, 2011)
The head of Britain's biggest drugs manufacturer, GlaxoSmithKline, has delivered a stinging attack on companies that shift their headquarters abroad in search of lower taxes, declaring that it is "completely wrong" for businesses to view themselves as "mid-Atlantic floating entities" with no connection to society.
Speaking before this week's budget, in which George Osborne will be under pressure to create a growth agenda for business, GSK's chief executive, Andrew Witty, said that banks, hedge funds and industrial companies that look only for lower tax regimes are contributing to a damaging destruction of trust between the public and the corporate world.
"One of the reasons why we've seen an erosion of trust broadly in big companies is they've allowed themselves to be seen as being detached from society and they will float in and out of societies according to what the tax regime is," said Witty. "I think that's completely wrong."
GSK, based in Brentford, west London, employs 16,000 people in Britain out of a global workforce of 98,000. The company produces treatments for asthma, cancer and HIV, as well as brands including Horlicks, Aquafresh, Lucozade and Ribena.
In an interview with the Observer, Witty said: "While the chief executive of the company could move, maybe the top 20 directors could move, what about the 16,000 people who work for us? It's completely wrong, I think, to play fast and loose with your connections with society in that way."
HSBC, Diageo, Unilever and Reckitt Benckiser have all mooted the possibility of leaving Britain in search of lower rates of tax.
Witty scorned the possibility of being a company that "floats around in Bermuda", saying that businesses should stick with their home country through bad times as well as good. "We could go, in theory, anywhere for a low tax rate. But first of all, how do you know that country isn't going to change its tax rate in 10 minutes?
"Secondly, isn't it better to be in a country and say: 'Let's try to work through the difficult times and get to the good times?'"
GSK paid pounds 1.3bn of tax on profits of pounds 4.5bn last year, although virtually all of this was levied on its operations overseas. The previous year, it paid pounds 417m in corporation tax.
GlaxoSmithKline chief Andrew Witty rejects the idea of being a
company that 'floats around in Bermuda'.
Posted: March 2011