Tax avoidance—legal, but ethical?

Who wants to pay more tax? No one. I think it’s fair to say that most people, including the body corporate, want to pay as little tax as possible. And it’s probably also fair to say that most of us want to pay as little tax as possible legally–not just within the letter of the law but also within the spirit of the law.

That’s possibly where ethics comes into play—where we draw the line between the letter and the spirit of the law.

Take that apple of the techie’s eyes, Apple Inc., for instance. From 2009 to 2012, it avoided paying US $44 billion in taxes—including tax on product sales in Australia. Legally, of course.

Let’s say you spend $6 on an apple that cost $1 to produce. The store that sells you that apple has ‘purchased’ the apple from another apple store in Ireland for $5.50, leaving the Australian seller the meager profit of 50 cents (on which to pay tax) and the Irish ‘seller’ the lion’s share of the profit (on which to pay tax). (Of course, that apple never was in Ireland; in fact it was produced in China and shipped directly to Australia.)

Now, why would an apple producer want such a convoluted set up? Because it saves them paying a lot of tax: 12.5% in Ireland vs 35% in the US and 30% in Australia. And the savings add up fast.

Of course, governments collude in allowing this to happen and not surprisingly, lots of global companies take advantage of tax loopholes, including Amazon, General Electric, Google, Hewlett-Packard, IBM, MasterCard, Microsoft and Pfizer pharmaceuticals.

All very confusing, and all very legal. But is it right?

Discussion questions

Where do you draw the line between following the letter of the law and the spirit of the law? Where do you think a corporation should draw that line? Which stakeholder groups do you take into account when deciding where that line is? What, if any, is the relationship between, say, ensuring humane working conditions in overseas suppliers and paying the ‘right’ amount of taxes?

Well-balanced managers

I’m reading a book called Life’s a Pitch by Philip Delves Broughton. It’s about how central sales is to organisations. We seldom think of sales as a pivotal function but let’s face it — without people out there selling, those ‘back at the ranch’ would all be out of work.

One good point that I want to share with you (and the book is filled with good points and worth reading for many reasons, not just to find out what it takes to be a good salesperson) is that when it comes to working with customers, good relationships are vital — EXCEPT when you’re selling products and services as one-off transactions. Then, the hard-sell, no-relationship method is the one to go for. For all  other types of sales, working with your customers as partners and building solid, trust-based relationships is the go.

But the main reason for this blog is to give you Earl Nightingale’s checklist of seven items necessary for living a full life, reproduced in Chapter 4. (Nightingale was a mid-20th Century legendary speaker and sales maestro.) Living a full life is important for managers because just as managers with empty lives tend to be poor managers, managers with rich and full lives tend to be good managers. (A sweeping generalisation I know, but a truism nevertheless, I think.)

So to be a good manager, follow these seven rules (paraphrased first by Broughton and now by me):

  1. Have a worthwhile goal; without a goal, you end up living hour to hour, always reacting, never setting your own course.
  2. Work to keep you attitude positive for lots of reasons, not least of which because your own attitude determines other peoples’ attitude towards you.
  3. Think for yourself. Otherwise, you’re buffeted by circumstance and biddable by others.
  4. Remember the Boomerang Principle — you get back what you give.
  5. Always be truthful.
  6. Invest in your own development so you can keep growing.
  7. Remember that you become what you think about most of the time — your thoughts determine your fate.

Put this list somewhere where you’ll see it every morning. Read it over and over until it becomes part of who you are.

Discussion questions

Does your organisation deal in one-off or multiple transactions with its customers? What can you do to more fully adopt Nightingale’s seven items for living a full life?

Dealing with disappointment

Inevitably, however much we try to avoid it, we all occassionally have to deal with disappointment in the workplace. Although people all have their own individual way of dealing with disappointment, the strategies they use to do so must comply with their organisation’s values and codes of conduct.

An example to the contrary came to my attention over the past few weeks, with reports that cricket allrounder Daniel Christian damaged change rooms on three separate occasions after being dismissed from the pitch. He’s now been instructed to spend some time away from South Australian state cricket.

After the first incident, which occurred at the Adelaide Oval, he was given a verbal warning. After the second incident, this time in Tasmania, he was given a written warning and fined his match fee. Christian apologised after both outbursts and paid for the repairs.

A third incident occurred, this time in Perth, which led to Christian’s suspension from the next match.

Discussion questions

How do you deal with pressure and disappointment at work? How do you help your team deal with pressure and disappointment? How should employees who fail to uphold the values and standards of the organisation and/or their profession be dealt with?

Priceless reputations

Lance Armstrong’s fall from grace was quite fast after so many years of ‘here’ status thanks not just to his cycling prowess but also his successful battle with cancer.

Organisations can fall from grace just as easily, and just as quickly, and generally for the same reason – loss of their ethical credibility. Some, like the Australian Wheat Board, never recover. Others, like Apple and Nike, manage a comeback, as if their ethical breaches were an illness to be battled and overcome, like Lance Armstrong’s cancer.

Thanks to social media, falls from grace are more likely, and more rapid, than ever before. (Just ask broadcaster Alan Jones.) 

Questions for discussion

What steps can organisations and individuals take to protect their priceless reputations? Are you and your staff fully conversant with your organisation’s code of conduct? When was the last time you reviewed it with your team?

To spy or not to spy

A story on news.com.au called ‘Google “spy” app lets bosses keep tabs on workers’ caught my eye recently. For $15 per employee per month, an employer can see exactly where employees are, in real time, when they’re not in the office. And there’s no hiding: employees appear as pins on a map, even when they’re inside buildings.

The spin is that the app helps ‘organise teams on the move’ and employees can turn off the device (if they’re game). But, like checking out employees and job candidates on social networking sites, one wonders whether this app has legal implications to do with peoples’ right to privacy.

With about 30 per cent of the total workforce working off site, not to mention office-based workers on their lunch hour and employees who call in sick, there are a lot of potential ‘pins on the map’.

Questions for discussion

What do you think? Would you use this app to monitor your team members? If so, under what circumstance? Where would you ‘draw the line’? What do you think are the ethics surrounding checking up on an employee’s whereabouts?