|Richard Murphy was also in the Global Tax 50 2014 (as part of the Tax Justice Network),2013 , 2012 and 2011|
Richard Murphy is a name well-known to those in the tax world for his pioneering work on issues of tax justice and the interplay between tax and corporate social responsibility. If he had not been involved with tax, ITR learns, Richard Murphy could have been a train operator. If he had gone down that track, country-by-country reporting (CbCR), for one thing, would not exist today – at least not as we know it.
The tax justice campaigner, professor of practice, chartered accountant, blogger and published author talks to Amelia Schwanke about his career choices, the success of CbCR and what direction he thinks tax is headed in 2016.
International Tax Review: Why did you choose to begin a career in tax? Where would you say it all began?
Richard Murphy: For me, I became very fascinated by the world of business and finance as a teenager. Bizarrely, I saw an interest in railways – typical teenage boy thing to do at the time. But I didn't get interested in taking train numbers or that sort of thing, I got interested in the social history and economics of railways, the history of railways, the history and development of accounting, and mergers and takeovers, and to some extent even the tender developments of taxation and the socio-economic aspects of that. So I went to university to study economics.
I wanted to become an accountant because I thought I wanted to learn about how it really worked. I'd always had an academic interest in parallel. I ended up specialising in tax and setting up my own firm, which became quite successful. I sold out of that in my early forties. I'd always thought I was going to become an academic then but I didn't at that time; instead I developed a new role in campaigning and research and helped found the Tax Justice Network (TJN). I campaigned for tax reform, before it became in anyway widely-known. I created country-by-country reporting in 2003 which was, again, well before anyone anticipated that the OECD would ever need to make use of it. As a result of that I've ended up as an academic.
ITR: Why did you decide to make the switch from industry insider to industry campaigner?
RM: There was always a political interest in me. I had been involved in student politics, but I decided I didn't want to be a politician – it didn't suit me. I had a big social conscience. I'm a Quaker; that influenced me. I'm very concerned for social and economic justice and in my early forties I realised that this was something I wanted to do more than remain as a practising accountant that had various commercial roles as well. Although, I haven't given up being a practising accountant entirely. I still have a practice; it's very small, but it does occasionally do projects and so on. But fundamentally I shifted from being commercially-orientated towards being a campaigner.
I never knew that I was going to become a virtually full-time campaigner and now researcher/academic – that was something that happened rather than something that I can claim was a grand career plan. I couldn't regret for a minute; it's been much more exciting than being a practicing tax practitioner if I'm to be completely honest with you – but don't tell the rest that.
ITR: How proud are you of your work on country-by-country reporting?
RM: It's the single biggest thing that I've done that has had the most impact. I mean, I can't pretend otherwise. It happened quite quickly. It was an idea that happened virtually in the spur of the moment as a result of a conversation with John Christensen, right at the beginning of the history of the TJN. I wrote it in 2003 and genuinely thought that it would be by two people.
Literally, I wrote the idea and then began talking about it to various people. First of all, it became of interest to campaigners in the extractive industries, then it became of broader interest as the financial crisis developed and then the whole thing began to get momentum as being the basis on which we can hold multinational companies to account – but that didn't happen overnight. There was no way on earth that I could have ever predicted this would have happened the way it did and I'm proud of it – of course I am.
ITR: What would you say was your most significant work on tax from 2015?
RM: I would have to say my book, The Joy of Tax, because it's the first chance I've had in a sense to put forward my ideas about how tax fits in to the bigger political economy and how I believe tax and money are related and how that would change the perspective that we have on how we should design tax policies for the future.
ITR: What direction do you think tax is taking, in light of BEPS and related reforms?
RM: There's a number of things happening at the moment: one is an enormous implementation process. We've been through a point where the whole shock of 2008 has happened, there's been a massive public awareness that there is a tax problem, there has been a policy response, there's now an implementation stage and the next stage well effectively be a feedback which will then suggest that there are further changes to make.
Now I think the process of change has become much quicker over the last seven years or so. I think this [rate of change] will carry on; I think we're going to see a lot more changes; I think there will be a challenge of implementation; and I do not think that expectations by most politicians and the public will be met as of yet. There is a massive expectation gap between what businesses are willing to say about their tax and what the public wants to know about their tax in a format they can understand.
There will be an increasing demand for things like the 'fair tax mark' which is another initiative that I've been involved with. There will be a continuing demand for on-record CbCR; there will still be a demand for fundamental tax reforms because of growing inequalities in society. The stresses that are going to be faced within taxation are not going to be reduced in the next few years. We have not got to the point where we can say, 'ah, the OECD has recommended a bit of implementation to happen. Job done, let's all settle down to a decade where not much is going to change'. That's not the way it's going to be. We're going to see a great deal more because the pace has changed and society is growing. If anything, the stresses in society are growing. The ability of tax to exacerbate those is one of the themes in The Joy of Tax – the joy of tax is its ability to shape society.
ITR: What message concerning transparency would you give the tax world?
RM: The best method we need is published CbCR for multinational companies. Why do we need that? Because then the public will have the confidence that some companies are definitely paying the right amount of tax, others can be held to account, public pressure can be brought to bear, the quality of tax reporting will go up, the demand for better governance to explain why tax is not being paid if it isn't – and there are good reasons why tax sometimes isn't being paid but still the demand for better governance would result in better communication and a lot of the misunderstandings will begin to disappear, confidence would begin to rise and then we could move on to deal with other issues. Public CbCR is the thing we really need because it would actually help businesses move on.