Corporations must prepare for interventionist politics

High-revenue but low-tax-paying tech companies could be targeted as the government mollifies voters with interventionist politics, says Merryn Somerset Webb.


We could soon see a firmer approach to corporate tax collection

I wrote here recentlythat the coming election is to be one of the most important of our lifetimes. Not because of Brexit, but because of the shift I expect it to represent in the social contract.

We know that electorates are demanding more in the way of action of all sorts from their politicians. And we know that, thanks to the insane levels of public debt, very little of that action can consist of spending more money.

That means that we are likely to see an increasing number of policies that are interventionist that purport to improve things for "ordinary" people without troubling the public purse along the way.

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So we have suggestions that utility bills should be capped. We have Theresa May planning for her manifesto to include tough rules to prevent "irresponsible bosses" taking whopping pay packets or dividends even as their pension schemes slowly go bust. And we have murmurings about somehow capping executive pay.

It is all part of a general trend that, as we have long pointed out, is going to see a change in the generally supportive environment for large corporations operating in the UK and possibly for the high-revenue but low-tax-paying tech companies in particular.

If you are in any doubt about this, look at yesterday's papers. The Times led with the headline "Social media giants fail to tackle hatred, say MPs". The BBC ran a similar headline but skipped the "say MPs" bit. Yes, the once loved "do no evil" social media kings are suddenly out of favour. Google is accused, in the Select Committee report on the matter, of having "profited from hatred."

Along with Twitter, YouTube and Facebook, Google has failed to tackle terrorism, violence and hatred online. These companies are "among the biggest, richest, and cleverest in the world", and their failure to fulfil their social responsibility to deal with extremism is "a disgrace," "shocking," and "shameful". The state, says The Times "must step in if these internet giants will not face up to their responsibilities to publish responsibly,regulators must make them".

It is hard to disagree with any of this. But it does represent a shift in the way the government looks at social media firms. There are numerous mentions of how rich/profitable/high-revenue the firms are in the report (that they have profited from terror makes the whole thing "more obscene") along with fury that they have allowed state-funded ads (for universities, charities and the like) to appear around terror videos.

May has often said that her government will step in where capitalism isn't working ie where the profit motive gives us bad rather than good results. Can a significantly firmer approach to corporate tax collection from the social media sector or a system of very high fines for offenders be far behind?

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.