Former Bank of Canada governor and current head of the Bank of England, Mark Carney challenged large technology companies to have a greater “sense of responsibility” and pay more taxes as he spoke on Friday about global inequality at the World Economic Forum in Davos, Switzerland.
“You need to recognize that some of the biggest firms taking advantage of international tax rules are tech companies,” Carney said during a debate on whether growth models are delivering enough jobs and addressing global income inequality. “The amount tax they pay is small in relation to the large returns they get. A sense of responsibility is needed…I would point to that.”
The BBC World Debate: A Richer World, but for Whom? was produced by the WEF and the British Broadcasting Corp.
Carney was governor of the Bank of Canada from 2008 to 2013 during the midst of a global financial crisis. Although the youngest central bank governor among G8 and G20 nations at that time, he was credited to have played a major role in helping Canada avoid the impact of the financial crisis which began in 2007. He was appointed governor of the Bank of England in 2013.
Carney did not name any tech companies but the publication the Guardian commented that his remarks will add pressure to businesses like Google Inc. that use offshore agreements to reduce their tax remittance to the British government.
For example, Google U.K made £642 million in sales in 2013 and paid £21.6 million in corporate taxes for that period. By diverting the lion’s share of its sales through Ireland, Google was able to obtain a tax rate of 15.7 per cent for 2013, well below the highest tax rate in the U.K and all its major markets, according to the Guardian.
In the United States, businesses spent US$400 million lobbying political decision makers to shape market policies in their favour while thousands of people in developing countries die of diseases such as Ebola and malaria, said Winnie Byanyima, executive director of Oxfam International. She also said US$18 trillion is stashed in tax havens. This is money that could be channeled back into the economy to create jobs and lift people from poverty.
Calling for tax reforms, Byanyima said: “Let the companies stop lobbying and put the money into medicine.”
Carney, who worked for the U.S. multinational investment banking firm Goldman Sachs Group Inc., for 13 years before moving to Canada’s Department of Finance, also pointed out how technology can disrupt economy and impact many existing jobs.
“We need to examine the ability of technology to replace what we see as competitive jobs today,” he said.”…So the issue becomes how do you have education? How do you have training for a world where actually creating an opportunity will mask creativity…?”
In explaining that technological changes can result to job losses unless people are given access to education that will help them become part of the creative economy, Carney was even able to poke fun at himself.
“Actually everything I did at Goldman Sachs could be replaced by technology – that’s why I had to leave,” he said.