After the recent referendum, with a general election looming and a Scottish election next year, I’ve been pondering on the role of companies in the political process. This has led me to an interesting question: should companies be able to vote in elections and referendums?
The idea that those who pay tax should have a say in what the taxes are and how they are spent is fundamental to democracy. One of the first concrete expressions of this idea was the Magna Carta, which is 800 years old this year. The slogan “Taxation without Representation is Tyranny” drove the American Revolution. It is an idea that, along with universal suffrage, has shaped the modern world.
When companies as we know them today first became common (following the Joint Stock Companies Act of 1856) the formation of a company created a new entity equivalent in many ways to a person – it had its own identity, liabilities and ability to enter into contracts. Although owned by shareholders, the liability of shareholders and directors was limited – a big distinction from earlier partnerships.
Now companies pay a number of taxes directly, including business rates, corporation tax, some VAT, employers national insurance contributions and import duties. Companies however have no representation.
I’m not talking about the giant global companies that avoid tax and spend vast amounts lobbying governments and appointing politicians to their boards. This needs to be fixed – a frightening amount of what they do is legal and both the zeitgeist and common sense say this needs to be changed (Lobby your MP not your Barista at Starbucks). However, the debate about these companies often says they need to be “better citizens“, and isn’t a characteristic of a citizen that they get the vote?
Most companies aren’t Starbucks or Google anyway. According to the ONS (Office of National Statistics) in 2014 the UK had over 5 million SMEs that employed 15.2 million people and had a combined turnover of £1.6 trillion. Why shouldn’t these companies have a say in how they are taxed, how those taxes are spent, and all the other affairs of government? After all, they pay taxes, and “taxation without representation is tyranny”.
With a total of 5.2 million companies in the UK, these companies could wield substantial political clout if each had a vote. That’s only a little bit less than the population of Scotland. Does that sound disproportionate?
Personally I like the idea of companies having a vote. My voting behaviour as a person would probably shift to the left if I wasn’t also considering my business life. My business however would tend to vote more centrist or a little to the right. If I am in any way typical (and who knows if I am) then we might get some interesting and much needed diversity in politics – especially in an era of coalition governments…
There would clearly be a huge number of practicalities to sort out. In a constituency based system where does the vote count (avoidable with proportional representation, but that’s a separate issue)? How do you prevent people registering companies simply to “buy” more votes? Should bigger companies have more than one vote to reflect their scale? Should companies be represented by separate MPs? Who decides how the company votes? How does a company cast its ballot?
I’m not sure giving companies a vote is the right answer, but I do think that it’s time the relationship between companies, the state and the rest of the population moved on from where it is now. Smarter people than me will figure out how to fix it, but I do know that a Google Tax is not a solution, or even a sticking plaster. Will Hutton’s article British capitalism is broken. Here’s how to fix it has some big ideas and having heard him speak recently at the Scotland CANDO assembly I find myself agreeing with him on at least some of them.
Sadly it seems the next Westminster election is once again unlikely to feature any manifesto (from a major party) offering fundamental reforms. There don’t seem to be any “big ideas” in British politics at the moment, and while there may be some “big ideas” in Scotland they are tied up in the Independence debate, which to me is a whole separate issue.