As leaders of the Group of Eight leading economies gather in Northern Ireland, David Cameron’s welcome initiative to reform global corporate tax rules may still fall short of definitive success. All the more reason for governments to push on after the summit, together and at home.
The revelations in recent months that many high-profile global companies pay vanishingly little corporate tax have laid bare serious shortcomings in the international tax system. That has helped create a groundswell of public demands for reform, which politicians, struggling to make ends meet in public-sector budgets, are readier than ever to meet. This is good, and Mr Cameron deserves praise for raising the topic to the top of the global political agenda.
The task remains formidable. There is a free-rider problem: every state would like everybody else to clamp down on tax avoidance without having to touch its own companies. That makes the G8 an ideal forum to create a commitment to act together. But Mr Cameron remains hampered by perceptions of hypocrisy: UK dependencies and the City of London advisers are important players in the tax minimisation game. Saturday’s deal with the dependencies is a mark of progress.