Luxury car-maker Ferrari, who is well-known throughout the world for selling expensive sports cars, is threatening to move its operations from Italy to the United Kingdom, a country with a lower corporate tax rate.
But will Ferrari pack up and move to London? That’s up for debate. American multinational company Burger King announced it was buying Tim Horton’s in September 2014, claiming they were planning to relocate their corporate head office to Canada and take advantage of our country’s lower tax rates. But not one box has been packed and shipped from their Miami office to the north.
That’s probably because they don’t have to. All they need to do is set up a mailing address and they are as good as Canadian! And I don’t know how many employees at Burger King’s head office really wants to give up sunny skies, sandy beaches and palm trees for unforgiving Canadian winters.
Will Ferrari move to the UK? The company might be trying to negotiate a lower tax rate in Italy. By threatening to move, the government might try to cut a deal with the automaker. But that isn’t something the Italian economy can afford. The country’s economy has spent nearly 3 years in recession. Unemployment is at an all-time high. And Italy needs all the money it can collect to avoid a default.
Shouldn’t companies like Ferrari believe they have a social obligation to society? Of course they should. There is no evidence Ferrari is struggling to make ends meet. But many times they simply want to avoid any kind of social responsibility to the community they serve in order to build greater wealth.
These international tax loopholes hinder a county’s ability to collect revenues from large multinational companies to pay for valuable government services that people and even companies rely on. Corporate tax revenue doesn’t just pay for healthcare and social services. It also supports the automotive industry. It pays for roads, bridges and infrastructure so people can drive their nice Ferrari’s around town.
I hope Ferrari decides to stay in Italy. Even the Italian flag is on the car’s logo. The government has provided a tremendous amount of financial support for the company over its 85 year history. It would be nice if Ferrari returned the favour.