212 Years Later, British Protest a Colony’s Tax

Claiming that they are being victimized by an unfair system of taxation, the British concluded two days of lobbying here Tuesday aimed at overturning California’s unitary tax.

Retaliation in the form of a punitive tax policy directed against California-based corporations was one of the issues that surfaced, though discreetly, in talks with top state officials.

“Somebody jocularly said the other day, ‘You do remember the Boston Tea Party. . . .’ That’s what it was all about,” said Sir Terence Beckett, who headed the lobbying effort of the Confederation of British Industry, referring to the American Colonies’ rebellion against English taxation in 1773.

Tax Computations at Issue

British businessmen claim that California’s method of basing a multinational firm’s tax liability on a combination of worldwide income and assets is unfair. They believe that their state bank and corporate tax liability should be based solely on business done within California.

The British group met with Gov. George Deukmejian, who backed a unitary repeal bill last year, and Assembly Speaker Willie Brown (D-San Francisco). Other top state officials were treated to a luncheon and dinner during the two-day lobbying effort.

The Speaker said after his meeting Tuesday that he is optimistic that some kind of unitary repeal bill will be passed this year.

He said Deukmejian proposed on Monday that the governor, Brown and Senate President Pro Tem David A. Roberti (D-Los Angeles) appoint a task force to study various unitary repeal proposals and see whether common ground could be reached.

“It appears as if there is an absolute new dedication to the idea that something ought to be done, particularly coming from the governor’s office,” Brown said. “That always means, in my opinion, there is a better chance this time than in previous years.”

Last year, the threat of retaliatory tax action by the British Parliament--as well as strong pressure from Japanese and other foreign lobbying interests--spurred passage of a unitary repeal bill in the Senate. The Assembly let the measure die after intense lobbying by representatives of U.S. corporations that claimed that the tax repeal would give foreign firms an unfair competitive advantage.

Full repeal of the tax, which would please both domestic and foreign-based multinational firms, would amount to a tax break for those corporations of as much as $500 million, according to estimates by state analysts.

Partial Repeal Backed

Deukmejian opposed full repeal but supported a partial removal that would primarily benefit foreign-based firms and cost the state $270 million.

There have been talks between businessmen representing foreign and domestic concerns to see if differences can be ironed out.

Supporters of the unitary tax say that unless a formula based on worldwide income is used, multinational corporations would be able to hide profits produced in California by using accounting methods that would allow them to transfer profits to lower-taxing countries.