Etsy, ethics and hypocrisy: are secretive avoidance methods really ethical?

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There were some raised eyebrows at the recent news that Etsy, the international online craft marketer with an ethical, small enterprise-supporting reputation, had taken the step of changing how its Irish subsidiary is registered, meaning they no longer need to declare basic financial information, and designating the business there as an unlimited liability company – just like Google did not so long ago.

The conclusion drawn by the move is that this will enable the company to move more revenue through their Irish base – indeed, anyone outside of America will now enter a terms of agreement with Etsy Ireland rather than Etsy USA.

It may seem churlish to begrudge a company for trying to reduce its tax bill when it has been nothing but ethical as an organisation. But that’s precisely why people are so put out. Etsy is one of very few public companies that is a certified B corporation – meaning it has passed a rigorous set of standard set to show it benefits community, employee, consumers and the environment. The shady nature of the restructure – the fact that they are no longer obliged to share basic financial information goes against the company’s very vocal dedication to transparency in business. So what gives?

Quoted in their most recently quarterly report, the company states: “Our new corporate structure changed how we use our intellectual property and implemented certain intercompany arrangements… This may result in a reduction in our overall effective tax rate.” Etsy have declined to comment further on their tax planning, but they have categorically denied that they are driving down their contributions via the so called ‘Double Irish’ method, where profits are routed through the Irish subsidiary and then to another Irish unit headquartered in a tax haven.

So there isn’t much to suggest that Etsy are suddenly about to pay drastically less in tax, but it does beg the question: if a company is willing to do something that goes so far against its core tenant of transparency, what else is it happy to do? Can a company really call itself ethical if it seeks to conceal information from the public in such a way?

As we’ve seen with Starbucks and Google, the outrage aimed at companies employing such measures depends on the expectations we have of the company in question. Google was meant to be the friendly giant, Starbucks too always presented itself as amiable and close to its consumers, in spite of its corporate size. There is a sense of despondent resignation to more of the same happening if even the likes of Etsy are taking the plunge.

Tax avoidance is still high on political agendas and the extent to which it should be allowed continues to be a matter of debate. Jeremy Corbyn has recently claimed that a clampdown on avoidance could bring in £20billion annually. George Osborne has been less than complimentary about those who avoid tax and has promised government action in his Budgets. Meanwhile, James Kirkup argues in The Telegraph that although politicians may think it, the general public really don’t care all that much about the issue, in terms of whether it changes their buying habits.

One thing is for sure, when it comes to reapplying for their certified B status again in the future, it might prove more difficult for Etsy. Companies have a simple choice: while consumers might continue to shrug resignedly at the practice of avoidance, they can’t expect to keep their nice guy image at the same time. It seems for most people, hypocrisy is the bigger sin.

Kayleigh Ziolo is a freelance journalist and writer based in Ireland.

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