At a time when government debt is too high and spending must be cut in order to bring the budget back to a more sustainable path, no one will be keen on a company that does not pay its fair share of tax.
Although this seems to be correct on an instinctive basis, one must question whether investors would want the companies in which they invest to be managed in a way that would not maximise the funds available for shareholders. Should a charity or its fund manager want a company's management to pay more or less tax?
The question might seem odd, but companies such as Apple, Starbucks and Vodafone have all been criticised for paying too little tax. If this criticism led to a loss of support from the public for their products, paying less tax would be a self-defeating process.
However, if a company pays less tax, it retains more of its earnings and can afford to invest more or pay out higher dividends. Both of these would be beneficial to the shareholders.
Indeed, having a more cash-positive balance sheet could allow a company to borrow money more cheaply.
Because earnings per share are an after-tax item, reducing the tax would lead to higher earnings and therefore a higher rating. This suggests that investors should actively seek companies that pay a low rate of tax.
In practice, many investors think that a low rate of tax might be unsustainable and like to look at other measurements than earnings per share, such as cash flow per share. They feel that a low tax payment might indicate the company has made less profit. So investors tend not to seek out companies that specifically pay low tax.
The reason companies can get away with paying so little tax is that many of them now operate on an international basis and bias their profits to tax shelters. This usually fails to reflect the nature of their business and where they are generating their sales, so there is a strong argument for governments to adjust their tax rates. In the short term, the UK government could be accused of wanting companies to pay less tax - it has lowered the level of corporation tax to 23 per cent in a bid to attract companies to this country.
As the tax rate falls, the attraction rises of setting a minimum threshold for tax of, say, 10 per cent. Where companies do not want to pay even this basic rate, they could be encouraged to give a certain amount of money to charity or to support specific projects that would benefit society.
Vodafone, which was criticised in 2011 for paying too little tax, recently sold its stake in Verizon Wireless to Verizon Communications, and has so far avoided a potential capital gains tax bill from HM Revenue & Customs, estimated to be more than £6bn. Were it to be encouraged to give 1 per cent of its shares to charity, society would benefit and consumers might feel happier about it paying no tax on its successful investment gain.
However, the amount of tax firms pay is a question for government, not charity investors. So charities should adjust the way in which they invest only if they feel the company will end up damaging its own reputation and, as a result, its value.
John Hildebrand is an investment manager at Investec Wealth & Investment