Cisco's Chambers: Don't kill the golden goose

"Taxation policy determines where we go in terms of investment. I don't like it, but that's how we are run."

Is Cisco CEO John Chambers presenting the Israeli government with an ultimatum? Chambers, who came to Israel for the Presidential Conference, called a press conference today at which he commented on the global aspect of corporate taxation. "This is what I know," he said, "Most tax policy was set before Microsoft came into existence and the global economy developed. In the US, we pay 34% tax, and it's the only country in the world that has exports and doesn't bring the profits home. This is a broken model, and I say so all the time. Because of this, you see me putting a great deal of money outside the US." (Cisco has $47 billion cash, of which $40 billion is outside the US, S.S.).

"I would do everything that your government is doing in terms of taxation," Chambers continued. "You have to do what you can to make the companies that operate here able to compete. I would be very careful about taxation policy, so as not to kill the 'golden goose' you have here. The government has to balance expenditures and it has the power to raise taxes, but, in my view, the road to balance is via growth, and bringing a greater flow of revenue in.

"Taxation policy here has consequences for the way business behaves. Will your taxation policy affect the number of start-ups and foreign investment here? Certainly. As far as we are concerned, taxation policy determines where we go in terms of investment. I don't like it, but that's how we are run. We told the US government that its taxation policy encourages us to alienate the money outside of the country. That's why I frequently comment on the subject. I want the US government to know the consequences of this policy for employment."

100 jobs

During his visit to Israel, Chambers provided headlines about the company's business. He came to the press conference from a meeting with Prime Minister Benjamin Netanyahu at which he announced the company's intention of allocating $15 million to investment in funds "that support integration of Israeli Arabs, and development of innovative security technologies."

Yesterday, another item was reported about Cisco's business in Israel, by the Ministry of Finance, which announced that Cisco would expand its cyber activity here, and set up a laboratory and consultation center. The company will hire 100 people, to join its 2,000-strong Israeli workforce.

Chambers also talked about Cisco's involvement in Israel Electric Corporation's fiber optic venture, in which Cisco is participating as an equipment supplier and as a provider of finance. "Israel is about to become the first fully digital country in the world. Make no mistake, there will be challenges along the way. This is something that most countries do a little at a time; you are going to do everything at once, and when you do something that others haven't done, you take risks. We are proud to take part in this, and there is an opportunity here both to improve the condition of the country and to bring some of the start-ups that will be involved in it to other places in the world. " Chambers estimated that the project would get underway within eighteen months to three years.

Published by Globes [online], Israel business news - www.globes-online.com - on June 19, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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