This phoney moral war on foreign company tax Ms Hodge was apoplectic at what she could only assume was a snub. You're not serious. It's outrageous," Ms Hodge barked at Andrew Cecil, the director of public policy for Amazon in Europe. We will expect a serious person to appear before us. Amazon is due to send a suitably serious person in the next fortnight. That's enough of your jokey approach, Mr Cecil. The whole debate is overlain with the whiff of morality, the argument that it is somehow unfair that companies do not pay corporation tax to any large extent whatever the domestic employment they may create. In his evidence last week, Matt Brittin, Google vice-president with responsibility for Northern Europe, patiently explained: "We pay all the tax you require us to pay" and added that the company's tax arrangements are not a matter of "personal choice" but of a responsibility to shareholders to keep costs down. Ms Hodge responded: "We're not accusing you of being illegal, we're accusing you of being immoral." The problem is that the wrong people are in the dock. Companies do not set tax rules, elected politicians do. Ms Hodge should have called Gordon Brown, the former Chancellor, and asked why, when he wasn't busy creating the conditions for "no more boom and bust," he could not find a little time to sort out the corporation tax issue. And what of Ed Balls, the present shadow chancellor and once right-hand man (though he doesn't like to boast about it) to the member for Dunfermline East? The man comfortable with the phrase "endogenous growth theory" could surely have sorted out a few new tax rules. Tax is not a matter of what is fair, it is a matter of companies abiding by the rules laid down by the democratically elected government. As one chairman of an American company said to me, he was pretty sure he would be breaking his fiduciary duties if he decided - because he was nice and went to Church - to pay more tax than the company needed to. Another senior figure admitted that his company paid "a bit of tax" in the UK just to keep the moralising attack dogs at bay. What is to be done? First, there needs to be a little clarity and honesty. What exactly is the message the Government wants to give to foreign companies operating here? Through one side of his mouth, George Osborne is suggesting he really feels corporation tax levels are a problem, presumably in the hope that the public will infer that he believes foreign companies based here should pay more. Through the other side, he trumpets the Government's year-on-year plan to cut corporation tax to ever lower levels to make Britain the most tax competitive country in Europe and the G8. Well, which is it George? Tax equalisation or tax competition? Across the EU, there is downward pressure on corporation tax. As a note from Baker Tilly, the chartered accountants, reveals, EU corporation tax has been trending down as a matter of policy for years and now stands at 23.5pc. The UK has deliberately placed itself below the EU average. In Cyprus companies pay a lot less - around 10pc - whereas in Italy the effective rate is more like 40pc. A "level playing field" may sound superficially attractive until you delve into the detail. Level with whom? Ireland (12.5pc)? Bulgaria (10pc)? Or Italy? In the present era of austerity, governments are hunting high and low for ways to increase the tax take. Out of such a febrile atmosphere will almost certainly come bad law (Dangerous Dogs Act anyone?) where highly evolved rules are thrown out in favour of something more palatable to those gathering around the guillotines. "Any change should not be a hastily formulated and ill-considered reaction to often poorly researched and populist criticism," George Bull of Baker Tilly said last week. Coalition advisers have started talking about 'the wisdom of the crowd. There is also such a thing as 'the madness of the mob."" Hang on, here's a good tax idea This weekend The Sunday Telegraph reveals the latest thoughts of the 2020 Tax Commission, a smart union of The Taxpayers" Alliance and the Institute of Directors charged with looking at how to efficiently reduce the tax burden and make life simpler for both businesses and individuals. The Commission has been thinking hard about the Chancellor's idea to merge National Insurance and Income Tax and has come to the conclusion, rightly, that the present anachronistic system should be overhauled. National Insurance is a deliberately opaque process where both the employee and the employer pays a contribution. It is also not an "insurance" payment as it is not linked to any type of risk profile but rather is paid on earnings like any other tax. As the Commission says, bringing the two taxes together in a single income tax would make it clear how much individuals pay in total and would reduce the administrative burden on businesses. For once, this would be a tax change in the correct direction. You can contact Kamal Ahmed about his column at kahmed@telegraph.co.uk and follow him during the week on Twitter at kamalahmed1