The debate about tax avoidance has got to move on, and it will move on now that we’ve got a debate on it in the House on 7 January – and not in Westminster Hall, in the Chamber. There has been a huge swell of public anger against the Starbucks, the Googles, the Amazons, etc., who are paying less than 1%, or even less than 0.1%, of their gross profits made on sales in the UK – but nothing happens. It bears a close similarity to the phone-hacking saga: the evidence of hacking was overhelming , the police were sitting on huge quantities of incriminating material, yet nothing happened because of the cosy relationship between Scotland Yard and News International. In the same way nothing happens over tax avoidance because the cosy relationship between the corporate multi-nationals and the Tory party. Of course we are told that the big companies are diligent in complying with the tax laws (though they go to enormouse effort and expense to circumvent them by whatever artificial contrivance they can), and of course we are told that the government is cracking down hard on tax avoidance which they say is ‘morally repugnant’ (though they are actually themselves opening up huge tax loopholes for multinationals in tax havens). The cant is breathtaking.
If the government were genuinely serious about tackling tax avoidance, it is obvious what needs to be done. In order to block transfer pricing which allows multinationals to be taxed in a low tax jurisdiction of their own choice, which costs the British treasury tens of billions every year, the government would require all multinational companies to report on their assets, sales and profits country by country so that they were taxed correctly in every country they operated. It would require all nominee account holders in tax havens to be identified. It would require tax havens, at least those which are UK-controlled Overseas Territories or Crown Dependencies, to provide automatically to the relevant tax authorities in foreign countries details of accounts held by citizens of those countries so that they could be properly taxed, whether corporate of individual citizens. Tax havens which refused to comply would be told that unless they did so, all transactions in future involving those tax havens would be treated as illegal.
In other words, the problem is not that nothing can be done (of course it can) or that everything possible is already being done (of course it isn’t). The real problem is that neither the government nor the corporates have the slightest intention of carrying through an iota of reform because the present situation suits both sides perfectly – the corporates retain their ill-earned profits and the government through ‘light touch’ regulation keeps their corporate donations to win the next election.