Tax haven black list for corporate leeches

Jayne Bryant asks how a gigantic tax evasion rip-off can be clawed back by cooperation tax across the EU

One trillion euros are lost each year to tax avoidance in member countries of the EU. When families and businesses are tightening their belts, paying their correct taxes, huge corporate companies are finding slick ways to avoid paying their fair share.

Multinational corporations such as Google, Amazon and Starbucks don’t even try to hide their greed. Hearing the chief executives of these companies teasing us with their creative avarice is unpalatable. The actions of these corporations, while not illegal or underhand, are immoral. As Ed Miliband said, “If everyone approached their tax affairs as some of these companies have approached theirs we wouldn’t have a health service, we wouldn’t have an education system”.

When Matt Brittin of Google said that his company did not have a sales presence in the UK the truth was quickly outed. Brittin was told by Margaret Hodge, chair of Parliament’s Public Accounts Committee, that Google’s behaviour was  “devious, calculated and, in my view, unethical”.

Companies can avoid tax easily by burying their businesses on Caribbean islands or in European principalities. In four years, Amazon has paid just £10m tax on £12billion of UK sales, since it was really “in” Luxembourg.

It is mainly up to member states to step up the fight against tax avoidance and fraud. But the EU is an essential bargaining power. This is another prime reason for consensual action across Europe. In a resolution in the European Parliament last week, member states agreed a clear EU-wide definition of a “tax haven” and planed a joint blacklist of these jurisdictions. This is a leap forward. Harmonising tax bases, enforcing measures to block tax havens, and reducing VAT fraud is the path to fair company taxes.

The UK, through the Commonwealth, is responsible for one in five of the world’s revenue boltholes. They are the leeches, sucking resources from the UK and poor countries. Gordon Brown began the global crackdown on tax havens in 2009.  Emphasis was put on helping deprived countries deal with the losses through tax dodging that cost them three times as much as they receive annually in aid. But momentum was lost and tax cheating died away as a big UK issue. Now it’s back.

Recent research from Oxfam found that lost tax revenue from money stashed offshore costs governments more than £99 billion a year – enough to eliminate extreme poverty across the globe twice over.

One way money can be clawed back is to implement  redistribution through a financial transaction tax – the ‘Robin Hood Tax’. It aims to raise public funds and discourage speculative trading by harvesting hundreds of billions of pounds every year globally. Experts have calculated that even a tiny tax on the financial sector can generate £20 billion annually in the UK alone. It could give a vital boost to the health service, our schools, and the fight against child poverty and climate change.

The tax would help rebalance our economy towards less volatile sectors such as manufacturing rather than on those obsessed with what is going on in the City’s square mile. Peter Hain MP said the Robin Hood Tax “could be one of the most popular taxes this country has ever seen”.

Eleven countries in Europe including Germany and France will adopt this tax.  However, Cameron and Osborne decided that the interests of a certain square mile in the City were paramount.

Europe is absolutely right to forge ahead with measures to curb tax avoidance. Co-operation between countries in Europe and beyond is essential.

The European Parliament is taking action. But Cameron’s tough talk on tax avoidance was not matched by Conservative MEPs. They refused to back proposals to bring greater transparency to multinationals’ tax affairs. Labour MEPs have promised to name and shame those sheltering tax evaders by creating a EU wide black list of tax havens. Companies avoiding tax should be denied public contracts. Tax authorities should be resourced to tackle tax dodgers, outlaw aggressive company tax fiddles and impose transparency. Tax fairness, avoidance and fraud will dominate the future European agenda.

The outcome of Cameron and Osborne’s lame reform policies are minimal – demonstrating weakness where strength and urgency are needed. Throughout  the EU and especially in Wales we must end tax cheating that cuts vital revenues.

Labour MP Michael Meacher is pushing in Parliament for guarantees that companies or individuals do not have tax avoidance as their primary purpose. It is incredible that such an elementary moral principle needs to be put into law. Such is the protozoan moral basis of some of our Big Banks and Big Businesses.

Chancellor George Osborne dreams up ever more draconian ways to punish the poor for the selfish and immoral actions of the rich. Meanwhile, Ed Miliband outlined his “fairness” alternative in his Five Labour Priorities. The future could be bright if our continent reclaims its inheritance of the best of progressive, fair, social Europe.


(EDITORS’S NOTE: the article has been changed at the request of the author to make clear references to tax avoidance not evasion)

Jayne Bryant is a Labour MEP candidate for Wales.

8 thoughts on “Tax haven black list for corporate leeches

  1. “When families and businesses are tightening their belts, paying their correct taxes, huge corporate companies are finding slick ways to avoid paying their fair share.”
    They obviously are paying their “correct” taxes, otherwise, presumably, they would be prosecuted. How did you skip from “correct” to “fair share”?

    “Labour MP Michael Meacher is pushing in Parliament for guarantees that companies or individuals do not have tax avoidance as their primary purpose.”
    Companies’ primary purpose is to increase profits within the framework of the law. Labour should commit to changing the law, not bleat about “morality”.

  2. Many corporates and a fair number of private individuals would probably argue that it is the political class – with their insatiable demands for taxation to cover incompetence, inefficiencies, empire building, fraud, debt charges, wars, and various other vanity projects – who are the leeches!

    The EU budget is currently around £108 billion – but what is the EU other than an unnecessary layer of undemocratic governance? I can’t really blame anybody for not wanting to contribute to its very existence, nor to fund those who profit from it…

    I don’t use this as justification for tax avoidance – corporates should account for the profits and losses on their turnover on a state-by-state basis and they should contribute to the infrastructures they make use of in the course of their business. But if governments provided better value for money maybe there would be less incentive for corporates and wealthy individuals to bend the rules?

  3. Obviously written before the 11 countries signed up to a Financial Transaction Tax began to row back from a piece of gesture politics which probably will not work in practice because of the global nature of capitalism.

  4. It appears that over the years HMRC have actually been advising companies to “reduce” their taxes. They don’t do that for me, nor you I suspect.

    On top of that when Sarkosy was in power he tried to get Tony Blair, Gordon Brown and then David Cameron to join with him to deal with the evasion that companies use by selling their produce at cost price to their “office” in a tax haven. Then they charge the full rate to the purchaser in the receiving country. None of the UK PMs were interested. Why I ask?

    David Cameron now seems to have changed his tune. But I’m not sure it’s this specific fiddle that he’s interested in. He’s certainly not interested in the “wash trades” and other illegal trades which fiddle the figures of Investment Banks and their less scrupulous traders. This is primarily what the “Robin Hood Tax” is designed to discourage. Which is primarily why he’s against it.

    Wealthy people have been allowed to get away with tax murder for yonks with the connivance of their wealthy political friends, their Accountants and the HMRC. Meanwhile those of us on PAYE, or something similar, pay the full whack

    The Finance Sector in the City of London, according to Finance commentators on Sky News, “is the most inefficient industrial sector in the UK”. Nobody argued with the statement. So why is it being “protected” from being more efficient by Westminster and Whitehall? Could it be that the City of London is to the Conservatives what the Unions are to Labour?

  5. John R. Walker

    “… but what is the EU other than an unnecessary layer of undemocratic governance?”

    Rubbish! We elect MEPs don’t we? The member states form the Council of Ministers don’t they?

    These are the decision-making parts of the EU. The Commission works for them.

    If the EU isn’t democratic then Westminster isn’t either and how much are we forced to pay for that without so much as a referendum – ever?

  6. Gwyn

    The European Parliament is not like the UK Parliament in that it cannot propose legislation even though its members are elected. It is there only to accept, amend, or reject proposals from the Commission – and rarely from the Council which has a limited power to propose legislation. The Commission does not even have to accept the decision of the EP. Hardly democratic! The EP does, however, have a nuclear option in some circumstances to dismiss the Commission which was exercised once. In all material respects the EP is there to give people who don’t understand the system the impression of democracy.

    In the Council the reality of Qualified Majority Voting (QMV) on many issues means that any dissenting member state’s rights and best interests can be ridden over roughshod by the vested interests of other states. Hardly democratic!

    Is it democratic that the handful of member states which fund the EU can be out-voted by those which receive their largesse?

    The Commission works for the EU – every Commissioner takes an oath which puts the EU first and their country of origin nowhere. This oath lasts for life not just for the duration of the Commission.

    Maybe you need to read Booker & North’s book – the Great Deception… Maybe a lot of people who write and read on this forum need to read it come to think of it…

    Parliamentary democracy is a sham – we elect our representatives and leave them to do as they like. Once we’ve elected them they invariably fall into line under their respective Party Whips – there are too few free votes. They do not work for us… That’s how it is – like it or lump it. The Welsh Assembly is no different but I note you chose to denigrate the UK Parliament instead. It’s an imperfect system but slightly better than a totalitarian state. Have you got a better idea? Thought not…

    At least most of our taxation is still controlled by the national governments – clearly the EU is keen to change this as it grabs for direct income streams of its own and for ever increasing integration of financial systems in line with its standard MO as a slow-motion coup d’etat.

    And Luxembourg is not only the EU’s favourite back-office but also home to some of the world’s most aggressive tax avoiding corporates so maybe the EU should start by practicing what it preaches by cleaning up its own back-yard. Sadly Luxembourg also has one of the world’s highest banking sectors relative to its GDP – somewhere between 22 and 28 times GDP compared with Cyprus which was around 7 times – so it is a massive bubble waiting to burst right at the very heart of the EU so we can be fairly sure attention is going to be diverted away from this inconvenient truth towards other tax havens like those operating in Commonwealth countries.

    Meanwhile Latvia will be told tomorrow that it can become EuroZone victim number 18! When will this insanity end?

  7. But Latvia wants in! When will superannuated nostalgics like John Walker face the fact that the EU is not a conspiracy against English democracy but a free association of states who come together to do things that none of them can do one their own?

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