Miliband’s measures for tax avoidance beat Cameron’s empty promises

Miliband’s announcements have placed Britain firmly in the lead within EU debates about how to tackle tax avoidance

 

Normally, tax avoidance rarely hits the front page. Two sets of leaks, from Luxembourg and Switzerland, have changed all that. Just this week we learned that, of the thousand people aided by HSBC to evade taxes in Switzerland, a piffling one person has been prosecuted.

The UK’s tax system seems to have as many holes in it as Swiss cheese. David Cameron and George Osborne have totally failed to tackle tax avoidance in the last five years.

Investigative journalists, including from the Guardian, stuck their necks out to publish material indicating the mindboggling extent of aggressive tax planning. In his announcement that he would implement a ‘tax dodging bill’, Ed Miliband has also stuck his neck out.

But the many small and medium-sized business owners I’ve talked to about tax dodging are fed up with being undercut by multinationals who can engage in ‘transfer pricing’ – basically, shifting profits between countries to dodge tax.

We’ve had many warm but empty promises on tax dodging from Cameron. Under his leadership, the UK’s tax ‘gap’ – what should be paid in tax, versus what actually is – has risen by £3 billion. So it’s refreshing to hear Ed Miliband commit to well thought through measures which experts have been demanding for decades.

Miliband’s announcements have also placed Britain firmly in the lead within debates in Europe on how to tackle tax avoidance. Ever since ‘Lux Leaks’ broke, the pressure has been on European politicians to show real action is being taken – not least on Jean-Claude Juncker, President of the European Commission and a former leader of Luxembourg during some of the worst excesses of creative tax avoidance schemes.

This pressure is now resulting in tangible action. Registers of beneficial ownership for companies have now been agreed at EU level, after years of campaigning by NGOs and the European centre left. And Pierre Moscovici, the European Commissioner for Economic and Financial Affairs, Taxation and Customs, has declared his support for country-by-country reporting of profits by multinationals – a measure also promoted by Miliband – which would make it much harder to shift profits around to avoid tax.

Finance ministers from Italy, France and Germany have all also broken ranks to argue for strong action against tax dodging, including automatic transfer of information between tax authorities on so-called ‘tax rulings’ – special agreements between individual companies and tax authorities.

But that is not enough; more is needed to stop tax dodgers feasting on Swiss fondue, not to mention Caymans caviar. I’m one of two MEPs leading the Parliament’s legislative response to Lux Leaks, and am determined we use this chance to stop the race to the bottom on tax. We need an EU-wide definition of tax havens, and must consider measures like blacklisting tax evaders and the advisers who help them do it.

Despite countries agreeing on paper that they want action taken, the need for consensus amongst member countries within the EU on tax issues has consistently been blocked, as parochial interests have intervened. Acting alongside France and Italy, Britain could make real progress on tax justice in Europe – but only according to Miliband’s progressive agenda. Cameronian window-dressing will get us nowhere.

Anneliese Dodds MEP is a member of the European Parliament economic and monetary affairs committee (ECON), and is the Socialists & Democrats Group co-rapporteur of the parliament’s legislative initiative report on tax avoidance

17 Responses to “Miliband’s measures for tax avoidance beat Cameron’s empty promises”

  1. Leon Wolfeson

    And if this had been said back at, oh, conference rather than headlines of freezing benefits and refusing to borrow for social housing, Labour might have even persuaded me it was a genuine policy.

  2. blarg1987

    Unfortunately all political parties are complacent on such issue.

    However the elephant in the room is not dealing with HMRC and it’s deals with major companies and senior managers becoming non executive directors. They should go through all previous tax deals and go back to these companies.If the companies complain about unfairness etc the government just has to say sue the corrupt person who allowed the deal to go through in the first place.

  3. Leon Wolfeson

    Suing HMRC officials for following government direction is a bad idea, as is retrospective law.

  4. hillpark100 .

    The problem with this debate is that it is now all about ‘political grandstanding’ in reality the current tax system does not work in an increasing global environment (Gordon Brown tried to fix it and ended up making it 10 times worse) I would be interested in what Mr Milliband’s plans actually are? This is a situation where the law of unitended consequences could really hurt the UK economy.

  5. blarg1987

    I think we are getting our wires crossed, you are referring to staff who on order of ministers etc let companies off on tax, that I agree with.

    I am referring to those individuals who over ruled HMRC advice and let companies off with light tax bills only to end up working for those same companies in non executive positions an example would be looking into the deals that the former head of HMRC did as an example.

  6. Leon Wolfeson

    The thing is, the “individuals who over ruled HMRC advice” basically did so at government direction. It’s not a good road to be going down.

  7. blarg1987

    Did they though? One individual in question over ruled HMRC advice after going for a meal with the company in question without ministerial input and is now working for them.

    If I did not make myself clear I am referring to those individuals who did so off their own back. And before you say ministers would sign off all deals, if that was truly the case at the committee meetings then the minister would have been summoned..

  8. Leon Wolfeson

    Direction isn’t the same as being the hand which signs.

  9. blarg1987

    They are related, in that the person if questioned would say in front of committee government direction meant they did that deal as a consequence and here is all the evidence then the committee would still question the minister as to explain why they directed that individual in that way.

  10. Leon Wolfeson

    My problem is the precedent you’d set for future use, afaik

  11. blarg1987

    The only precedent would be those who use their position to gain favour in other industries would be prosecuted for abusing their power.

  12. Leon Wolfeson

    No, you’ve set a precedent that civil servants awarding contracts can be prosecuted, even when following ministerial direction.

  13. blarg1987

    Can you show me where I have in my posts? As far as I can see I have done no such thing and only said those who make decisions for personnel gain should be prosecuted not for following senior managers directions or decisions.

  14. Leon Wolfeson

    You can’t separate things with that fine a grain! It never works, and frequently they’ll be one and the same, too.

  15. blarg1987

    I think we will have to agree to disagree on this as I can’t see how prosecuting people because they take a corporate bribe in the form of a position in a company is the same as a person being told to follow policy.

  16. Leon Wolfeson

    There is existing law against bribery. You’re proposing something further.

    Moreover, again, you’re creating the precedent that civil servants can be liable for choosing a company to contract out to – if you like it or not. The result would be for the “top point” winner to be selected, even when it’s otherwise very inappropriate!

  17. blarg1987

    Then we need the existing laws to be enforced, I have not seen one prosecution of MP’s or civil servants yet for giving companies deals or contracts only to end up being on the same companies board.

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