Labour's decision to call for an investigation into the Google deal makes sense both ethically and electorally
The government’s new tax deal with Google allowed the corporation to pay just 3 per cent tax on their UK profits. This amounted to £130 million on the £6 billion they earned in the UK between 2005 and 2015. Moreover, this deal was struck after 25 meetings with 17 different ministers.
As Jeremy Corbyn put it on last week’s PMQs:
“Why is there one rule for big, multinational companies and another for ordinary, small businesses and self-employed workers?”
On his concern about this at least, Corbyn has shown himself to be in tune with the public.
In his recent work for the Legatum Institute, Tim Montgomerie found that examples of businesses buying and cheating their way to success – like Google and some buying property in London – has led to an almost universal belief that all big business do.
This view – that the government has done worse than nothing to try and change this – is immensely damaging. The Legatum Institute’s Prosperity Index shows that in the UK far more people now believe businesses are corrupt.
In 2011, 33 per cent believed that businesses were corrupt; then in 2013 this jumped to 51 per cent. Whilst this has since declined, almost half of British people (42 per cent) now believe businesses in the UK are corrupt.
Rather than congratulating himself on a tax deal well done, the chancellor should take note. The Index shows that countries in which a high number of people perceive business and government to be corrupt are more likely to disapprove of government policy in other areas – for example, in their attempts to address poverty.
In some more extreme cases this can lead to people bypassing the system – as visible in Greece or Italy. More generally, countries which perceive a high level corruption also have a lower GDP per capita and a lower level of prosperity overall.
Cameron has addressed some of these issues; for example he spoke about rooting out ‘dirty money’ last year in Singapore and suggested that the world should ‘require transparency from foreign companies in [their] country’.
Similarly, business minister Sajid Javid said that if you are ‘a company not paying your fair share of tax be warned: we will come after you’.
Yet, to some, Cameron’s speeches are starting to seem shallow. London mayor Boris Johnson described the deal with Google as ‘derisory’, while others are branding it a ‘sweetheart deal‘ which makes all this rhetoric against ‘dirty money’ look hypocritical.
Similarly, Rachel Davies from Amnesty International notes that Cameron must ‘put his rhetoric into action’. The increases in the perception of corruption also indicate that the electorate may agree.
In attacking tax avoidance itself, and those in government who condemn but do not act, Corbyn is not the minority view – though Tories may like to think he is.
Therefore, the Labour Party is right – electorally and ethically – to call on the National Audit Office to investigate the Google agreement. Corbyn speaks the mind of many when he stands up and says ‘this is not right, the system has to change’.
War on Want’s justice campaigner Murray Worthy claims:
“As the public have got to understand better what corporate tax avoidance is, there is a clear sense of outrage that is going well beyond a small group of protesters – it’s something that the public feels is really not right”.
More recently, in a Telegraph poll, 91 per cent agreed that ‘companies like Google [should] pay more tax in Britain’.
Ordinary people need to believe the system works for them – or at least not against them – for its continuation. This is what Corbyn has always sought to do. While the Tories tear themselves apart over Europe, this could well be what will win him the election.
Abigail Watson is a research intern at the Legatum Institute
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