Why are the government making it easier for UK multinationals to dodge their tax bills?

Good Society

The last Budget introduced a vast watering down of anti-tax haven abuse rules

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Chris Jordan is a Tax Justice campaigner for Action Aid

“We will also target tax evasion and off-shore tax havens… Everyone must pay their share.”

tax-havens– George Osborne, Conservative Party Conference, 2009

New research published by the Tax Justice Network estimates that the staggering amount of wealth now held in tax havens is between £13-20 trillion pounds.

Tax havens don’t just undermine the revenues of countries like the UK, where ordinary people are forced to pick up the tab of tax dodged by multinational companies and the super-rich.

The OECD estimates that developing countries lose three times more to tax havens than they receive in aid each year.

The massive use of tax havens is a corrosive force, eating away at the provision of decent public services right around the world.  The government rhetoric often echoes public outcry, but are they really delivering?

Last year, ActionAid showed that 98 of the FTSE 100 were using tax havens, where they locate 38% of all their overseas subsidiaries.  82 of the FTSE 100 also operate in the developing world.

The massive use of tax havens is hard-wired into the business models of many multinational companies.

As we showed in the case of Grolsch and Peroni owner, SABMiller, it’s relatively straight forward for multinationals to sell their products in one country, but transfer all the profits into a tax haven of their choice.  SABMiller shifts an estimated £100 million in profits out of Africa and into tax havens each year.

It’s easy for these massive numbers to leave you cold – but this has a very real impact on ordinary people.  An extra 250,000 African children could go to school if this one company stopped avoiding its tax bills.

It results in the crazy situation where market traders are effectively paying more in corporation tax, than the giant multinational next door, which manages to clock up profits in excess of £2 billion a year.

See also:

• Global super-rich hoarding “up to £20tn” as HMRC get set to ‘name and shame’ tax dodgers 23 Jul 2012

• As tax avoidance fills the headlines, 10,000 jobs to be cut at HMRC 25 Jun 2012

• So, Mr Cameron, are Tory boys Philip Green and Gary Barlow “morally wrong” as well? 21 Jun 2012

• Osborne, Barclays, the Cayman Islands and tax avoidance 17 Apr 2012

Given the importance of extracting maximum value for money from the British aid budget, the government should be eager to take action, enabling poor countries to keep hold of their own tax revenues and break free from a dependency on aid.

And yet they’re actually making it even easier for UK multinationals to use tax havens to dodge their bills.  The last Budget introduced a vast watering down of anti-tax haven abuse rules, giving UK multinationals the green light to siphon more of their profits out of the developing world and into tax havens.

Rather than announcing yet another ‘crackdown on tax avoidance’, designed to fiddle round the edges, our politicians need to grasp the nettle on tax havens. This will require comprehensive, international action to fully resolve, but there’s also a huge amount we could be doing from the UK to make it much harder for wealth to be leached offshore.

This wouldn’t just help ordinary people in the UK. The whole world stands to benefit.

 

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18 Responses to “Why are the government making it easier for UK multinationals to dodge their tax bills?”

  1. leftlinks

    Left Foot Forward – Why are the government making it easier for UK multinationals to dodge their… http://t.co/WtNA5Ucw

  2. NE36 RETWEETER ONLY

    Why are the government making it easier for UK multinationals to dodge their tax @ActionAid's @ChrisJords reports: http://t.co/m1JLyGoW

  3. Anonymous

    Taxing companies is a nonsense. Companies don’t pay tax; corporation tax is either paid by shareholders receiving lower dividends, or by employees receiving lower wages.

    The proper level for corporation tax is zero.

    http://blogs.spectator.co.uk/coffeehouse/2012/02/which-tax-cuts-would-be-best-for-the-economy/

  4. 45 Apples

    Why are the government making it easier for UK multinationals to dodge their tax @ActionAid's @ChrisJords reports: http://t.co/m1JLyGoW

  5. HEATHER WAKEFIELD

    Why are the government making it easier for UK multinationals to dodge their tax @ActionAid's @ChrisJords reports: http://t.co/m1JLyGoW

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