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”
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.
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..
Leon Wolfeson
Direction isn’t the same as being the hand which signs.
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.
Leon Wolfeson
My problem is the precedent you’d set for future use, afaik