"Radical action" needed to end corporate tax avoidance, says North-East MP

A NORTH-EAST MP has called for radical, cross-party action to completely overhaul of the UK’s corporate tax system following revelations high-profile firms like Amazon, Google and Starbucks pay little or nothing to HM Revenue and Customs.

Liberal Democrat MP for Redcar Ian Swales tabled a House of Commons back-benchers debate on the issue, calling for sweeping tax reforms, better enforcement and greater transparency for both companies’ tax declarations, and HMRC’s discussions with companies about tax.

He also called for more uniformity across the European Union, to prevent global corporations from benefitting from more favourable tax systems across the EU.

He said large firms who were avoiding tax should not be allowed to win Government contracts, as it was unfair to the smaller companies who played by the rules and paid their taxes.

Smaller, local firms were losing out because they were being subjected to an unfair playing field, he said, and this had to stop. He told the house: “Our high streets are now subject to global competition in burger restaurants, bookshops and coffee bars.

“Local bookmakers have largely disappeared instead of trying to compete with rivals operating from Gibraltar – on paper.

“Most retailers are not only competing with the unstoppable rise of the internet but also with tax offshore based giants like Amazon and eBay.

“The list of national and local UK businesses that can’t compete will get longer and longer. Comet was the latest to go broke just before Xmas probably costing the UK taxpayer £50m.

“Companies that pile up untaxed revenue in tax havens also have enormous financial muscle to re-invest cheaply or take out any other business they want to. “It was recently estimated that the world’s tax havens are holding £8 trillion in cash.

“That’s the total Gross Domestic Product of the US plus Japan, or enough to buy the entire London Stock Market four times over. This highlights the compounding effect of tax avoidance. These companies benefit from not paying the tax to begin with and can then use that money to compete ever more aggressively.”

He said Government action could have a significant impact on corporate tax avoidance.

“Government action could mean companies quickly change their behaviour. When I suggested such a step to Google at the PAC hearing the signal was quickly picked up with an article in the trade press.

“The Government has enormous power to require those seeking grants or contracts to reveal the tax structure of their UK entities.

“Decision makers could then include bidder’s tax arrangements when choosing. The National Outsourcing Association support such a move. This is surely part of getting best value for UK tax payers in spending their money.

“To those who cry EU bidding rules I say its right to look at both costs and income and who can stop countries making demonstrably the best value choice in the national interest from an open process?

“This is not a party political issue. MPs from all sides of the house want to see action.

“This problem is urgent, huge and growing.

“The more companies and their advisers see what others are doing the more the leakage is becoming a flood. Only a select few will be able to keep their heads above water and it will be the smaller, independent companies who will be overwhelmed.

“We can't rely on pleas for morality or altruism. Companies play by the rules set in this house and the enforcement we put in place to back them up.

“Just last week the Prime Minister said this issue is a top priority. Tinkering won't do. Now is the time for radical action.”

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