Avoiding avoidance - Government tax plans won't tackle Amazon, Google & Starbucks
03 December 2012
Tax avoidance has today hit the headlines as an influential committee of MPs releases its damning report into tax avoidance by multinational companies including Amazon, Google and Starbucks. Despite this stinging criticism from MPs, War on Want’s new report Avoiding Avoidance shows that that the centrepiece of the government’s plans to tackle tax abuse will have no impact on the tax avoided by Amazon, Google and Starbucks.
Cameron and Osborne have repeatedly spoken out on the immorality of tax avoidance. In his budget speech in March, Osborne branded tax avoidance “morally repugnant” and Cameron has said that a tougher approach is needed for big companies with “fancy corporate lawyers and the rest of it”. Despite their rhetoric, the government is set to introduce a tax ‘anti-abuse rule’ which will only target cases at the very fringe of what is legal, doing nothing to stop tax avoidance by corporate giants like Starbucks.
Murray Worthy, War on Want’s tax justice campaigner, said:
“The government’s hypocrisy on tackling tax avoidance is breathtaking. Osborne and Cameron are happy to talk tough on tax, but in reality their plans will only go after the small fry on the fringes whilst giving a green light to multinationals like Amazon, Google and Starbucks to continue avoiding billions in tax.
“This government’s tax plan is totally out of step with public opinion. While the public, MPs and businesses are sending a clear message that tax dodgers must be stopped from exploiting the system, the government would rather cosy up to its multinational friends. If tax avoidance is morally wrong, then failing to clamp down on tax avoidance is morally indefensible.”
The report Avoiding Avoidance also shows that the government’s proposals, expected to be a highlight of the Chancellor’s autumn statement on Wednesday, would have had little or no impact on recent tax avoidance scandals involving the Student Loans Company, the BBC, high ranking civil servants, Jimmy Carr or Take That. In developing the proposals, the government rejected the opportunity to stand up to tax avoiding rich individuals and multinational companies and introduce a General Anti-Avoidance Principle that our analysis shows could recover up to £5.5 billion a year.
The Public Accounts Committee has also called for strong action, calling on the government to introduce “new measures to secure a fair contribution to the tax base from multinational corporations” in its scathing report, also published today. The report, published by MPs who last month grilled executives from Amazon, Google and Starbucks over their 'immoral' tax arrangements, was hugely critical of the government’s approach. The MPs said that they believed it was widespread practice for international companies to exploit tax law to avoid paying their fair share, a situation the chair of the committee described as “outrageous and an insult to British businesses and individuals”. The committee went on to accuse HMRC of “a pervasive acceptance of the status quo” of tax avoidance, and that the government is “too passive” in its approach.
The government must now scrap its proposed ‘anti-abuse rule’ and instead introduce a General Anti-Avoidance Principle to give HMRC a powerful tool to tackle tax avoidance, and make the UK’s tax regime one that is based on fairness, rather than its attractiveness to multinational companies.