Now that Cameron supports tax justice, what must he do about it?

We can’t just rely on companies cleaning up their tax affairs. We need international, intergovernmental action on tax justice, and the UK should deliver it.

When the Prime Minister stands in front of television cameras and uses your campaign slogan, you know something is happening.

On Tuesday in County Armagh, setting out his priorities for the G8 summit that the UK will host next June, David Cameron put the fight against tax dodging at the top of his international agenda:

“I want to us to achieve tax justice in our world, so that big companies pay their taxes”.

The focus on tax is not entirely a surprise. This year’s mountain of news stories about big companies accused of not paying their fair share is reaching a breaking point. But tax justice is bigger than Starbucks, Amazon or Google. The clever accounting that allows some companies to opt out of the tax system – both in the UK and in some of the poorest countries in the world – is made possible by two features of the international system itself.

This is why Cameron putting tax justice on the international agenda marks a new, important and hopeful shift in the government’s previously underpowered response to the global haemorrhage of public revenues.

First, international tax rules are desperately ill-equipped to meet the challenges of globalised business. They are powerless to stop profits being shifted into tax havens, and out of the countries where real sales are made, real people employed, real goods produced. Last week’s public scrutiny of UK high-street companies has lifted the lid on a bizarre world of goods bought via Swiss subsidiaries, and management services purportedly provided by firms operating from a post-box in the Cayman Islands. This world is dishearteningly familiar to ActionAid researchers, who have traced how multinational companies have used exactly the same strategies (pdf) to shrink their tax bills across Africa and Asia. The tax avoided by just one UK-headed multinational we investigated could, we estimate (pdf), pay to put a quarter of a million children in school in the developing countries where that company operates.

Second, this profit-shifting is possible and profitable thanks to the abusive offshore tax regimes of tax havens (pdf), whose secrecy rules also confound tax inspectors’ attempts to unpick clever accounting tricks, or to locate wealth simply stashed illegally in shell companies and anonymous trusts. Tax havens are not just a drain on scarce public finances. They are an affront to democracy, a deliberate block on legitimate governments’ efforts to raise their own revenues and prevent the corrupt theft of public funds.

On both counts – rebalancing the rules and shutting the tax havens – international agreement and concerted diplomatic muscle is needed. The G8 has come under criticism in recent years. But it remains unusually well-placed to push real international tax reform and prise open the tax havens – 40 per cent (pdf) of which are closely linked to the G8 countries themselves.

How could this be done? First, the G8 could use its weight to make tax havens disclose the wealth and assets that foreign companies and individuals funnel into their jurisdictions. The agreements to do this already exist. Tax havens should sign them, or face serious financial countermeasures. Second, we need to unlock the corporate "black boxes" into which tax haven-held assets are currently stuffed. To tear down the veil of offshore secrecy we need a legally-binding global standard, simply requiring the real, human owners of anonymous companies and trusts – their "beneficial ownership" – to be put on public record. A transparency convention with this standard at its heart, launched and signed by the G8, would be a game-changer not just for tax revenues, but for the fight against corruption, money-laundering and international crime – making us better-off, and keeping us safer.

And finally, Cameron has stressed that the G8’s approach to global injustice cannot be about "rich countries doing things to poor countries". It must be about "us putting our own house in order and helping developing countries to prosper". The spring clean must start at home. Before we get to Lough Erne in June, the UK’s own tax avoidance regime needs to be made fit for purpose: capable of protecting UK revenues, and closing the UK tax loopholes (pdf) that leach money out of developing countries too. The budget next spring is the place to do it.

This is a fight that could transform the UK’s public finances, ensure that scarce UK aid is not undermined by the haemorrhage of developing countries’ revenues, and ultimately allow those countries to fight poverty and hunger with their own resources. In Fermanagh next year we must seize the opportunity with both hands.

Image: ActionAid

Mike Lewis is a tax justice campaigner at ActionAid

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How Theresa May is trying to trap her opponents over Brexit

An amendment calling on MPs to "respect" the referendum outcome is ammunition for the battles to come. 

Theresa May is making a habit of avoiding unnecessary defeats. In the Richmond Park by-election, where the Liberal Democrats triumphed, the Conservatives chose not to stand a candidate. In parliament, they today accepted a Labour motion calling on the government to publish a "plan for leaving the EU" before Article 50 is triggered. The Tories gave way after as many as 40 of their number threatened to vote with the opposition tomorrow. Labour's motion has no legal standing but May has avoided a symbolic defeat.

She has also done so at little cost. Labour's motion is sufficiently vague to allow the government to avoid publishing a full plan (and nothing close to a White Paper). Significantly, the Tories added an amendment stating that "this House will respect the wishes of the United Kingdom as expressed in the referendum on 23 June; and further calls on the Government to invoke Article 50 by 31 March 2017". 

For No.10, this is ammunition for the battles to come. If, as expected, the Supreme Court rules that parliament must vote on whether to trigger Article 50, Labour and others will table amendments to the resulting bill. Among other things, these would call for the government to seek full access to the single market. May, who has pledged to control EU immigration, has so far avoided this pledge. And with good reason. At the Christian Democrat conference in Germany today, Angela Merkel restated what has long been Europe's position: "We will not allow any cherry picking. The four basic freedoms must be safeguarded - freedom of movement for people, goods, services and financial market products. Only then can there be access to the single market."

There is no parliamentary majority for blocking Brexit (MPs will vote for Article 50 if the amendments fall). But there is one for single market membership. Remain supporters insist that the 23 June result imposed no conditions. But May, and most Leavers, assert that free movement must be controlled (as the Out campaign promised). 

At the moment of confrontation, the Conservatives will argue that respecting the result means not binding their hands. When MPs argue otherwise, expect them to point to tomorrow's vote. One senior Labour MP confessed that he would not vote for single market membership if it was framed as "disrespecting Brexit". The question for May is how many will prove more obstructive. 

George Eaton is political editor of the New Statesman.