Labour’s five steps to tackle tax avoidance

David Cameron has failed to bring forward the changes which are needed to bring transparency. Labour would develop a robust and effective corporation tax system.

In tough times it’s more important than ever that everyone plays their part and pays their fair share of tax.

People and businesses who pay their fair share have been shocked by how little tax some companies seem to pay in Britain. Sometimes there are good reasons why, such as because they are investing in research and development. But all too often companies that pay low taxes in Britain are doing so because they can bend the rules to their advantage.

As Ed Miliband says in his interview with today’s Observer, businesses need to act in a responsible way, but the government sets the rules of the game, so they too have a responsibility to act. David Cameron and George Osborne are not just cutting taxes for millionaires, they are also doing far too little to tackle tax avoidance. And they are pushing through deep cuts to HMRC, which risk being a false economy if they make it even harder to enforce the law. 

At the start of the year, we set down a challenge to the government: that they should end the era of tax secrecy. Some companies have not been paying their fair share of tax, hiding behind complex networks of companies and using tax havens to shift their profits out of tax. We said that the government needed to show leadership, bringing forward measures for the G8 that started with the requirement to publish a simple statement for the tax which companies pay in the UK.

But the government has failed to bring forward the changes which are needed to bring transparency. They have also failed to grasp the need to reform of the Corporate Tax system to close the loopholes which are being used by some companies.

This isn’t good enough. David Cameron must deliver real action at the G8 meeting next month, starting with Labour’s five steps to tackle tax avoidance:

i. Labour supports a form of country-by-country reporting. Agreed internationally it would mean large multinational companies should have to publish the key pieces of information which people need to properly assess the amount of tax they pay. This would cover their revenues, profits and taxes in each country that they operate. As well as meaning that multinational companies pay the right level of tax in the UK, this change would be a boost for developing countries. It would stop profits being stripped out from those countries, increasing their tax revenues and reducing their reliance on aid.

ii. Labour would extend the Disclosure of Tax Avoidance Schemes regime, which Labour introduced, to global transactions. The IF campaign have said this would be an effective way of tackling avoidance in developing countries.

iii. Labour would open up tax havens, with requirements to pass on information about money which is hidden behind front companies or trusts. Labour is backing the IF's campaign's calls for the UK to Launch a Convention on Tax Transparency at the G8 to deliver this.

iv. Labour will continue to challenge the government on the impact of their changes to Controlled Foreign Company Rules on the UK and developing countries. Labour has repeatedly tabled amendments in Parliament to introduce a proper assessment of the rules, which have been rejected by the government.

v. Labour also wants to see fundamental reform of the corporate tax system, because the shifting of profits and use of tax havens to avoid tax is also a symptom of a system which is failing to keep up with global economic developments.

That is why Labour is today publishing an update on its review into the full Corporation Tax system. The aim of Labour’s review is to develop a system which is robust and effective in the modern world; supports investment and job creation; deals effectively with the complexities of international business; is fair to all; and is transparent and can be better understood by the public.

Families and businesses who are paying their fair share want to see tax avoidance properly tackled. If David Cameron fails to deliver, then it will fall to the next Labour government to act.

Ed Balls MP is the shadow chancellor and Catherine McKinnell MP is the shadow exchequer secretary to the Treasury

A visitor passes the Google logo on September 26, 2012 at the official opening party of the Google offices in Berlin, Germany. Photograph: Getty Images.

Ed Balls is the shadow chancellor; Catherine McKinnell is the shadow exchequer secretary to the Treasury

Photo: Getty Images
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The barbecue that shows that Jeremy Corbyn is inevitable

Labour's been a long time dying, says Neal Lawson.

Just sometimes you spot something small and throw away which crystalizes something much bigger and really profound.  It happened recently about the future of the Labour Party, tucked away in the letters page of the Guardian. Steven Pound the MP for Ealing North shared his concerns about the influx of new, presumably Corbyn voting, members. 

The worry was this – only two of the 43 invited new members could be bothered to turn up for a barbecue and social. There it was, in a tiny chicken nugget, all you needed to know about why the Labour Party is a vehicle out of time and place and so ripe for the Corbyn Surge.

Let’s unpick the BBQ, the new members and their seeming reluctance to show up. The first thing that’s screams at anyone vaguely normal is why on earth would you want to go to a BBQ being organized by the Labour Party – when presumably you could go to a real one, with real friends.  There is a give away – it’s a “barbecue and social” – ie a barbecue where you have to be social – where you have to told to be social as if that weren’t a given. Does the Labour Party or anyone have BBQs that are unsocial?  When you decode it, what it means is come and pretend that Labour is ‘with it’ – that being a member is a deep cultural and social experience – when everyone knows it isn’t.

The Labour Party has been a front for years – a front for a technocratic and managerial elite who like to tell everyone what’s good for them and that they must suck up almost as many right wing ideas and polices as the Tories are offering to be in office.  And the party, in desperation and with nothing else on offer, had to go along with it. 

 Of course people get bored of being used and eventually despise knowing that all the party was doing was slowing the rate at which the poor got poorer and the planet burnt – that meetings were meaningless because all the real decisions were being made elsewhere. But the elite still needed the legitimacy of plastic members and their leaflets wouldn’t deliver themselves.  So the foot soldiers had to be given something – so why not a BBQ – that will show Labour has changed – that the party has deep roots and bags of fun. But it’s a scam. A Quorn sausage when only meat will do. Because we all know that really the elite want to read out the minutes and the matters arising from the last BBQ, to be Minister for burgers and the secretary of state for baked potato’s.

But its stopped working. What the Ealing 41 refusniks tell us is that they didn’t previously join Labour because there was no point.  Modestly humanized neo-liberalism, even with a BBQ and social, is not enough. A party still rooted in the culture of the last century – the factory - with no democracy and little connection to the governing norms of the 21st century – that of Facebook – was not attractive to them.

The surge around Jeremy Corbyn changed all that – Labour became interesting for the fist time despite everything about it – its elitism, its awful compromises, its lack of hope or belief in the best in people – only the worst (I’m really resisting German sausage jokes here).

The Pound letter ends with the chilling warning that maybe all these people had joined for was to get Jeremy Corbyn elected in the hope for something better. As if that’s wasn’t good enough – surely they understand there are more BBQs to be organized?   Cant they join and pretend with us  – vote for the status quo and eat their meat?

 But this is the 21st century. People join and swarm, in a none David Cameron unpejorative way.  Bubbles and waves appear so fast.  Foot free but progressively minded, agile and connected is the way millions of people now are. 400,000 of them have joined Labour since the last election. They will swarm  elsewhere quickly if Corbyn doesn’t win or over time if he fails to understand the nature of these new times.  The party of the past is dead regardless of who becomes Labour's leader.  But these wave of hope and action mean we can still change the world – just without making a meal of it. 

Neal Lawson is chair of the pressure group Compass and author of the book All Consuming.