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

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Why Prince Charles and Princess Anne are both wrong on GM foods

The latest tiff between toffs gives plenty of food for thought.

I don’t have siblings, so I was weirdly curious as a kid about friends who did, especially when they argued (which was often). One thing I noticed was the importance of superlatives: of being the best child, the most right, and the first to have been wronged. And it turns out things are no different for the Royals.

You might think selective breeding would be a subject on which Prince Charles and Princess Anne would share common ground, but when it comes to genetically modified crops they have very different opinions.

According to Princess Anne, the UK should ditch its concerns about GM and give the technology the green light. In an interview to be broadcast on Radio 4’s Farming Today, she said would be keen to raise both modified crops and livestock on her own land.

“Most of us would argue we have been genetically modifying food since man started to be agrarian,” she said (rallying the old first-is-best argument to her cause). She also argued that the practice can help reduce the price of our food and improve the lives of animals - and “suspects” that there are not many downsides.

Unfortunately for Princess Anne, her Royal “us” does not include her brother Charles, who thinks that GM is The Worst.

In 2008, he warned that genetically engineered food “will be guaranteed to cause the biggest disaster environmentally of all time.”  Supporting such a path would risk handing control of our food-chain to giant corporations, he warned -  leading to “absolute disaster” and “unmentionable awfulness” and “the absolute destruction of everything”.

Normally such a spat could be written off as a toff-tiff. But with Brexit looming, a change to our present ban on growing GM crops commercially looks ever more likely.

In this light, the need to swap rhetoric for reason is urgent. And the most useful anti-GM argument might instead be that offered by the United Nations’ cold, hard data on crop yields.

Analysis by the New York Times shows that, in comparison to Europe, the United States and Canada have “gained no discernible advantages” from their use of GM (in terms of food per acre). Not only this, but herbicide use in the US has increased rather than fallen.

In sum: let's swap superlatives and speculation for sense.

India Bourke is an environment writer and editorial assistant at the New Statesman.