Tories say one thing and do another on tax avoidance

Cameron's government is undoing Labour's good work, says Seema Malhotra.

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After five days of partial-truths and evasion – following the publication of the Panama Papers and constant media and political scrutiny – David Cameron was been forced to admit that he did benefit from an investment in an offshore trust based in a tax haven. We have also discovered that in 2013 Cameron personally intervened to oppose the beneficiaries of off-shore trusts being named in proposed European Union money laundering rules.

The past five days have shown both the poor judgement and the instinctive slipperiness that Cameron defaults to when he comes under scrutiny about his actions. But more than that, they have exposed once again that both Cameron and Osborne – who has his own questions to answer – have, on the subject of tackling aggressive tax avoidance and tax evasion, as on so many others, said one thing whilst doing another.

The reality is their corporation tax measures have raised much less than those introduced by the last Labour government. In fact, over the next four years Labour’s corporate tax avoidance measures will raise ten times as much as those introduced by George Osborne as Chancellor.

And after the Global Financial Crisis in 2008 the Labour government was leading international efforts in clamping down on tax havens. Under David Cameron and George Osborne, Britain’s leading role has come to a halt. 

Even in opposition it has been left to Labour to lead the way in Europe by drawing up plans to deal with tax havens. A report by Labour MEP Anneliese Dodds calls for international agreement on tax havens. Under the plan there would be tough sanctions for both countries and multinational companies that use tax havens. However, both Tory and UKIP MEPs voted against it.

International action is the only way to clampdown on tax avoidance and evasion - and there is strong appetite in the European Union to tackle the problem. Sadly, the Tories have been fighting these proposals.

Six times in 2015 alone, Tory MEPs were instructed by Cameron and Osborne to vote against measures to combat corporate and personal tax avoidance at an EU wide level. Often it was only Tory MEPs, UKIP and a few other fringe right-wing parties who lined up with the tax avoiders and evaders instead of those who pay their fair share of tax.

The EU now calls on all national governments to have a register of those who are beneficial owners of companies and trusts. At Cameron’s personal insistence, the UK government opposed any action on trusts, and managed successfully to prevent the register of trusts being made public.  They have also not required any of the Crown Dependencies such as Jersey, Guernsey and the Isle of Man, or Overseas Territories, such as the British Virgin Islands, Bermuda or The Bahamas to produce their own public registers of beneficial ownership, which Labour called for them to do before the last election.

Why would the Government be opposing measures when they have used such strong language on the issue? In 2011 Osborne said those who evade taxes were “leeches on society” and, in 2012, said tax evasion and tax aggressive tax avoidance was “morally repugnant”?

In 2013 David Cameron said:

“Individuals and businesses must pay their fair share. And businesses who think they can carry on dodging that fair share, or that they can keep on selling to the UK and setting up ever more complex tax arrangements abroad to squeeze their tax bills right down, well they need to wake up and smell the coffee, because the public who buy from them have had enough.”

After the chaos and shambles of the last few days, Cameron and Osborne must show they are willing to take effective action to restore public confidence in the fairness of the tax system.

Next month’s international summit on tackling tax evasion in London presents the Prime Minister with an opportunity to do so. Labour believes Cameron should announce at the summit that the UK Government will compel UK Crown Dependencies and Overseas Territories to introduce full, publicly accessible registers that show the owners of companies and the beneficiaries of private trusts registered in those jurisdictions. If they won’t act the next Labour Government will.

Let’s remember our public services are being cut because we are told there is not enough money while the Tory government have turned a blind eye to the wealthiest paying their fair share. Ordinary people have no choice on the rate of tax they pay and nor should the very richest in our society or large corporations.

Labour is clear, we are on the side of people and companies who do the right thing and pay their fair share of taxes. Now David Cameron needs to decide whose side he is on.

Seema Malhotra is Labour MP for Feltham and Heston.