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8 September 2016updated 09 Sep 2021 9:08am

How just 17 words could change the world

A 13-year campaign took a great stride forward this week, explains Toby Quantrill. 

By Toby Quantrill

Campaigners have worked for 13 years for the victory that came a giant step closer on Monday night, in the form of 17 crucial words.

They are words which are likely to tilt the world: against the likes of Apple and in favour of people who have no choice about paying tax and who need the public services for which it pays.

At 9.54pm on Monday, MPs from all the UK’s major parties, led by Caroline Flint, persuaded Treasury minister Jane Ellison to change the Finance Bill.

The rather technical 17-word amendment gives the government power to require multinationals publicly to reveal much more about their affairs around the world – a troubling prospect for those with plenty to hide. (And not yet troubling enough, as I explain below.)

But this week’s breakthrough has been many years in the making. It has taken a mixture of dedicated research and campaigning, painstaking legal arguments as well as scandalous revelations and public outrage to make it happen.

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The inventor of Monday night’s reform, irrepressible accountant Richard Murphy, first suggested country-by-country reporting (CBCR) back in 2003. The same year, he and John Christensen set up the UK’s Tax Justice Network, which has campaigned for the reform ever since.

Their case has been strengthened by the ever-growing evidence that multinational tax dodging is a grave threat to people, smaller businesses and public services everywhere. Academics have painted a picture in which every year, multinational tax avoidance deprives developing countries alone of billions.

Journalists including Private Eye’s Richard Brooks and the International Consortium of Investigative Journalists, as well as the popular media, have contributed to this week’s Parliamentary success by showing the public and politicians the seriousness, the scale and the deep injustice of the problem.

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Apple’s 13 billion Euro run-in with the European Commission featured heavily in Monday’s Commons debate – but it is only the latest of many damning stories about multinationals. When whistleblowers released the LuxLeaks files in 2014, it became clear that dozens of household name multinationals had done cosy deals with Luxembourg in order to slash their tax bills across the world.

Such scandals have had an impact. Polling in recent years has suggested that a large majority of British people across the political spectrum regard multinational tax avoidance as immoral, even if it is legal. A large majority also want firms to be forced to reveal more about their finances – something that public CBCR would clearly achieve.

Governments’ own worries about multinationals shirking tax have also helped the campaign for legal reform. Rich countries’ club the OECD has recently led its members to require country-by-country reports of large multinationals. Crucially, the documents are hidden from the public – but the requirement has helped those of us who argue that they should be made public.

Something similar is true at European level – the law has required certain types of multinational to publish country-by-country reports and so, campaigners have argued, why shouldn’t they all have to?

In the UK, the coalition behind public CBCR now includes organisations such as Christian Aid (my employer), Global Witness, ActionAid, Oxfam and Save the Children. During the run-up to the last election, some of us campaigned together for a Tax Dodging Bill that would have included public CBCR.

One of our arguments is that once multinationals’ reports are made public, developing countries will be better able to collect their fair shares of tax from the firms.

In the UK’s Parliament, dozens have backed this reform over many years, from Stephen Timms, the first minister to really consider it, to today’s truly cross-party list of supporters. Hundreds of MPs from eight political parties supported Monday’s amendment. From Caroline Lucas to Douglas Carswell, with many others from the centre-left and centre-right, this is the broadest possible coalition of supporters.

Parliamentarians will be aware of public feeling about multinational tax dodgers but many will also have heard from purely UK businesses, which rightly argue they face unfair competition from multinationals able to shift their profits into tax havens and out of the way of HMRC.

There were, then, many factors that contributed to the House of Commons breakthrough on Monday night.

And we will soon have a law that empowers the government to introduce public country-by-country reporting.

The catch is this: will the government use its power? Ministers have said they want to wait for other countries to implement similar reforms, before they do. But campaigners will not take no for an answer.

Toby Quantrill is principal adviser on economic justice at Christian Aid.