David Cameron seeking action on tax avoidance at EU summit

 
David Cameron in Brussels Mr Cameron is calling for a US-style cross-border tax information exchange

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David Cameron is urging EU leaders to back global action against tax evasion and "aggressive" tax avoidance that is causing nations "staggering" losses.

The prime minister is meeting his European counterparts in Brussels to discuss ways of cracking down on those who do not pay their fair share.

It comes amid a row over the tax paid by firms like Google and Amazon.

The CBI has warned politicians not to "moralise" about tax or rush to judgement without the facts.

The business lobby group said paying tax was not "optional" and that firms must make "responsible judgements" with the interests of their shareholders, stakeholders and society at large in mind.

'No absolutes'

But it warned politicians against engaging in a "moral debate" over the issue and said they must consult with business before introducing any new rules.

"As politicians pursue fairness it is important that any criticisms are grounded in fact and hasty solutions or political point-scoring do not trigger long term unintended consequences," the organisation's chairman Roger Carr said.

"Tax avoidance cannot be about morality - there are no absolutes."

He urged Mr Cameron and other leaders "to fix the rules internationally, not unilaterally", adding that "independent action can cost competitiveness and cause confusion".

Start Quote

Talking tough on tax, whilst continuing to usher a third of the world's wealth into UK tax havens, risks making a mockery of David Cameron's leadership at the G8 Summit in June”

End Quote Oxfam

The taxation issue is on the agenda of the latest EU summit - which will also discuss energy policy - at the request of the UK, France and Germany.

Mr Cameron wrote to EU leaders ahead of the meeting urging a US-style cross-border tax information exchange. The UK, Germany, France, Spain and Italy are currently testing such a system and want to launch it by the end of the year.

Mr Cameron also wants G8 and EU meetings to include country-by-country reporting of where companies pay their tax.

As he arrived at Wednesday's meeting, the prime minister said competitive tax rates were vital for securing investment but firms must abide by the rules.

"That means international collaboration, sharing of tax information," he said. "It is important that we make sure we act together to make sure we do everything on this agenda."

The BBC's Europe Correspondent Matthew Price said there was "growing unity" about the issue across the EU, with an estimated one trillion euros lost every year due to individuals and companies not paying as much tax as they could do.

But Labour leader Ed Miliband has accused the prime minister of not backing up his rhetoric with "concrete proposals" and said a future government led by him would be prepared to act on its own in the UK.

Low-tax regimes

After the four-hour summit, Mr Cameron will travel to Paris to meet French President Francois Hollande at the Elysee Palace where co-operation on tax evasion and avoidance as well as tackling corporate secrecy will again be on the agenda.

The meetings come two days after Mr Cameron wrote to 10 British overseas territories and crown dependencies, including the Cayman Islands and the Isle of Man, urging them to "get their house in order" and sign up to international treaties on tax. Critics claim such places, which operate low-tax regimes, are used by companies for tax avoidance or evasion.

Google chairman Eric Schmidt The party leaders have been under pressure to raise the issue with Google boss Eric Schmidt

Tax avoidance, where companies operate within the rules to avoid paying taxes, and tax evasion, which is outside the law, have risen high on the political agenda in recent months.

High-profile companies like Google, Amazon and Starbucks have faced criticism in the UK for the low levels of tax they appear to pay compared with the size of their businesses.

Speaking on Wednesday, Mr Miliband accused Google of going to "extraordinary lengths" to limit UK tax payments.

'Cat and mouse'

Deputy Prime Minister Nick Clegg said it was unsurprising that firms were trying to exploit the "crack and crevices" of national tax laws and said he had raised the issue with Mr Schmidt at a Downing Street reception earlier this week.

The government was reducing corporation tax, he said, and, in return, it expected firms to pay their fair share of tax.

He acknowledged individual countries' tax systems were often "arcane" and were struggling to keep pace with "disembodied" businesses operating across national borders.

"We have got to make sure the rules apply much more evenly and strictly across the piece and so big companies cannot play cat and mouse with different national tax administrations," he said.

Apple boss Tim Cook defended the firm's practices when he appeared before the US Congress on Tuesday, insisting it complied with both the letter and the spirit of the law.

Oxfam, meanwhile, has suggested people using tax havens are depriving the world of more than £100bn in lost revenue.

"Talking tough on tax whilst continuing to usher a third of the world's wealth into UK tax havens, risks making a mockery of David Cameron's leadership at the G8 Summit in June," its head development finance and public services Emma Seery said.

 

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  • rate this
    0

    Comment number 41.

    32. Sally
    Higher corporate taxes =Lower staff wages.

    Only an accountant would think like this. You miss the whole point as this is about commercial organisations not paying their fair share of taxation, indeed not even coming close to paying their fair share.

    Evasion and avoidance are morally the same and the law should be changed so there is no distinction.

  • rate this
    +2

    Comment number 40.

    Sally, but is the gap between rich and poor getting bigger or smaller?
    Some people are profiting greatly from austerity so if redistribution of wealth is not happening naturally, it needs to be encouraged.
    It can't be morally right that the poor are bearing the disproportionate brunt of austerity.

  • rate this
    +4

    Comment number 39.

    A company director's duty is to maximise profit for the shareholders. A Governments duty is to set laws to make sure that everyone pays the correct amount of tax. Is all this bleating by MPs a diversion from their shortcomings in making effective tax laws or do they keep loopholes in place so that they can reduce their own tax payments.

  • rate this
    +2

    Comment number 38.

    19.
    JP
    4 Minutes ago

    ""Labour landslide. Result"
    With Mandelson in your ranks the term working class is a dirty word and he is still pulling strings."

    I know, but leave me with a scintilla of hope that someone might act to end this madness.

    The boy Ed does appear to have at least 1% Labour values, so I'll take what I can get! And a landslide does free a PM from the idiots on board.

  • rate this
    +4

    Comment number 37.

    "But it (CBI) warned politicians against engaging in a "moral debate" over the issue and said they must consult with business before introducing any new rules."

    Can't remember the last time the CBI allowed the general public to influence board meetings of its members.

    I've been suffering from an illusion that this is a democracy in which the government consults its electorate.

  • rate this
    -1

    Comment number 36.

    It is not that long ago when the French put their top rate of tax up to 75% DC told the French to come to Britain and pay 40% tax That is tax avoidance when the tax is the same through out the EU the problem will disappear
    That is the point of the EU If we leave we will be cut to pieces

  • rate this
    -2

    Comment number 35.

    Question: How much tax does the royal family pay?

  • rate this
    +20

    Comment number 34.

    I chuckle at this. The worst tax dodgers are politicians who love to fiddle their expenses and hide their large amount of dosh in UK overseas territories. I think its time that if you want to be an MP then you have to disclose the last 10 years of your tax returns for the public and media to review.

  • rate this
    0

    Comment number 33.

    Hopefully he will also raise the issue of 'evasion of responsibilities' and simple good management by the same governments. The waste of public money that is going into the public sector and EU is even more staggering.

  • rate this
    -6

    Comment number 32.

    Higher corporate taxes =
    Lower staff wages.
    Lower share prices, hurting investors like our pension funds.
    Higher product prices, paid for by us, to offset part of the added taxes.

    Anyone thinking taxing corporations, means taxing the rich, is fooling themselves. It's us, actual people, who bear the cost of corporate taxes, not the abstract entity called the "corporation".

    25Martin
    Yes.Thnk u. Xx

  • rate this
    +3

    Comment number 31.

    going to the eu about tax avoidence when he is telling them that we will withdraw if he doesnt get his way is a bit rich even for this discredited pm. tax avoidence is world wide not just this country. we have a government that has just cut the tax for the rich and firms so giving to green light for paying less tax. cameron whould be better going on to a beach and try to stop the tide coming in

  • rate this
    +18

    Comment number 30.

    Why does he need to consult the EU? Why can't he just grow a pair, get the law changed and just deal with it that way, then he wouldn't have to waste any more of our money on his travelling expenses, flying back and forth in 1st class no doubt!

  • rate this
    +8

    Comment number 29.

    The remedy is to levy additional VAT on products sold by the companies that are avoiding paying their proper taxes by basing their businesses in tax havens etc. The Inland Revenue should have the power to assess their tax labilities, based upon their UK trading, and require an additional VAT levy to collect the outstanding amount. I think that action would prompt changes in their policies.

  • rate this
    +20

    Comment number 28.

    What a ridiculous hypocrite, how can anyone take him seriously?

  • rate this
    0

    Comment number 27.

    the biggest component of our wellfare budget is income support for minimum wage.

    1) Raise minimum wage to the living wage.

    2) Offset the costs to companies for paying this extra amount, by reducing their corporation tax.

    3) Workers are happier. People have more money to spend and make the economy grow, and only the companies that are avoiding their taxes lose out.

  • rate this
    +5

    Comment number 26.

    My niece, who lives in Cork, tried to buy a Google Nexus Tablet from Google. She couldn't. I was able to buy it for her from the UK. Curious if Dublin is really Google's European HQ.

  • rate this
    +3

    Comment number 25.

    15 Sally ... Tax evasion is illegal, Tax avoidance is not. so it would not be sensible.

  • rate this
    +5

    Comment number 24.

    National taxes on business profits and property will have to be abandoned eventually; they just don't work in a globalised world. They will have to be replaced with taxes on consumption, based on the tax residency of the consumer. It's the only way I can see to level the playing field internationally and between real and virtual retailers. I'm not holding my breath though!

  • rate this
    +3

    Comment number 23.

    Yes but in order to combat tax avoidance a certain unity of purpose and institutions within Europe is required... so Cameron and the tories are up for that, are they? What a joke.

    If Cameron wanted to start somewhere close to home, he could do worse than taking a long hard look at the Isle of Man, the Channel Islands and Gibraltar...

  • rate this
    +11

    Comment number 22.

    the truth is cameron et al are not happy pursuing this agenda because its big business corporations - sponsors of the tories. similarly hes reluctant to pursue a bankers tax. hes only interested in hounding the lower working class ie the people he despises.

 

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