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
    -1

    Comment number 161.

    Is tax what you pay to the upkeep of society, or is tax what you pay for what you use?
    140 - so good to know that if a Labour MP has tax havened wealth, then tax avoidance can be swept under the carpet. We don't accept "He did it first" from children, please adress the problem.

  • rate this
    -3

    Comment number 160.

    So what is the 'right amount' of tax for companies? The 12.5% Ireland charges? The 23% the UK charges? The 34% the USA charges?

    Why should countries that run their tax system well be forced to put up their rates because some politicians are so incompetent or so politically dogmatic taht they demand a huge chunk of someone else's hard work?

  • rate this
    -1

    Comment number 159.

    And a little more research would show you exactly how much the Millibands are worth

    -Clearly Ed is confident that His income would not put him into the band of earners that will benefit from the Tory Millionaires tax cut ,which means He earns less than £150,000 pa Cameron earns far more than that.
    The Tories won't permit taxes on their Wealth The Cameron family fortune is £20 Million+

  • rate this
    -3

    Comment number 158.

    Government cracking down on those who do not pay their fair share. "Fair" .... who decides? The politicians? I know if I was wealthy I'd want to keep what I think is "fair"...better in my business hands than in the hands of politicians.

    Too much interference/tax by gov't kills incentive...keep it up and business will close. Then the next topic will be about higher unemployment.

  • rate this
    -2

    Comment number 157.

    Make tax optional for everyone and just ask each individual to donate what they think is right, but publish everyone's income and donations.

  • rate this
    +5

    Comment number 156.

    Isn't it amazing, The British taxpayers bailed out the Cayman Islands to the tune of £200 million when Osbourne already has £25 million in his investment trust invested there and pays NO TAX on it.

    It's just the same old Conservative party, If you're rich, we will enhance that, If you're poor, we will make sure you pay for our mistakes.

  • rate this
    0

    Comment number 155.

    Politicians aren't responsible enough with the tax money they already get,12bn foreign aid,78m wasted on wrong planes for aircraft carriers,spending lord knows how much on the absurd managed motorways system that is ruining out motorways,until politicians can show a bit more responsibility they shouldn't be allowed to touch our money.

  • rate this
    +1

    Comment number 154.

    Re 94 Owlsoflaughter Agree with you overall sentiment. BUT their attitude is hardly suprising when one see the FRIGHTENING WASTE of the revenue ,the NON jobs that STILL exist in unnaceptable numbers Demise of our defence,WARS the majority DON'T want. Ever expanding EU b------t and red tape. ALL nails in the coffin of enterprise,job creation! GOV should create the climate for enterprise NOT JOBS!

  • rate this
    0

    Comment number 153.

    I like to know how much milliband and his cronies have sorted away...milliband doesnt talk about his wealth...yeah I bet he dont.

  • rate this
    +5

    Comment number 152.

    140.Jaw dropping truth
    Don't forget the Kinnock's and the Blair who increase thier Wealth by 35 Million selling Socialists Dogma to the non-thinking :-)
    ////////
    When did Blair sell any Socialists (sic) dogma to anyone? He is more right wing than Cameron. If you had the ability to think rather than spouting cliche's you'd know that.

  • rate this
    +1

    Comment number 151.

    There is a menace called corporate fascism a conspiracy of capitalists that intends to control governments through threats, bribes, and influence over national legislation. Corporate pac money sloshes around affecting elections and the media. In Malaysia protests have errupted against the elimination of generic drugs in the TransPacific Trade Pact. Paying no taxes is central to new trade deals.

  • rate this
    +3

    Comment number 150.

    136. Viva Verdi
    ...can find no loopholes."

    The thing is that the 'loophole' isn't really a loophole, it's just something that happens when (a) a company pays tax where it is based, (b) you get global companies, and (c) different countries have different tax rates.

    Changing (a) would be disastrous, (b) is just how it is, so you're left with (c) which a single government can't do on its own

  • rate this
    +4

    Comment number 149.

    80.
    JP
    "I have put the tick in the box at 97 with big hopes and regretted it ever since, The working class need to supplant the new labour model so representation returns, hopefully the TUC will sort that one out soon."

    Bless you, I thought I was alone!
    I'll confess to my vote in 79, but I'm stuck in the Tory Stalinist Territory of the South East anyway and so have no say.

  • rate this
    -10

    Comment number 148.

    What's the difference between threatening to jail a mum who runs a school bake-shop, selling cupcakes, and doesn't pay tax on her profits;
    Or,
    A business who sells books or iPhones, and doesn't pay tax on their profits?
    Nothing. Their both equally innocent.

    Stop thinking you have a right to the fruits of someone else labour. Get out there, pull your socks up, and contribute yourself. Xx

  • rate this
    +3

    Comment number 147.

    If multinationals are using their international status as a means to avoid paying tax, it leaves the smaller home-grown businesses at a major disadvantage.

    If national governments are effectively saying they are impotent in preventing this, they should reduce corporation tax significantly in order to level the playing field for smaller businesses.

    The little guys shouldn't be picking up the tab!

  • rate this
    +1

    Comment number 146.

    What is the fair share of tax that firms are `supposed' to pay?

    The political class no doubt wanted to improve the prospect of employment in the economy but in so doing have inadvertently made it possible for taxable funds to be removed outside their remit. There is a price for everything.

    The problem is that taxes are too high and the state far too big. We need a better model of government.

  • rate this
    0

    Comment number 145.

    Dave C, I suggest you start with the Irish, who have undercut UK corporation tax rates for years...

  • rate this
    +3

    Comment number 144.

    @136.Viva Verdi
    "It makes sense to make the laws sewn up so tightly that even the most cunning and highest paid accountant can find no loopholes."

    For revolving door government to work it makes sense to intentionally introduce loopholes so as to benefit a later career outside politics.

    Not that I would accuse government of being corrupt, just hypothetically speaking.

  • rate this
    +1

    Comment number 143.

    134. Chubby1

    I agree he probably can't do anything about it. However, the naming/shaming and asking them to pay a fair share simply won't work. This is all talk and no action.

    Perhaps a transaction tax is the way to go. Then again this could be hard to enforce for companies like Google.

  • rate this
    +6

    Comment number 142.

    Cameron was only too quick to criticise Jimmy Car for aggressive tax avoidance because He isn't a Tory Paymaster but is not prepared to offer meaningful comment or appropriate criticism of the multi national corporations that are costing the UK 10's of Billions in lost tax revenue
    It is far easier and popular in the City to target the poor even though the amount saved is a relative pittance.

 

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