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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  • Comment number 421.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    0

    Comment number 420.

    #304"there has never been a free libertarian market so don't give examples why it can't work" Have you thought the reason why their has never been a free libertarian market is because it would never work.

  • rate this
    +5

    Comment number 419.

    If we can revalue the wages paid to cleaners, hairdressers, dinner ladies, labourers, and so forth, the people at the bottom, so they are paid substantially more, then the well off right wingers smaller state and more self provision could work. Also stop confusing those who inherit or are given or award themselves lots of money with wealth creators.

  • rate this
    -1

    Comment number 418.

    #412
    Selling state assets is not treason at all. Is a company that sells a subsidiary that it has invested in losing itself money? No. The investment adds to the value of the company, therefore when the company is sold it is done so at a higher price to reflect the investment.
    #415
    So is this our future choice? Big-state Social Democracy or no-state Libertarianism? Is there nothing in between?

  • rate this
    +3

    Comment number 417.

    #411 As long as Scotland also took the bailout burden of Royal Bank Of Scotland & HBOS. Although that might drain the oil wells slightly quicker than expected :-)

    On topic, tax laws are written badly and too complicated - even Einstein had trouble understanding them!!! Make them simple and easy to understand and it will not be worth the effort avoiding them

  • rate this
    0

    Comment number 416.

    414
    They are incapable of competing with properly run government. If there is an efficiency problem then let it be solved with all the modern styles of management available. The bottom line is that gov run services dont have the millstone of having to generate profit around their necks. They are free to reinvest every penny into efficiency or service. Tax could also be linked more closely to use.

  • rate this
    +1

    Comment number 415.

    @413 Bob Roberts
    "I think you’ll find that the majority "on the right" are not opposed to tax but high tax that punishes the successful and stifles growth."
    I'm not sure that is the case no. It used to be mainstream conservative economic opinion. Increasingly the "libertarians" are insisting that all tax is immoral, and socialist.



    I think you may be missing

  • rate this
    0

    Comment number 414.

    @412.beebalert,
    I agree that roads should remain publicly owned but should be managed privately by bidding companies. As for hospitals, schools they could be privatised as they can compete, whereas a road cannot compete as you can't choose any number of roads to use when going somewhere.
    Privatisation is less morally reprehensible than pointing a gun at people and demanding tax for public services

  • rate this
    +2

    Comment number 413.

    #381
    I think you’ll find that the majority "on the right" are not opposed to tax but high tax that punishes the successful and stifles growth. I doubt they are in support of the current laws, but think that it is the government’s, and not the companies’ faults for taking advantage of the law, and think that it should be changed rather than the constant vilification of big business.

  • rate this
    +1

    Comment number 412.

    410
    whether by auction or otherwise selling state assets to private companies to be run for profit is textbook treason. It can never result in long term benefit to the tax payer.

  • rate this
    0

    Comment number 411.

  • rate this
    +1

    Comment number 410.

    @407.beebalert ,
    That's why any service that's privatised should be auctioned off. As for public infrastructure e.g. roads could be managed and fixed by private companies who put in bids every few years and are paid by road tax rather than from the general taxation.
    I'm definitely against IP as it's a violation of physical property rights. Trade secrets are more compatible with liberty.

  • rate this
    -4

    Comment number 409.

    Good that Dave Cameron initiated action on clamping down on tax avoidance.

    Clegg and Miliband have jumped on the tax avoidance bandwagon - hypocrites.

  • rate this
    +3

    Comment number 408.

    #8
    Cameron is "afraid" of the FTT because it would not apply globally so they'd all go elsewhere (see Sweden late 1980s), because we already have a kind of FTT (Stamp Duty) and because the proceeds of UK BUSINESS would go towards the EU BUDGET.
    #407
    By that logic the sale of any company or asset would be theft.

  • rate this
    +2

    Comment number 407.

    Andreas 398 privatisation is crony capitalism. It is a prime example of the kind of theft excessive taxation can be thought of. The people of a country build an infrastructure. It gets "sold" to a private company who then rent our own stuff back to us. Same goes for IP over products using government funded R&D to invent.

  • rate this
    +4

    Comment number 406.

    Taxation is a very emotive subject.
    Some people,if they can afford it,can save lots and lots of money.
    The rest of us will just have to be happy with what we have left ,after PAYE and National Insurance is deducted by your employer and transmitted to our Government.
    Hasten to add...that is not what I think....The people avoiding tax think like that.
    And our Politicians think that is OK.

  • rate this
    +5

    Comment number 405.

    Let's not wait for the OECD or the EU or the G7 or the IMF to take action against these big companies who seem to find a legal loophole to avoid paying tax.

    Consumers have the ultimate power, and should avoid using Google and Apple products. There are other companies who do actually pay their fair share of tax.

  • rate this
    +1

    Comment number 404.

    @398. Andreas
    >>>In the name of fairness, rather than increasing corporation tax up to the level of income tax we could instead be decreasing income tax to corporation tax levels.

    Indeed. Almost everyone in employment in this country loses between 40%-60% of what they earn to various taxes which, when you think about it, really is obscene. Revolutions have been made of less.

  • rate this
    0

    Comment number 403.

    I cannot see what is so complicated - surely "All profits made through business from UK customers in the UK is taxed at 20% (or whatever)" would suffice?
    #393
    What UK companies? The only reason these companies are here is because people want them. If UK companies were better they'd get the business instead.
    #12
    They would listen because they all know (and admit) that they want to keep us.

  • rate this
    -3

    Comment number 402.

    I do think David Cameron should be kicked out of the Tories. He is a closet socialist and a pr spiv.

 

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