Finance (No. 2) Bill

Part of the debate – in the House of Commons at 10:00 pm on 11th April 2016.

Alert me about debates like this

Photo of Caroline Flint Caroline Flint Labour, Don Valley 10:00 pm, 11th April 2016

I am grateful to the 50 colleagues from six parties who supported my ten-minute rule Bill, including every Back-Bench member of the Public Accounts Committee. I hope to build that cross-party support as I seek to amend this Bill. My interest today is not to grandstand, but to change the law.

In January 2012, the Prime Minister said:

“We need a tougher approach. One of the things that we are going to be looking at this year is whether there should be a general anti-avoidance power that HMRC can use, particularly with very wealthy individuals and with the bigger companies, to make sure they pay their fair share.”

Many in this House would agree with that.

Three months later, the Chancellor said:

“I was shocked to see that some of the very wealthiest people in the country have organised their tax affairs, and to be fair it’s within the tax laws, so that they were regularly paying virtually no income tax. And I don’t think that’s right.”

Many would agree with that.

In January 2013, the Prime Minister said:

“We want to drive a more serious debate on tax evasion and tax avoidance. This is an issue whose time has come. After years of abuse, people across the planet are rightly calling for more action and, most importantly, there is a gathering political will to actually do something about it.”

Just last week in Exeter, the Prime Minister said:

“It’s not fair when you’ve got companies who are basically shifting their profits around the world, rather than paying them in the country where they make their money.”

That is all the more reason why I hope the Government will adopt the purpose of the Multinational Enterprises (Financial Transparency) Bill.

However interesting the Prime Minister’s current or recent tax returns are, they are but small beer compared with the need for openness by sophisticated multinationals using various means to legally avoid paying tax in the countries where they earn much of their revenues.

The reputation of the UK is tarnished by the number of tax havens that fly the Union Jack. A World Bank review of 213 big corruption cases found that more than 70% relied on secret company ownership. Company service providers registered in the UK and its overseas territories and Crown dependencies were second on the list of those providing such companies. When the Government said that bankers should pay tax on their bonuses as on their wages, companies such as Deutsche Bank, when the Business Secretary worked there, put them out of reach offshore.

I am not a cynic; I am an optimist and I believe in the good of people to do the right thing. I do not believe there will ever be a perfect system to catch those who will use every device they have to avoid paying the tax that is due, but I do believe that backing public country-by-country reporting is vital to addressing deliberate and sophisticated tax avoidance. I urge the Government not to wait for the EU or the OECD, but to adopt my public disclosure measure in the Bill and let the UK lead where I am sure others will follow.