Unfortunately, the Scottish Government only has power to directly tackle tax avoidance in relation to two fully devolved taxes—land and buildings transaction tax and the Scottish landfill tax. We take a simple, clear and very robust approach. We have a general anti-avoidance rule that is wider than the corresponding United Kingdom rule. It allows Revenue Scotland to take action against tax avoidance arrangements considered to be artificial, even if they otherwise operate within the law.
Following recent reports about the use of offshore tax havens, the Cabinet Secretary for Finance and the Constitution has written to the Chancellor of the Exchequer to seek urgent reassurance that the United Kingdom Government will now take the issue of tax avoidance seriously, and to demand that concrete action is now taken.
Does she share my disgust, particularly at those who have been disclosed in the paradise papers whose salaries are paid by the public, such as Fiona and Martin Delany and Paddy Houlihan, who are actors in the hit show, “Mrs Brown’s Boys”, who have their wages paid by the BBC and funded by the licence payers, and who are squirreling away some £2 million offshore to avoid income tax? Does she agree that they should consider disbarring themselves from using, for example, any health service across the UK, which they obviously do not want to pay for—or would they not like that script?
I think that Christine Grahame is right, and I am sure that the anger that underlies her question is shared by the vast majority of people across the UK. People should pay the taxes that they are due to pay.
Paying tax is the collective duty that we have, to ensure that we have public services that are there for all of us when we need them. The taxes that we pay provide our national health service and our education system, and they provide the infrastructure and the other support that our businesses need if they are to prosper and thrive. When somebody does something that is about not paying full tax, such as putting money into an offshore haven, they are depriving those public services of the money on which they rely. That is wrong.
According to HM Revenue and Customs estimates, the Treasury lost out on £6.9 billion through evasion and avoidance in 2015-16, and £1.7 billion of that was down to tax avoidance. For individuals and businesses, tax contributions should be a matter not of what they can get away with but of respecting the spirit of the law and paying a fair contribution.
That is my message to individuals; my message to the UK Government is that it is within its power to crack down on some of this stuff, and it is a matter of regret and shame that it has not done so. I hope that we will now see action, before the next set of papers is released, no doubt some time in the future.
I accept that there is always much more to do to clamp down on tax avoidance and evasion, but will the First Minister acknowledge that the tax gap in the UK, at 6 per cent, is the lowest that it has ever been and is among the lowest in the world?
On the subject of regret and shame, does the First Minister regret being part of a Government that paid £10 million of taxpayers’ money to Amazon, a company that hardly has an excellent record when it comes to paying tax?
Yes, okay, we can cite figures, as Murdo Fraser has just done, about the tax gap being less than it is in other countries, but let me repeat what I said: close to £7 billion is being lost to public services in our country because of tax avoidance and tax evasion. That is unacceptable, and even if Murdo Fraser cannot quite bring himself to see that and say so, I think that the vast majority of people in the country will do so.
We call on all companies, Amazon included, to pay their due tax, and we call on the UK Government, where power on this lies, to take the action to ensure that people pay the tax that is due.
As the First Minister correctly pointed out, companies that participate in tax evasion and tax avoidance reduce the amount of money that goes to public services to address the issues that we talk about in this chamber, week in and week out, such as building a better health service and supporting education.
Will the First Minister therefore agree to call in and cancel public contracts where companies have been shown to have participated in tax avoidance, to ensure that all public contracts are awarded to companies that organise their tax affairs in a fair and transparent manner and pay fairly into the public purse?
I generally agree with the sentiment of the question. As James Kelly knows, we have made significant reforms to public procurement over a number of years, to ensure that where companies are benefiting from public contracts they are expected to behave not just within the letter of the law but in a way that people would think is acceptable.
I hope that James Kelly recognises that the powers around tax avoidance and cracking down on it lie principally not with this Parliament, unfortunately, but with the United Kingdom Government, and I hope that he will join us in calling on the UK Government to at last do something about it.
The First Minister will be aware of reports in the paradise papers regarding the St Enoch Centre in Glasgow. She will also be aware that, for example, Edinburgh airport is owned by a complex structure, located in Grand Cayman and Luxembourg, and that a large rural estate sale that is currently being negotiated involves a transfer of shares in offshore companies to avoid land and buildings transaction tax.
What additional work is the Scottish Government undertaking to ensure that those risks of tax avoidance by offshore companies are identified and ended?
We will continue to do everything in our power to try to crack down on such behaviour. I have already spoken about the fact that the rules on the two taxes for which we have responsibility are more robust than those for taxes across the UK.
Andy Wightman is aware of and has a keen interest in some of the work that we are progressing in the context of land reform to increase transparency with a register of controlling interests.
I wish that this Parliament had more power in this area. Unfortunately, we do not. Let those of us who think that that is wrong come together to demand that the UK Government takes action that so far it has dragged its feet in taking, and perhaps ultimately to call for those powers to lie in the hands of this Parliament, so that we can have the crackdown that people want.