Thursday, February 28, 2008

UK MPs call for tax justice inquiry

We blogged yesterday about the excellent investigation by the Guardian newspaper into the tax tricks of the supermarket giant Tesco. Now we have British parliamentarians asking the questions that are only right in a democratic society.

MPs and Lords called for a crackdown on tax avoidance yesterday following the Guardian's revelation that Tesco was using an elaborate corporate structure involving offshore tax havens.

Vince Cable, the Liberal Democrat shadow chancellor (Finance Minister) said:

This exposé shows the depth of the tax avoidance culture. They must crack down seriously on it, as the tax burden is now falling disproportionately on low and middle income taxpayers, rather than the very rich. The government must also answer why British dependent territories are being allowed to offer large-scale tax avoidance schemes at the expense of the Treasury. If Germany can crack down on Liechtenstein, why can't Britain do the same with territories for which it is directly responsible?"

And he went on:
Tesco's behaviour makes a complete nonsense of any claims that it makes about corporate social responsibility. The Government must also answer why British dependent territories are being allowed to offer large-scale tax avoidance schemes at the expense of the Treasury. If Germany can crack down on Liechtenstein, why can't Britain do the same with territories for which it is directly responsible?"

In a leader article, the Guardian looked at this issue of corporate responsibility further.

Avoidance or efficiency or planning - whatever euphemism you use, paying the bare minimum in taxes is becoming part of Britain's business culture. That leaves more of the nation's tax bill to be footed by the rest of us. In the past decade, while corporation tax has been squeezed, income tax and national insurance has grown as a proportion of the country's tax take from 42.9% to 47.6%. Tax avoidance is a worldwide curse.

The Financial Times seems to have pretty much ignored the story, although it has done some good reporting on other matters in the past. Nevertheless, we are reminded of this FT story, which shows the Guardian investigation to be just part of a wider picture.

The article outlines some useful steps that the British government should take. It also quotes TJN's Richard Murphy. Read the article. As we have been saying a lot recently, the mood is shifting.

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