It was humiliating for Google, Amazon and Starbucks executives when they were hold before a committee of MPs last month to explain why they've been paying little or no corporation tax in Britain .Now Parliament's Public Accounts Committee says the three multinationals have to pay their fare share. They've also concluded that the three firms have amorally used secretive jurisdictions, royalties and complex structures to avoid paying corporation tax. John Christensen is from the Tax Justice Network.
For a very long time multinational companies have been taking very strong advantage of witnesses of the global tax system and shifting their profits to tax havens. And this has been very damaging not only to public finances, but to global economy.
The Committee Chairman says corporations have been allowed to get away with ripping off the British tax payer. Margaret Hotch says there's poor legislation, a lack of international cooperation and that U.K.'s tax authority is weak. She says it's an insult to British business and individuals who pay their fare share. The report is a indictment of the current tax laws and the complex regime that Amazon, Google and Starbucks have employed to pay little or no corporation tax. The committee says that Amazon's evidence was evasive and lacked credibility. And Starbucks' claims were difficult to believe. Philip Booth is from the Institute of Economic Affairs.
It's part of general anti-business rhetoric which I think is most unfortunate, which has been going on since the financial crisis. If we don't begin to welcome business and have stable policies that are attractive to businesses, then we won't get back to economic growth.
HM Revenue and Customs have also been accused of being "too lenient in negotiations with big corporations". The Public Accounts Committee says HMRC needs to be bolder in challenging tax avoidance and needs to be prepared to prosecute. They say companies' tax practices should be made part of its mandatory reporting requirements.
John Christensen agrees:
Without a shadow of doubt they had been far too lenient. And this culture goes back well over ten years. They had been chasing smaller businesses and that's led to an unleveled pay bill. So the culture of HMRV needs to be dramatically changed. There's nothing unfriendly about requiring very profitable businesses to contribute towards paying the British tax.
Meanwhile, the British Chancellor George Osborne has announced extra funding for HMRC, said that it can pursue companies which avoid paying tax. Mr. Osborne says that extra investment would ensure that the Treasury gets extra 2 billion pounds a year in unpaid tax. But the action group U.K. On Cut is taking matters into their own hands. They say they'll target Starbucks stores on Dec, 8 over their tax avoidance. Anna Walker is from the group:
We are incredibly angry that the government is refusing to tackle tax avoidance in any serious way. The kind of proposals is simply tinkering around at the edges of most extreme form of tax abuse. And that wouldn’t cover the kind of tax avoidance that Starbucks, Google and Amazon are using at the moment.
The committee has now called on the British government to leave the international community, to close loopholes and increase transparency in tax havens.