I have just noted what David Cameron had to say yesterday on tax avoidance by multinational companies.
I'm delighted he has said he will tackle this issue, and on the scale that he has indicated. But let's be clear what precisely he has to do to achieve his stated goals. At a minimum:
1) He has to abandon his government's policy of territorial taxation since this is a tax avoider's licence to abuse this country
2) He has to invest heavily in HMRC to give it the resources it needs to really tackle tax avoidance and tax evasion
3) He has to change the law and OECD tax treaty standards on company residence and change all UK double tax treaties to comply
4) He has to change the OECD standard on permanent establishment and change all UK double tax treaties to comply
5) He has to move to unitary taxation
6) He has to pesuade the OECD to abandon arm's length transfer pricing
7) The EU has to change many tax directives and potentially allow tax withholding at source on inter-EU payments
8 ) He has to re-establish the controlled foreign company rules he has just been dismantling
9) He requires a proper General Anti-Tax Avoidance Principle Bill
10) He needs to tackle the UK's tax havens as the starting point of a demand for global transparency, automatic information exchange and proper recording of the beneficial ownership of companies
11) He needs to ensure companies are properly regulated in the UK, which is far from the case now, if he is to get any more than 34% of UK companies to pay corporation tax, which is the number that do so now
12) He will, of course, need to adopt country-by-country reporting
13) He needs to re-appraise the tax gap and the way HMRC measure it - which currently excludes all the tax avoidance he finds so repugnant
14) He needs to get some proper advice from people outside the FTSE 100 and the 100 Group of Finance directors funded Oxford Centre for Business Taxation on just what an appropriate tax policy for the UK might be
15) He has to replace those people who are heading H M Revenue & Customs who have had ties with tax avoidance and whose influence may explain HMRC's lax attitude to the issue.
Now all those are possible. But he's got to embrace them.
Does anyone think that likely?
I hope it is. But if he fails then he is responsible for the failure to do so. And the resulting tax avoidance, because he's now set the yardstick for measurement, and this is what he does to do to achieve it.
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Anyone who thinks there will be changes along these lines is sadly mistaken…..
(Not that it shouldn’t, just that it won’t)
Glad to hear the Treasury reads this blog…is there any way to find out if they have a copy of The Courageous State and an advanced order on your new book?
One afterthought…would anyone at the Treasury like to take the challenge of living on the cash equivalent of Jobseekers Allowance? That means you just have to take it when your electricity and gas go up 10% a year, you have to be very careful about what food you buy when food inflation is 10% a year at least, you have to sit at home and not go out any more at the weekend, and you have to give up buying newspapers, magazines and books and just rely on the Internet to keep up with what’s going on (the price of which is going up around 10% a year)…so wherever did these closed-curtains troglodytes who should be grateful for a 1% uprating for three years come from? How dare they breathe the same air as the Treasury mandarins? Isn’t that what you really think?
Not a chance. Not unless the G20 and particular the US, puts its weight behind change. The problem is deep seated and requires a coordinated approach.
Capital is already skipping off to Singapore.
I expect Cameron to go on huffing and puffing about tax avoidance for public consumption, but in reality doing little to tackle it.
Unfortunately though, history shows that to get real change to the benefit of the ordinary people rather than extremely wealthy individuals and their vested interested interests, words whether written or spoken need to carry the implicit promise of action by a large majority.
[…] More important is suggesting what we can do about it. Expect some elaboration of this list. […]