Ed Miliband vows to curb corporate tax avoidance

Labour leader urges David Cameron to work with G8 countries to force corporate giants to pay their fair share

The Guardian, The Observer, Daniel Boffey, policy editor, Saturday 18 May 2013

Ed Miliband is prepared to go it alone if other countries do not agree
to act. Photograph: Joe Giddens/PA

Ed Miliband has vowed to rip up the rule book as prime minister and go it alone if there is no international consensus to tackle multinationals engaging in massive tax avoidance.

In an interview with the Observer, the Labour leader urged David Cameron to find agreement at the G8 summit of leaders next month around an ambitious agenda forcing corporate giants to pay their fair share.

He said that, if Cameron fails, he himself as prime minister would unilaterally act to make multinationals operating in the UK more transparent about the money they make here, the movement of cash around their corporate structures, and the justifications for the tax they pay.

He would also increase the resources of HM Revenue and Customs to strike at tax cheats.

Miliband, who will speak at a Google event in Hertfordshire on Wednesday, said he believed some multinationals, including the internet giant, were not living up to their responsibilities to society. Google was accused by MPs last week of being devious, calculating and unethical after it emerged that it paid just £3.4m in tax on £3.2bn of sales taken from UK customers last year as the sales were technically "closed" in low-tax Ireland.

Miliband said: "Now, what is the politicians' responsibility: change the law. But it is also to talk about the kind of society we want to create and what the responsibilities of a company like Google are. I don't think they are living up to their responsibilities at the moment, and I will be very clear about that on Wednesday.

"It is part of a culture of irresponsibility. If everyone approaches their tax affairs as some of these companies have approached their tax affairs we wouldn't have a health service, we wouldn't have an education system. And actually the point I will make at Google is that will undermine Google."

Meanwhile Eric Schmidt, executive chairman of Google, writing in the Observer, has given his first reaction to last week's criticism of his company by MPs on the public accounts committee. He says tax avoidance is rightly a "hot topic" in difficult economic times and urges genuine reform, but adds: "Politicians – not companies – set the rules."

But, in a major policy announcement, Miliband says a Labour government would engender a more responsible capitalism in the UK by changing those rules with or without international agreement. Miliband would:

■ Pursue a new global system where multinationals must publish their revenues, profits and other key corporate information useful to revenue authorities in each country in which they operate.

■ Force multinationals to publish such information in the UK even if international agreement cannot be found on the issue, as they do in Denmark.

■ Make it a legal requirement for multinationals operating in the UK to disclose details of any tax avoidance schemes they are using globally.

■ Seek reforms to "transfer pricing" rules to stop companies from shuffling money to other parts of their firm based in tax havens in return for spurious services.

■ Open up the ownership of companies sited in Britain's tax havens to the UK revenue authorities, but also seek to allow developing countries access to such information.

Miliband said the government was "dragging its feet" on the issue of tax avoidance. "They have got to act. If they don't act, we will act in government. This is an absolutely massive and serious issue.

"I think it is a pro-business agenda to say that people should pay their fair share at the top. The head of a big British retailer came to me recently who was outraged by some of the things going on. He was saying he pays his taxes. The business world feels strongly about this.

"This has an impact on people in their daily lives. The less the big companies pay their fair share of tax, the higher tax others will have to pay, the worse the services they will receive."

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