Tax Avoidance — House of Commons, 2015-02-11
Topic: Macroeconomics
Cathy Jamieson (Labour, Centre-left): As my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) said in her opening remarks, the tax system in this country is based on trust: trust that the Government will make responsible decisions on how to use the money they collect; trust that if I pay my fair share, so does my neighbour; and trust that the Government will be even-handed in their application of the rules. But, as we have heard in today’s debate, under this Government that trust has been eroded I wish to highlight a few points made by Opposition Members in the debate. My hon. Friend the Member for Glasgow Central (Anas Sarwar), who has been a champion on this issue, rightly raised international aspects, the links with tackling poverty and the role of non-governmental organisations. My right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) raised serious concerns about HSBC operations and the links to tax havens, and the role of the other big banks. My hon. Friend the Member for Bishop Auckland (Helen Goodman) highlighted specific examples that have been in the public domain relating to large companies and their position on paying tax, and she stressed the need for fair play. My hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) highlighted the sometimes inappropriate messages sent out to the public when people are not held to account and the need to crack down harder. My hon. Friend the Member for Llanelli (Nia Griffith) emphasised the need for fairness and spoke about the damage done to honest businesses when larger businesses are not held to account. She also rightly raised issues relating to resources for HMRC. The hon. Member for Foyle (Mark Durkan) also spoke about international matters and the need for EU countries to work to take action, as the G20 countries also should We heard a number of strong speeches containing important points, but we have also heard a lot today about the Government’s record—or perhaps lack of a good record—on tax avoidance. We have heard about a tax gap of £34 billion, which has grown larger by the year, and a Swiss deal that, of course, is full of holes. The Chancellor claimed when announcing it in 2012 that it would raise £3.1 billion, but as we have heard today, it has raised just £873 million. Perhaps the Government are failing because rather than closing existing loopholes, they are busy opening new ones The Office for Budget Responsibility has warned that the Government’s shares for rights scheme could cost the taxpayer hundreds of millions of pounds, yet it seems today that the Government regard their record on tax avoidance as a source of pride, rather than as something that needs far more work. Let us go back to that much quoted study by the Financial Times, to which a number of hon. Members have referred, because it is important yet again to put on the record what it actually said: "Measures put in place by Labour during its 13 years in power to counter corporate tax avoidance are projected to raise ten times as much over the next four years as those introduced by the current coalition government." There we have it: 10 times more raised under plans introduced by our Government during those 13 years. And that is even before we get started on HSBC We all know the story by now. HMRC was passed information about HSBC’s complicity in abetting tax evasion. Other Governments in other countries received the same information and used it proactively to recover millions of pounds of unpaid tax. What did our Government do? They cut corners and they cut deals behind closed doors. As our motion highlights, just one of 1,000 people alleged to have avoided or evaded tax has been prosecuted. Perhaps the Government are going to point to the money repaid, but it is just a fraction of what is owed. As Labour Members have repeatedly asked, what kind of message does that send? It sends the message that not paying tax is fine for big companies and big corporations because this Government will not pursue them My hon. Friend the Member for Birmingham, Ladywood also quoted Richard Brooks, a former HMRC tax inspector, in her opening remarks. He said that the Treasury and HMRC "knew that there was a mass of evidence of tax evasion at the heart of HSBC" in 2011, but the Government "simply washed their hands of it" She was also right to say that that is a damning indictment. It is not good enough and it is time we got some answers My hon. Friend also put questions to the Chancellor when she wrote to him earlier this week and she reiterated them to the Minister today. Did he ever speak to Lord Green about tax avoidance and evasion at HSBC? Given the scale of the alleged wrongdoing, why was there only a single prosecution? What role did Ministers play in deciding on a selective prosecution policy for those accused of tax evasion or avoidance? These are substantive questions and we deserve substantive answers, but so far we have had no answers at all, and the Government must now come clean and supply answers to those specific questions I found it increasingly difficult to listen to what the Ministers were saying. Somehow they were denying all responsibility and failing to join the dots when they were given information, and they failed to ask the right questions. People have lost faith in this Government because they have shown time and again that they cannot be trusted to act fairly and in the best interests of all. Our motion sets out what we would do to restore that faith. We will be able to do that because we recognise a fundamental truth about the tax system that this Government have failed to appreciate, which is that it is about trust and it is about fairness Let me reiterate what our plan is to restore that faith. We will introduce penalties for those who are caught by the general anti-abuse rule. We will give the plan teeth by introducing a tough penalty regime, with fines of up to 100% of the value of the tax that was avoided. We will close loopholes on stamp duty that allow the hedge funds to avoid paying hundreds of millions of pounds in tax through intermediary relief. We will take action to close loopholes that allow some large companies to move profits out of the UK and avoid corporation tax. According to HMRC, the tax loss from that loophole is around £200 million each year, and it has been reported elsewhere as £500 million.