Tax Avoidance and Evasion — House of Commons, 2016-04-13
Topic: Macroeconomics
Stewart Hosie (Scottish National Party, Centre-left): I suspect that the Chinese authorities are interested in that £93 billion just as much as we are, because I suspect that much of it is not there—how can I put this gently?—officially. They have as big a problem with money being fleeced from their system as we and other countries have with ours Another issue raised by my hon. Friend the Member for Kirkcaldy and Cowdenbeath, and by my hon. Friend the Member for East Lothian (George Kerevan), is the question of where the money actually is and how it is set to work for its beneficiaries. As we know, cash funds do not actually sit in the Cayman Islands or the Bahamas. One of the biggest centres for the cash is London, and we can see where some of that money is spent. For example, hundreds, if not thousands, of rather expensive properties in London have been bought by persons unknown. We have therefore called for radical reform to address tax avoidance, outright evasion and criminality and to deliver fairness across the board so that the very wealthy pay the tax that is due in precisely the same way as those on more modest earnings The starting point for paying tax in this country is the Revenue knowing precisely who owns what assets and what income is derived from them. In short, that means a public register of beneficial ownership of companies, and not just in the UK, but for the Crown dependencies and the overseas territories as well, precisely so that nobody can hide assets or incomes through an opaque structure of a company registered in an overseas territory, registered by a Panamanian lawyer while the money comes swiftly to a bank account in London and is parked in a multi-million pound mansion in Mayfair through an anonymous shell company That also means taking serious action on trusts. The argument that the Prime Minister used was that he would not have got the agreement had trusts been included. He argued—possibly correctly historically—that those trusts were set up in order to allow sophisticated investors to invest in dollar-denominated stock. But times have changed. I took a cursory look at the stock exchange website this morning. On its "frequently asked questions" page, I saw the following question: "Can a company have its securities traded in currencies other than sterling, for example euros and dollars?" The answer was, "Yes, your shares can be denominated and traded in any freely available currency you choose." Indeed, the stock exchange launched a Masala rupee-denominated bond last week. The old arguments that these structures are required for non-sterling trades or investment are now simply wrong. As my hon. Friend the Member for Kirkcaldy and Cowdenbeath put it, even if the Prime Minister was right some years ago, he is wrong now and public opinion has changed dramatically That brings me to what else the Prime Minister said on Monday. He said that he has published all the information on his tax returns for the past six years. He has provided details about money inherited from and given to him by his family. He has published other sources of income and his salary. He dealt specifically with the shares that he and his wife held in a unit trust called Blairmore Holdings, set up by his late father. That, from our point of view, was precisely the right thing to do. However, in a sense, all of that is irrelevant because it did not actually address the fundamental issue of individuals holding assets through overseas shell companies and being able to hide them and their income from the tax man Also, in describing the actions that the Government are taking to deal with tax evasion, aggressive tax avoidance and international corruption more broadly, the Prime Minister said that they have put an end to rich homeowners getting away without paying stamp duty because their houses are enveloped within companies. He said that they had made 40 changes to close loopholes, and they have sought agreement on global standards for the automatic exchange of information, and in June this year, as the Minister has pointed out, the UK will become the first country in the G20 to have a public register of beneficial ownership so that everyone can see who really owns and controls each company. We recognise that there has also been work on base erosion and profit shifting All of that is to be welcomed. What we are saying is that we need to go further. It will simply not be enough for the police and the tax authorities to see beneficial ownership of companies registered in Crown dependencies; it must be public, so that the citizens of those countries and ours can see who precisely owns and benefits from what. Also, while we welcome the publication of beneficial ownership of companies in the UK, I ask the Government to ensure that sufficient resources are now dedicated to HMRC so that it can forensically scrutinise the sources of income to ensure that they are legal and that the tax due is paid. Of course, as I said earlier, the Government must also pass on to other authorities the details of any miscreants suspected of looting cash from other countries I am delighted that this subject is now under real scrutiny. I am also delighted that we have gone wider than the parochial. Oxfam has pointed out how significant this is in its report "Ending the Era of Tax Havens". It gives encouragement to the Government, stating: "The UK is especially well placed to show leadership here because it controls or directly influences by far the largest network of tax havens in the world. This network, encompassing the UK’s Crown Dependencies and Overseas Territories and centred on the City of London, is estimated to account for nearly a quarter of global financial services provided to nonresidents within a jurisdiction. Taken together, this UK entity would sit at the top of the ranking in the Tax Justice Network’s Financial Secrecy Index" That is not something we should be proud of. However, Oxfam goes on to talk about the opportunity the Government have, saying that success in tackling corruption and tax evasion could be transformative not just in terms of our revenue, but in terms of the fight against global poverty and inequality, which, for the SNP, is just as important. I will end by saying one thing to the Government: the cat is out of the bag. This is not just about Mossack Fonseca; this is the tip of the iceberg. The public will not allow this matter to be quietly swept under the carpet again.