Tax Avoidance and Evasion — House of Commons, 2017-11-14
Topic: Macroeconomics
Margaret Eve Hodge (Labour, Centre-left): I completely agree with my hon. Friend’s very powerful point Unbelievably huge sums of money are hidden in these jurisdictions. It is impossible to measure accurately how much tax is lost through the presence of tax havens, but it runs into hundreds of millions of pounds every year. We do know that developing countries lose three times as much in tax avoidance as they gain from the global investment in international aid. Our tax havens, acting as secret, low or no-tax jurisdictions, are utterly central to much of the tax avoidance. We cannot continue to pretend that we are leading the international fight against tax avoidance and evasion when, by what we do and what we fail to do, we allow avoidance to prosper; and not just tax avoidance, but money-laundering, corruption, bribery and other financial crimes, which prosper through the secrecy that we allow to prevail. Our failure to tackle our tax havens, our weak regulatory regime and some of our tax rules means that we are now seen as the country of choice for kleptocrats and criminals as well as tax avoiders and evaders, as they seek to hide their money and minimise their tax bills We need our Government to hold to the commitments made by the Prime Minister and the Chancellor in 2013 and 2014. They understood that transparency was the key ask. We need public registers of beneficial ownership, showing who owns what and where. That, at a stroke, would undermine so much. Would Bono have invested in tax havens if he had thought that we would all know? Would Lewis Hamilton have created a complex structure of companies to avoid VAT? Would the actors in "Mrs Brown’s Boys" have hidden their earnings in artificial financial structures if they had thought that we would find out? The answer is no David Cameron understood that when he told the UK tax havens to rip aside "the cloak of secrecy" in 2013, when he urged them in 2014 to consult on a public register that was "vital to meeting the urgent challenges of illicit finance and tax evasion", and when he proclaimed in 2015 that "if we want to break the business model of stealing money and hiding it in places where it can’t be seen: transparency is the answer." However, in the last two years the Government have fundamentally watered down that commitment to public registers in British tax havens, and now we hear Ministers say that we must wait for other countries to go first. The proper call for international action on transparency has become the lame excuse for inaction in our own territories We should lead by example. We should demonstrate that transparency can and does change behaviour. We should compel our overseas territories and Crown dependencies to publish public registers. In the past, a Conservative Government used their powers to outlaw capital punishment in our Crown dependencies and overseas territories, and a Labour Government used the same powers to outlaw discrimination against gay people. Today we should work together to outlaw the secrecy of those jurisdictions, which leads to such massive tax injustices The Paradise papers show us that the problems created by secrecy are much bigger and more complex than we ever thought possible, and that is why we need to legislate for transparency in our tax havens. We should help them to transform their economies, so that they stop depending on hidden wealth, unsavoury people, and questionable financial practices. I cannot think of one good reason for us not to do that, and to do it now. Indeed, there is more that we can do, right now: it simply requires the Government to have the necessary political will. They will certainly have the support of the whole House, and the whole country, if they demonstrate by their actions, not their words, that they will work to stamp out tax avoidance We can and should now implement the legislation requiring multinational companies to report their activity and profits on a country-by-country basis—legislation successfully steered through Parliament by my right hon. Friend the Member for Don Valley (Caroline Flint). We can and should also introduce immediately the public register of property ownership that was enacted before the general election, promoted by Transparency International and Global Witness and supported by members of the all-party group on anti-corruption. Nobody knows why this legislation has not been implemented; it is a key element in the fight against corruption, avoidance and evasion. We can and should properly resource HMRC now so that it has the capability to pursue all who seek to avoid paying tax, not just the small businesses who form an easy target that can be hounded with little effort. Every £1 invested in HMRC enforcement yields £97 in additional tax revenues. It is a complete no-brainer that we should be strengthening HMRC and reversing some of the cuts The Paradise papers have helped place tax avoidance back at the heart of the political agenda and back at the top of the list of public concerns. The Government need to grasp this moment to act. They have an opportunity to do so in next week’s Budget. Britain will never get rich on dirty money, and our public services cannot function if the wealthiest individuals and the most powerful companies deliberately avoid paying their fair share towards the cost of those services. And this Government will not be forgiven if they fail to heed the lessons we can all learn from the Paradise papers. Proper transparency will come. The Government can choose whether they lead the changes needed or whether they want to be dragged kicking and screaming into implementing essential reforms. I hope they will listen, learn and act.