Finance Bill — House of Commons, 2021-05-24
Topic: Macroeconomics
James Stewart Murray (Labour, Centre-left): I am very happy to put in the Library references to comments from the other G7 countries indicating their support, but what I ask the Financial Secretary to do is put in writing the support from the UK Government for the plans proposed by President Biden, which he should be able to do today. He should act, because the British people want the Government to act. He need only look at polling carried out at the end of April by Yonder, formerly Populus, which showed overwhelming public support for action to tackle global corporate tax avoidance: three quarters of respondents thought that "The UK should play a leading role." The polling also showed that less than a third of people "trust Rishi Sunak and Boris Johnson to tackle global tax avoidance" The public are right to be sceptical, because the Government have shunned ample opportunities to come out in favour of President Biden’s plans; indeed, since we began debating the Bill, I have put them to the Financial Secretary and his colleagues three times. On Second Reading, I urged the Exchequer Secretary "to confirm to the House that she and the Chancellor back plans for a global minimum corporate tax rate and that they will do all they can to make this a reality."—[Official Report, 13 April 2021; Vol. 692, c. 197.] She did not respond. In case his colleague’s lack of response was simply an oversight, I asked the Financial Secretary in Committee of the whole House "to confirm whether the Chancellor backs plans for a global minimum corporate tax rate"—[Official Report, 20 April 2021; Vol. 692, c. 897.] He refused to do so, saying only that the Government "welcome the renewed commitment that the US Administration have made in this area".—[Official Report, 20 April 2021; Vol. 692, c. 914.] In a debate the following week, I put the question to him again, as simply and directly as possible: "does the Chancellor back the plans proposed by the US President?"—[Official Report, 28 April 2021; Vol. 693, c. 415.] The Financial Secretary replied: "I do not think it is appropriate for Ministers to comment on tax policy in flight".—[Official Report, 28 April 2021; Vol. 693, c. 418.] It is very hard to conclude anything from that pattern of responses other than that the Government are not backing these proposals to succeed We know that much of the discussion around President Biden’s plans and the proposals formulated in recent years by the OECD and G20, with which his plans largely align, has centred on the so-called pillars 1 and 2 of any agreement. In broad terms, pillar 1 relates to where profits are taxed, while pillar 2 relates to a global minimum corporate tax rate. Both are important to developing a fairer tax system, both feature in President Biden’s proposals, and the Opposition want to see progress on each We have been trying to understand why the Government are so reluctant to get behind President Biden’s plans. There was a suggestion in the Financial Times last week that what the UK wants is more movement on where large multinationals pay taxes—pillar 1—before it will agree to support the President’s global minimum corporate tax rate, pillar 2. The paper quoted a UK Treasury official: "The core UK proposition is that we’ve got to solve the digital tax issue…It’s not primarily about a minimum tax". To quote the chief executive of Tax Justice Network, that argument is "absolute nonsense". Many commentators have joined him in taking a very sceptical view of what the UK claims its position to be; they point out that President Biden’s plans include steps to make progress on pillar 1, and that although any estimates are necessarily rough, pillar 1 would bring in only a few per cent. of the estimated £14 billion that a global minimum corporate tax rate at 21% under pillar 2 would raise A report by Bloomberg, however, implied that the real reason behind the Government’s position may be cynically to disguise their real agenda: a desire to keep alive the possibility of a race to the bottom in the future. That would be such a damaging and short-sighted approach. People are fed up with the race to the bottom. We thought that even the Chancellor had had a conversion when he admitted to the BBC’s "Today" programme around the time of the Budget that years of Conservative economic policy had failed, telling the BBC that "there was an idea" that corporation tax cuts "could help spur investment, and what we’ve seen over the past few years is that we haven’t seen a step change in the level of capital investment that our businesses are doing as a result of those corporation tax decreases." After years of people being frustrated with tax avoidance by the biggest multinational companies, the new global deal finally within reach would be a game changer. It would raise billions of pounds a year for investment in our British public services and industry, it would stop British businesses being undercut by large multinational firms that shift their profits overseas, and it would change the behaviour of Governments around the world by calling time on the race to the bottom with tax rates. That is why a global minimum corporate tax rate is so important This is a once-in-a-generation opportunity. It would be a shameful failure for our Government, at the G7 meeting that we are hosting in Cornwall next month, to fail to lead on securing a global deal. It is crucial that we show support and help to build momentum behind the Biden Administration’s ambitious plans.