Whilst the Treasury continues with its programme of unprecedented spending cuts – many at the expense of the poorest and most vulnerable in the UK – it quietly slipped out proposals yesterday (30 June), which will hand out £840 million a year to multinational businesses.
Hidden under the bland title of ‘proposals on Controlled Foreign Companies’, the plans amount to a big relaxation of anti-tax avoidance rules. Advocates of the policies say that it will increase the UK’s ‘business competitiveness,’ but what it actually offers is big incentives for companies to shift their financial operations ‘off-shore’ – to tax havens such as Jersey, Guernsey or the Cayman Islands – as a means of avoiding paying UK taxes.
Even on the Treasury’s own estimates, this will cost £840 million in lost taxes a year. And this is on top of the estimated £25 billion a year that is already lost through tax avoidance by wealthy individuals and businesses.
Every pound avoided in tax is a pound less to spend on childcare, social care, health or education. At a time when spending cuts are having a real and damaging impact on the lives of some of the poorest and most vulnerable people in the country, it is morally indefensible for some of Britain’s richest companies to be avoiding paying their fair share of UK taxes.
Next week, the Methodist Conference will be debating a report on Poverty and Inequality in the UK, which call for – amongst other things – action to shine a light on how companies use tax havens to avoid paying taxes.
Tax avoidance is big business, and as we’re constantly re-assured, is ‘entirely legal.’ But its hardly moral.
If we are going to make any progress in Closing the Gap between rich and poor in the UK (or indeed, globally), we must surely take action not only to close the tax avoidance gap, but shift the public mood to make tax avoidance as morally unacceptable as drink driving – or stealing from the poor.