THE BLOG

Parliament Still Has Power

28/06/2016 12:54

The Commons returned this week with Britain a changed place. The referendum result has thrown up a hundred unanswered questions, the PM has handed in his notice, a Tory leadership campaign is underway, and Jeremy Corbyn's Shadow Cabinet has deserted him. An autumn general election has never looked more likely.

Despite the turmoil, Parliament must set about the business of passing legislation. And just maybe, after a quiet weekend, the Chancellor may surprise us all. Because one bit of unfinished business, where the UK could act decisively, is on multinationals and the taxes they pay.

Throughout the referendum, whenever some argued: "there are some challenges we need to deal with together", the other side would argue "but we want to make more decisions here in our Parliament."

Well, in this case, I'm pleased to report that, we can have our cake and eat it.

The UK can act decisively - on its own - but in so doing, declare its intention to encourage wider action, perhaps in the EU (where more limited proposals are under discussion) or on the OECD, which has more far reaching measures under discussion.

To recap on the problem: multinationals, such as Google, Facebook and many more, can, if they wish, run rings round national Governments. HMRC took six years to investigate Google before eventually reaching some kind of agreement. That's how the UK does it - and it takes forever. And it all remains behind closed doors.

French prosecutors have a slightly different approach. More bullish you might say. A dawn raid of Google's head office in Paris with dozens of officials and police, including 25 IT specialists, on the case.

Putting aside any question of criminality investigated by the French authorities, the central issue our Parliament can tackle this week is secrecy.

The way that multinationals structure their finances to reduce their tax burden is perfectly legal. And incredibly complicated.

The more I have looked into this, the more convinced I've become that the best way to tackle this issue is through greater transparency.

That is why, with the backing of a cross party majority of the Public Accounts Committee, and MPs from nine different parties, I have tabled an amendment to the Finance Bill, to introduce public country-by-country reporting.

All multinational businesses over a certain size will have to publish headline information about their revenue and where they pay taxes. This is information they already have to provide the HMRC; but it's time to shine a light on these activities.

It tells you something about multinationals when in 2010, the reported profits in Bermuda happened to be 1643% bigger than their whole GDP. It must be coincidental that their corporation tax rate is zero.

That's why this campaign's message is #showmethemoney.

Some of these global enterprises will only be cajoled into being more reasonable with their tax liabilities if they face the sure knowledge that the headline information about their activity is published for all to see.

The leaked Panama Papers, and the Google tax affair has moved the tide of opinion towards more openness.

Sands are shifting in the business world. Many companies see public reporting rules as inevitable. In 2014, one in four FTSE 100 companies provided a geographical breakdown of their taxes. Barclays has been foremost among them.

Those companies see that the game is changing. We are entering an era of transparency. And opinion from all parties is shifting.

On more than one occasion the Chancellor has argued in favour of public country-by-country reporting. Speaking at a G20 finance ministers meeting in April, Osborne said: "It should be clear to all countries and tax jurisdictions that the world is moving firmly in the direction of greater tax transparency and the UK will continue to push for an internationally agreed blacklist for those that refuse to do the right thing."

The Government has always said, they would like to wait for every country to move together on this.

I hope the Chancellor will rethink that stance - get back on the front foot and show that, on some issues, Britain still leads.

If he adopted my amendment, which is backed by nine parties and a number of Conservative MPs, he will have the support of groups ranging from the private business-led Fair Tax Mark and campaign group Tax Justice Network, to development NGOs including CAFOD, Oxfam, ActionAid, Christian Aid and Save the Children. The charities argue that developing countries lose more in unpaid taxes from big business every year than they receive in aid.

However long George Osborne remains as Chancellor, I hope he will reflect on his legacy. This step towards openness; making multinationals do the right thing; that is a worthy legacy for any politician.

So come on George. Support #showmethemoney and show that what Britain does still matters.

Caroline Flint is the Labour MP for Don Valley

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