23/01/2012 19:10 GMT | Updated 23/01/2012 19:39 GMT

Mitt Romney Attacked By MPs For Use Of Cayman Islands Tax Haven

LONDON -- A group of Labour MPs have expressed "alarm" that Republican presidential candidate Mitt Romney is using a British tax haven to pay a lower rate of tax.

Romney recently admitted that he pays an effective tax rate of around 15%, far less than many Americans. Much of his income is classified as investments and dividends rather than wages.

His wealth is also boosted by the millions he keeps in off-shore bank accounts in the Cayman Islands - a British territory in the Caribbean. On Tuesday, the multimillionaire former governor of Massachusetts is expected to make his 2010 tax returns public, along with an estimate for 2011. He had previously planned to release the documents in April.

Labour MP Katy Clark, one of the signatories to an Early Day Motion (EDM) attacking the presidential hopeful, said she would expect a politician of Romney's profile to be "more accountable" and to behave in a more "appropriate way".

"This EDM is taking a topical example and I think frankly it illustrates the scale of the problem that someone like this is involved in behavior of this nature," she told The Huffington Post UK.

"It is indicative of the problem we are trying to address," she added.

Clark said that she felt the issue of tax havens had been ignored because "often the people who take advantage have a lot of influence and a lot of power", adding that in a time of austerity when the British government was cutting public spending "we have to ensure we look at all the avenues to gain additional funds".

In practise EDMs have little impact on the legislative process and will not force the British government to take any action. Rather they allow MPs to put their opinion on record.

John Cryer, the Labour MP who tabled the motion, acknowledged that while the use of tax havens was not against the law they do exploit loopholes that the average person does not have access to.

"They are able to place large amounts of money off-shore due to tax advice. In stark contrast to the ordinary guy on the street, who works hard and plays by the rules, and pays his taxes," said Cryer.

He told Left Foot Forward: "I think it is a disgrace that the Cayman Islands, a tax haven, can enable wealthy corporations and individuals such as Mitt Romney and others in the wealthiest 1% to avoid tax and still be cloaked in secrecy.

"Meanwhile all across the western world, hard-working people are seeing their living standards and take-home pay stagnate or reduced.

"It reminds me of President Kennedy’s comment in his inaugural speech, ‘pay any price, bear any burden’. Except it’s the hard-working, modestly paid majority who are bearing that burden."

The full Commons motion reads:

That this House notes the OECD and G20's identification of the role of tax havens by wealthy corporations in fuelling the global economic crisis from 2009 onwards; is alarmed by reports that US former Massachusetts Governor Mitt Romnney is also using the Cayman Islands, a British territory, to avoid paying the same tax rate as other US citizens; is; and calls on the government to introduce urgent legislation to help close tax havens and increase transparency so that the very rich pay their fair share of tax in their respective countries and enable governments worldwide to invest more in jobs and growth.