THE BLOG
03/02/2016 05:15 GMT | Updated 31/01/2017 05:12 GMT

If the Tories Are Tough on Corporation Tax, Why Are They Lobbying to Protect Google's £30billion Tax Haven?

Following widespread condemnation of the 'sweetheart' deal agreed between Google and HMRC recently, George Osborne would have been hoping the week would end on a rather lighter note. Unfortunately, for him and his party, it seems the corporation tax scandal is one set to remain in the spotlight for the foreseeable future.

The details of the so-called 'sweetheart' deal between Google and HMRC have been widely publicised for over a week now. The huge tech corporation is reported to have made profits of around £7.2bn in the UK over the course of the last ten years, yet agreed to pay only £130m in corporation tax to HMRC. Analysts have calculated that this works out at a measly 3% level of corporation tax, despite the official rate being as high as 30% at one point during the same period.

Rightfully, the £130m figure has received much scrutiny over recent days, with even 10 Downing Street refusing to call the deal a "major success", the phrase used by George Osborne when the deal was first announced. At Prime Minister's Questions on Wednesday, Jeremy Corbyn questioned David Cameron on why, on the week people up and down the country are filling in their tax returns, small and medium-sized businesses are forced to pay the official rates of tax, yet large multinational corporations such as Google can negotiate 'sweetheart' deals and dramatically reduce the amount of tax they pay to HMRC.

However, it seems George Osborne and the rest of his party are well and truly in the pockets of Google, as an Observer investigation revealed on Sunday that "Treasury ministers have told the European commission that they are "strongly opposed" to proposed sanctions against Bermuda", where Google has supposedly amassed £30billion of profits from non-US sales and is not liable to pay any corporation tax.

Moreover, the UK is Google's second largest non-US market, accounting for 11% if its global revenues, meaning a considerable amount of the £30billion of profits amassed in Bermuda will inevitably come from UK sales.

This revelation inevitably raises more questions over Google's seemingly close connections with the Government and their ability to avoid paying their fair share of tax in the UK. It also rubbishes the Government's claim that they are taking serious action to tackle large-scale tax avoidance by huge multinational corporations such as Google and Amazon.

How can David Cameron say he is committed to tackling tax avoidance while his party's MEPs and even Treasury ministers do their best to prevent "countermeasures" against tax havens such as Bermuda?

This is a scandal that the public has a right to be angry about, and hopefully, one that maintains its media coverage. However, despite it being obvious that Google is one of the worst offenders with regard to large-scale tax avoidance, we should also begin to focus on the other multinational companies using similar techniques to reduce their tax bill. Companies like Amazon, Facebook, Apple and Microsoft all have questions to answer when it comes to paying corporation tax in the UK.

However, it's obvious that simply 'tax shaming' huge companies is not always a successful strategy to actually get them to pay more tax, although it does gains the necessary media coverage to take the issue further. Companies like Google and Amazon know the vast majority of people will always use their services, no matter how much tax they pay. What is needed is a complete rethink concerning how we tax huge corporations like Google, and how we can stop them from funneling profits into tax havens like Bermuda.

Evidently, the EU is taking rather belated action on the issue, exploring possible "countermeasures" against blacklisted tax havens. However, following the revelations in the Observer, it is now obvious that the Tories' priorities lie not in scrutinising multinationals properly, but rather in maintaining the absurd tax set-ups unfairly utilised by them.