Politicians who are trying to stop corporate tax avoidance have been having a Googling good time since the beginning of the year. The excitement started when Chancellor Osborne announced that the deal between Google and HMRC, under which the corporation will pay an extra £130 million in back taxes, was 'a major success'. He announced this from Davos, which may explain why it was so totally out of touch with the predictable public response: outrage. Compared with the £6.5 billion that Google made in the UK just in 2014, this is a shockingly small sum.
Tax is a classic example of an issue where we need EU cooperation: in the battle against corporate tax avoidance, we really do need more Europe rather than less. Corporations exploit their ability to move profits from country to country, and they also encourage national governments to compete with each other in a race to the bottom that undermines public finances and destroys public services that they themselves use. In the case of Google, the internet giant is free riding on the £1.2 billion of public money that has been invested in broadband infrastructure.
Following the Luxleaks scandal, Greens campaigned for a special committee in the European Parliament to investigate tax matters, and we have agreed on some strong proposals, including stopping payments of any EU funds to companies with subsidiaries in tax havens. The European Commission has recently proposed a tax package to prevent corporations from shifting their profits to minimise their taxes. But proposals like these are regularly blocked at the European Council by member states who put national self-interest ahead of the common good.
Our key target for this year is public country-by-country reporting so that we know where companies actually create economic value and we can require them to pay their taxes there. Intriguingly, Osborne recently supported such a move, although his MEPs voted against an amendment I put forward to achieve this last year. This seems more of a panic reaction than a policy commitment from a party that proudly supports tax competition, but we will hold the Chancellor to his word.
If you are gripped by the joy of tax, there is much more at: mollymep.org