Tax Avoidance and Multinational Companies

Chloe Smith Excerpts

Wednesday 3rd February 2016 Commons Chamber

[Chloe Smith (Norwich North) (Con)]

It is rich to attack this Government for collecting tax. Big multinational corporations cannot carry on as they have been and must expect to pay more tax, and Google’s payment is an important step forward to address the long-standing problem of larger corporations not paying fair amounts of tax under the last Labour Government.

Any debate about that past tax in particular and about aggressive tax avoidance in general is in the context of what past law required should be collected. This debate should look ahead to whether and how our laws should change in order to collect more. The tax gap is reported to be £34 billion, or 6.4% of tax liabilities, according to the 2013-14 figure. What might £34 billion buy us? It is half the deficit Labour left us. Public sector net borrowing is about £73 billion this year. It is three times the pay bill for nurses. To break it down further with an international example: £1 billion is what we contributed to the Ross Fund in the global fight against malaria. What is that £34 billion made up of? Only one third is committed by large businesses; half is committed by small and medium-sized businesses; and the rest, I take it, is made up of individuals in error and out-and-out criminals in malice.

We need to look at fairness in two ways. First, is the law applied fairly? We rightly expect HMRC to collect as much as possible from every source, large and small, mistaken or malicious, under a fair application of existing law. Secondly, is the law itself fair? Does the law need to change further, and if so how, to ask for more tax? That is obviously an international question. I welcome the OECD’s work on base erosion and profit shifting—I look forward to scrutinising the results in the Finance Bill to come, because that is ready for implementation—and the Government’s leadership on a diverted profits tax. I look forward to hearing a summary of what they have brought in during its first year.

In summary, I want tough action to ensure that all companies pay their fair share of tax; I want more tax collected; I want the laws we have to be used; I want new laws to be reported upon carefully so that my constituents can be assured that we are collecting what we need; and I want Britain to continue to lead the world in the OECD’s implementation of a sensible set of multinational measures.