Corporate Tax Avoidance

Dan Rogerson Excerpts

Monday 7th January 2013 Commons Chamber

[Dan Rogerson (North Cornwall) (LD)]

I pay tribute to my hon. Friend the Member for Redcar (Ian Swales) for securing the debate, and for the work that he and his colleagues on the Public Accounts Committee do on our behalf to delve a bit deeper into these issues. It is also a pleasure to follow the hon. Member for Amber Valley (Nigel Mills), who made a lot of sensible points.

The hon. Member for Lincoln (Karl MᶜCartney) was a little strident earlier, when he sought to have some political fun within the coalition. I am sure that hon. Members from Northamptonshire would have been proud of him. I thought he was being rather ideological. The Conservatives used to be the party of pragmatism, but his message was that there should be cuts at all costs, and that implementing cuts was the virtuous thing to do. I disagree with that. I believe that if there is something good to be done and the Government have the money to do it, they should spend that money on behalf of the people to try to achieve that goal. I do not think that there is anything inherently good in cuts, but the Government are trying to cut the deficit that we inherited, because it has burdened the country and future generations with huge interest payments and threatened to destabilise the economy. It is therefore the right thing to do.

Pretty nearly all the parties in the House agree that the deficit needs to be reduced over a certain period, but if we are asking people to contribute to that through cuts or through paying tax elsewhere, they need to know that everyone is making a fair contribution. That is understandable. Even though UK Uncut sometimes takes an extreme position and oversells the contribution that could be made to the economy by dealing with this problem more equitably, there is a core of truth in what it says, which is that some organisations are using expensive advice to ensure that they get away with not paying the same contributions as everyone else. As the hon. Member for Hayes and Harlington (John McDonnell) said, those who pay their taxes on a more straightforward basis want to know that everyone else is making a fair contribution.

We represent a diverse economy here in the UK. I represent a small business economy in which it is incredibly difficult for retailers to survive. The hon. Member for Cities of London and Westminster (Mark Field) talked about not wanting our high streets to be homogenous, but we need to be sure that there will be some sort of high street left. I am sure that most of us will have done some online shopping, because it is convenient and helpful, but it cannot be right for small, local businesses to compete under a completely different set of rules from those used by multinationals such as Amazon. We have heard that this is not just about corporation tax, and that the problem exists in relation to other taxes as well. We need to look at the matter across the piece. My hon. Friend the Member for Redcar made that point very well when he framed the debate.

We know why companies avoid paying tax. It is rational behaviour, and we cannot knock them for doing it. An industry has grown up around it because it is legal, rational behaviour. Governments of all political colours have sought to exploit this and to push behaviour in a certain direction. An example is waste policy and the effect of the landfill tax regime, which was used to push behaviour in a particular way. We all bear some responsibility for how we set the terms of the tax regime, but we can also set the culture. The hon. Member for Bognor Regis and Littlehampton (Mr Gibb) mentioned boardroom culture earlier, but this is about the culture of society as a whole. The fact that we are having this debate today is a positive thing. This is not about populism; it is a genuine response to concerns expressed by people who want us to articulate their views.

The coalition has acted to make corporation tax more reasonable, but that will work only if people actually pay it. The trade-off involves ensuring that we have a tighter regime. I agree that we should not move towards a bargaining system in which the final arbiter is public opinion. That is certainly not the way to run a tax system. I praise my right hon. Friend the Chief Secretary to the Treasury and his colleagues for investing in the areas of Her Majesty’s Revenue and Customs that carry out such work, because that is where the battle must be fought and won. Yes, the solution involves the legal framework, but it is also about HMRC having the resources to implement the measures.

It is no accident that we are in this situation. Previous Governments have preferred not to discuss the matter, because big business has a seat at the top table and has been able to lobby effectively. It has made the case that everything it does is good and everything it touches turns to gold, and that it should therefore be left alone to get on with it. I think the culture has changed at this time of austerity in favour of delving a little deeper and saying, “No, that is not the case. Where you do good, we will be partners in rewarding it and ensuring that our economy works, but where you are trying to pull one over on us, we will invest in the resources through HMRC to get the job done.”

The hon. Member for Hayes and Harlington was absolutely right to highlight the closure of tax offices under the last Government. I lost the battle to save my local office in North Cornwall, even though our compliance officers had a great deal of skill at doing such work. If it had been argued that their work could be done more efficiently so that the bigger corporations could be looked at, we could have retrained those people and they could still have been based out in the regions—as Amazon showed, it does not really matter where people are based; the trade will keep coming if things are managed effectively. It is a great shame that we lost that expertise, but that is now ancient history, as we are where we are.

It is clear that the sums involved are highly significant and that previous Governments have been too timid in tackling the problem. We are now having an open and public debate—both here tonight and out in the country—which I welcome. I look to the Minister to set out his determination to tackle the problem, invest the resources in HMRC and ensure that we tighten up the regulations where possible.

[Karl MᶜCartney]

rose—

[Dan Rogerson]

I am afraid that I cannot give way.

Significantly and finally, we must work with our international partners to set up an international framework for a culture in which companies pay for the profit they make and work effectively and in harmony with Government to achieve prosperity in the way that most people would expect.