Oral Answers to Questions

Mel Stride Excerpts

Tuesday 11th September 2018 Commons Chamber

[Jo Swinson (East Dunbartonshire) (LD)]

10. What steps he is taking to ensure that large international technology companies pay an appropriate level of tax in the UK.

[The Financial Secretary to the Treasury (Mel Stride)]

Mr Speaker, I echo your welcome to the hon. Lady. It is good to see her in her place. It is absolutely right that all companies in this country should pay a fair rate of tax. The Government recognise that for some businesses—typically online companies—the current international tax regime is not entirely appropriate. We are working with the OECD and the European Union to find a solution to that, and we have made it clear that in the event we cannot reach a position where we can move multilaterally, we will take unilateral action.

[Jo Swinson]

I thank the Minister for that answer. The fact that Amazon’s UK profits trebled, yet it ended up paying less tax, shows how the tax model is broken for large international tech companies. He said that the UK may act unilaterally if international progress is not made at sufficient pace. With the OECD report not expected until 2020, is he prepared to wait that long before starting to act? Does he anticipate perhaps joining in with our European Union allies on the 3% interim revenue tax before then?

[Mel Stride]

We are not only working with the European Union; we are also working closely with the OECD. At our persuasion, it has recently decided to bring forward that report to 2019. We are making progress at the multilateral level, but as I have clearly stated, we should all be in no doubt that we are prepared to take unilateral action, should that be appropriate.

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

The question is whether there is a level playing field. When my right hon. Friend hears that bookshops pay around 11 times more total tax than Amazon on the same £100 of turnover, does he think we are striking the right balance to enable our town centres and communities to thrive?

[Mel Stride]

When it comes to business rates, which are the heart of the taxes that my right hon. Friend referred to, we have done a great deal since 2016. We will by 2023 have provided reliefs totalling some £10 billion, much of which will fall as relief to the high street. I take on board the comments he has made. As with all taxes, we will keep business rates under review.

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

Contrary to the comments of the Financial Secretary to the Treasury, international co-ordination on tax has frequently been blocked by the Government. We saw that particularly when it came to the taxation of trusts with both David Cameron and now the current Government arguing against more transparency. It is no surprise that, as a result, a director of Fidelity International and other experts are saying that the Amazon case shows

“how tax policy hasn’t moved on.”

Why are this Government letting giant multilaterals get away with it and letting everybody else down?

[Mel Stride]

Let me be extremely clear to the House: this Government have an exemplary record on clamping down on avoidance, evasion and non-compliance. We have one of the lowest tax gaps in the entire world, at 5.7%, far lower than was the case under the Labour party. We have brought in a number of rules under the base erosion and profit-shifting project—a project of which we were in the vanguard. For example, tax deductions for interest expense came in in 2016 and yielded £3.9 billion by 2021, and the diverted profits tax that we introduced in 2015 has already raised some £700 million.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

11. What assessment he has made of the effectiveness of tax incentives to support the sale of companies to employees.

[The Financial Secretary to the Treasury (Mel Stride)]

We have brought in a number of incentives to encourage employee share ownership, not least employee ownership trusts, which provide a capital gains tax advantage to those businesses selling shares into the trust and tax advantages to employees alike. We have also brought in enterprise management incentives, company share option plans, the save-as-you earn scheme and the share incentives plan as well.

[Lloyd Russell-Moyle]

Small and medium-sized businesses are the lifeblood of the economies of local communities, but with 60% of small businesses with no succession plan after their founders retire, what are the Government doing to ensure that employee ownership is one of the options going forward to keep businesses going?

[Mel Stride]

I have set out a number of the schemes that the Government are moving forward with, and, of course, that has been with great success. In 2016-17, some 3 million employees entered into SIP share arrangements, 400,000 entered into arrangements under save-as-you earn with an average value of shareholding of some £5,000, and 3,500 employees were offered EMI schemes in that particular year.