Foreign Affairs Committee

Debate between Tom Tugendhat and Helen Goodman

Thursday 14th December 2017 Commons Chamber

[Tom Tugendhat]

I am sure my hon. Friend joins me in the sadness we feel that Burma is not currently able to seek re-admittance to the Commonwealth because of these very tragic events that, sadly, she has done nothing to prevent. There is of course a role for the Commonwealth in the region and more widely. We should also welcome the words of Archbishop Tutu in condemning the silence of the State Counsellor. Frankly, it is only voices like his that carry a weight that is equal to hers.

[Helen Goodman (Bishop Auckland) (Lab)]

We welcome the report from the Foreign Affairs Committee and agree with the conclusion that any repatriation must be safe and voluntary. Does the hon. Gentleman agree that, to ensure that there is no repatriation that does not meet these conditions, the United Nations High Commissioner for Refugees must have access on both sides of the border?

[Tom Tugendhat]

The hon. Lady makes an extremely valid point. Of course, we called in this report for absolute access in various areas, and for the special representative of the Secretary-General—Special Representative Patten—to have access, as she is expected to do this week, to the capital. But that needs to go further. The hon. Lady is absolutely right that the representatives of the UN High Commissioner for Refugees need access on the ground, not just with the Government.

Tax Avoidance and Multinational Companies

Debate between Tom Tugendhat and Helen Goodman

Wednesday 3rd February 2016 Commons Chamber

[Helen Goodman (Bishop Auckland) (Lab)]

I am pleased to have the opportunity to take part in this extremely important debate. Clearly, a number of things have gone wrong in the case of Google, but I shall focus on one aspect: the tax treatment of intellectual property. This is a growing part of the economy and we need to get it right.

I draw a distinction between two extremes—on the one hand, a large pharmaceutical company that does a great deal of research and development and employs a large number of people to make a new drug, and, on the other, a company such as Starbucks, which registers its name in Luxembourg, seemingly purely as a tax avoidance device. Between those extremes there is a continuum and Google is somewhere in the middle. It has done some mathematics to make some algorithms, but it also has a brand that is extremely powerful. We need to tighten up on this.

What happens at present is that a name is registered in a low tax domain. That separate company charges a fee to this country, where the work is done. That wipes out the entire tax treatment. That is ridiculous. One thing that is wrong is that the company seems to be able to set the price itself. The Revenue is not auditing it and asking whether that is reasonable. Obviously, maintaining a brand involves some costs, but small costs—perhaps to repaint some signs or to train its marketing people. Those costs cannot be compared to the cost of research and development.

[Tom Tugendhat (Tonbridge and Malling) (Con)]

Does the hon. Lady understand that an awful lot of the cost could be in intellectual property and in ideas held by people overseas? That is not necessarily as cheap as a lick of paint, as she suggests.

[Helen Goodman]

I was trying to distinguish between real intellectual property and intellectual property that is purely branding. Take the example of the BBC, which sells television programmes. The BBC can get more money for its television programmes than a small television production company, partly because it is called the BBC, even though the actual costs of making the television programme are the same.

The question we have to ask ourselves is whether, because of the high value of the brand, the company should pay less tax. I submit that that is a fundamental mistake, because the brand is an asset. What the company is getting in that situation is economic rent. The fact that it has a valuable asset is not a reason for it to pay less tax. That is absurd. If a company invests in a piece of machinery and makes a claim against its capital allowance, over time the amount that it can claim against tax decreases as it moves from the point at which the investment was made. In cases where the brand is the asset, companies are claiming more over time as they are selling more. I think that is an area where we could very usefully tighten up.

Perhaps this area of tax would be better handled if we had a few more economists looking at the underlying economics and fewer accountants, who seem very comfortable with the way the system works but are not driven by the desire that the rest of us have to make sure that these people pay their fair share.