MPs back bold new measures to crackdown on tax havens - poll
Government must rule out slashing corporation tax and turning UK into a tax haven after Brexit, says Jon Date, Tax Advocacy Adviser, at ActionAid.
ActionAid is launching a new campaign calling for the Prime Minister to deliver on her promise to curb the use of tax havens, and rule out any suggestion that the UK could become one - following recent reports that the Government could be considering slashing the UK’s corporate tax rate after Brexit.
A new poll released today, commissioned by ActionAid and carried out by Dods Research, shows that the Prime Minister would have significant cross-party support for bold new measures to increase tax transparency and tackle tax havens:
- Seventy four percent (74%) of MPs surveyed thought the Prime Minister should require all UK multinational companies to report how much tax they pay in every country where they do business (only 10% disagreed). This would allow people to see how much tax companies were paying around the world, and if they were using tax havens.
- A majority (56%) thought that, before the UK leaves the EU, the Government should set a date by which it will require UK-linked tax havens to publicly reveal the real owners of the shell companies they host (25% opposed). Ensuring UK-linked tax havens publish this information would help stamp out tax evasion, corruption and crime by making it harder for foreign citizens to hide ill-gotten assets.
- Seventy two percent (72%) of MPs also thought that UK companies with subsidiaries in tax havens should be required to explain what those subsidiaries are used for (18% disagreed).
The IMF estimates that corporate tax avoidance costs developing countries US$200 billion a year – money that is vitally need for public services like schools and hospitals. The UK has shown global leadership on tax transparency, for instance by being the first G20 country to introduce a public register of the real owners of companies and by legislating to allow for public country-by-country reporting. However, the Government’s apparent suggestion that the UK could become a tax haven after Brexit risks undermining the leadership it has shown.
In order to deliver on her promise to clamp down on tax havens, the Prime Minister must start by boosting tax transparency. This should include setting out how and when the Government will use its new powers to force companies to publicly report how much they earn, and how much tax they pay, in each of the countries where they operate. It should also ensure UK-linked tax havens like the British Virgin Islands live up to the same standards of transparency set by the UK by publishing the real owners of the shell companies they host. This is a measure that countries including Nigeria and Afghanistan are introducing, but where UK jurisdictions lag behind.
The Government must put an end to the suggestion that the UK could become a tax haven, including by ruling out any further rates to corporation tax beyond what’s been announced. This is because a “race to the bottom” on low tax rates affects all countries, with developing countries suffering the most. Finally, the Government needs to set out its own plan to curb the use of tax havens once and for all - taking both steps to help UK-linked tax havens transition towards other types of economies, and also to deter British companies from using tax havens.
Taking these steps would help ensure companies pay their fair share of tax wherever they operate. This is needed not just to stem public anger at home about tax avoidance, but also to ensure Britain remains a leader on the world stage, playing its part to help developing countries raise money to provide the infrastructure and public services needed to combat poverty.