Jim O’Neill says the only way to prevent tax avoidance by multinationals is for countries to work together.
How about this for a radical idea? Multinational businesses should pay tax on profits generated in the country where they are made.
Companies like Amazon, Google and their like pretend that their sales in the UK are actually made by their subsidiaries in low tax countries like Luxembourg and Ireland.
The big problem with my crazy idea is that a lot of countries have to come together to agree that this kind of thing can be made workable. They might even have to develop an organisation that has the power to make such an international agreement work.
Oh wait. There is such an organisation. It is called the European Union, a group of (currently) 28 nations that has already such powers. And despite being led by M. Santer, the man who created the problem when Prime Minister of Luxemburg by creating such a low tax economy for corporations that the multinationals flocked to Luxemburg City to set up their shell corporations to off-shore their profits, the EU has begun to fight back by challenging the Irish attempt to do the same.
For those not in the know, the Irish Government, led by the centre-right Fine Gael, sought to attract Amazon to relocate to the rather damaged Celtic Tiger, by offering a tax rate of 0.002%. The EU decided that this was unfair governmental support and declared it illegal. Both the Irish Government and Amazon have challenged this ruling at the ECJ, possibly the first time that a government and a multinational have been on the same side in a taxation case. We have to hope that the EU wins.
Why is this important? Britain seems hell-bent on leaving this power group of 28 countries who are now beginning to challenge the multinationals. This will leave Britain vulnerable to multinationals who have a GDP collectively much greater than that of the UK, without the debt built up by the Tories over the past seven years. Outside the EU and not covered by the power of the 27, the multinationals will put pressure on a weak Tory government to legislate to create a very low tax environment for them to exploit.
Let us be clear. None of this will create jobs in the UK, nor will it create tax revenues for the government. Experience around the world is that the multinationals will open small offices with a few accountants to pass the profits on to head office, possibly located in tax havens, many of whom are in British dependencies. More and more profit for the oligarchs who seem to own world trade these days.
If the Great Repeal Bill is to repatriate all the EU legislation into UK legislation, surely this is the time for Britain to be seeking to clip the wings of the multinationals. So, do you think this fractious Tory government will take such a radical step? Nope, neither do I. Labour must, therefore, take on the leadership of such a campaign and show that they will always be the friend of those who will be denied benefits and other support by a low tax economy and an enemy to those who are not prepared to fairly pay their way.
This time of year is often called the silly season in politics and nothing this year has shown this more than Alex Salmond’s descent from First Minister to First Comic. Having lost his seat at Westminster, much to his surprise, and having to sign on for the first time in many years, he has decided to assuage his feeling of lack of attention by doing a chat show at the Edinburgh Fringe complete with guests. I suspect that neither Jeremy Corbyn nor Kezia Dugdale, nor even “Colonel” Ruthie will be among those guests. He promises lots of stories from his time in politics, including stories about his chats with “President” Trump.
His big problem with this is that he has said he wants to return to active politics. How many politicians will want to chat with him, and even exchange private comments with him, when they know that as soon as he is unemployed once more he will spill their confidences to all and sundry to make the money he has lost on the horses? Mind you, apart from the Nat faithful, his performance in trying to sell the Daily Politics Mug for Andrew Neil would not have sold many tickets for his shows. Ah well, it’s a mugs game!