A report calling for the Government to put a stop to tax haven abuse and save the UK economy £18 billion a year was unveiled at a House of Commons meeting last night.
The tax haven report by UK union PCS, The Tax Justice Network and War on Want, accuses the Government of actively encouraging the use of tax havens and sets out a number of reforms to plug the tax gap that it believes currently amounts to £120 billion.
The meeting was hosted by Green MP for Brighton Pavilion Caroline Lucas who launched the Tax and Financial Transparency Bill earlier this year after posing a number of parliamentary questions to the Chancellor and suggesting tthat HM Revenue & Customs fails to prevent serious tax evasion.
500,000 companies “disappeared” from the UK’s Register of Companies in the year to March 2010, at an estimated cost of £16 billion to the exchequer.
The tax haven report, written by Richard Murphy, author of Tax Research UK blog, outlines 18 suggested reforms, split into international reform, UK domestic law, accounting reform and financial regulation.
One reform calls for the UK to demand an increase in the level of corporate transparency in the UK’s Crown Dependencies and Overseas Territories.
Another suggests the UK should support the introduction of a common consolidated tax base within Europe to tackle the problem of transfer pricing and tax avoidance between member states, and demand its extension beyond the EU.
In his address to an audience that included shadow exchequer secretaryDavid Hanson MP, and Labour MP for East Ham Stephen Timms, Mr Murphy used Rupert Murdoch’s multinational corporation News Corp to explain the problem governments face, with current regulation, in ensuring corporate entities as a whole are compliant.
News Corp uses 152 subsidiaries in tax havens, including 62 in the British Virgin Islands and 33 in the Caymans – a figure eclipsed only by Citigroup and Morgan Stanley.
Writing on his Forbes blog after the event, Mr Murphy said: “Like all multinational corporations, New International is an amalgam of many hundreds or thousands of companies, spread far and wide, many of them hidden in tax havens for reasons we know not why.
“And that’s the point: we don’t know because the company does not want us to know about what it is, what it’s made up of and where it accounts for what it does. That is deliberate. It is a deliberate construct to hide the truth.
“We have to ensure that tax havens are thrown open to scrutiny, universally, if any form of regulation is to be effective. Failure to do that will leave the whole of the corporate world subject to the cancerous degradation that now threatens its entire viability.”
The report will be used by Ms Lucas over the coming months to lobby the Government to back her bill, and build cross-party support for the measures proposed.
In her closing comments at the meeting, she said: “Jointly-authored reports like this one will help to convince the British people that tax avoidance is their common enemy too.
“Whether it means cuts to the public sector, underfunded social services or a less-than-generous aid budget, tax avoidance may make a small handful of people richer, but it makes the rest of us poorer.
“A comparatively tiny number of wealthy individuals and large companies have the means to make use of tax havens. That’s the richest and most comfortable people in society, taking advantage of the poorest and most vulnerable, who don’t have the luxury of choosing how much tax they pay.”