From the TUC

Osborne’s conversion to tax justice: too good to be true?

16 Feb 2013, by in International

George Osborne has written an article for the Observer committing to multilateral action against tax evasion and claiming to be leading G20 finance ministers in a new initiative. Along with reiterating his pledge to meet the UN target for overseas aid in the coming tax year, he opposes multinational corporations dodging their UK taxes by shifting profits overseas, and also opposes the way they do the same – with even worse impacts – against developing countries.

It may seem churlish not to welcome the repentance of such a serial sinner (he’s still cutting the UK’s corporate tax rate, and has refused to u-turn on the decision to cut the top rate of income tax, remember.) But is this really the same politician who has refused to join – and tried unsuccessfully to scupper – the European Robin Hood Tax on financial transactions? It surely is.

There’s a possibility that Osborne really is fed up with the way Amazon, Google, Starbucks and the rest have tried to avoid paying UK tax. And it’s also possible that Osborne is trying to claim credit in the UK for a move portrayed in other countries as an EU initiative led by the finance ministers of France and Germany, as well as the UK: the leg-work for this initiative was done by the Paris-based Organisation for Economic Co-operation and Development (OECD).

It would be easy for Osborne to dodge the argument that he might start out by addressing the problem caused by the tax havens the UK oversees: he will simply claim that the only way to defeat tax arbitrage is by a global agreement rather than unilateral action.

Although if he’s such a committed multilateralist all of a sudden, that refusal to endorse multinational action on transaction taxes (to defend the City of London, he says) looks harder to explain.

And his lacklustre crack-down on giving public contracts to tax avoiders (he’s so committed to this that he’s letting them carry on securing contracts in the health service, education, local government; and all they have to do is swear they never, ever did anything naughty to escape the crack-down…) does not inspire confidence either. Nor does the omission of tax dodging from DFID Secretary of State Justine Greening’s recent panegyric to the private sector….

So, all in all, underwhelmed is how Osborne’s startling conversion to global tax justice leaves me. But let’s look on the bright side, and wait to be impressed. We will watch the space where action against tax havens and tax avoiders should appear.

12 Responses to Osborne’s conversion to tax justice: too good to be true?

  1. John
    Feb 17th 2013, 2:13 am

    Thankyou for another article Owen; maybe, just maybe he is realizing that the next elction is on 2+ years away and is trying’´to meet some public concern!?

  2. Shinsei1967
    Feb 17th 2013, 8:17 am

    I’m sorry but you really are being churlish:

    1) Osb’s piece in the Observer fully acknwledges the international effort is being led by Germany, France & the UK. The fact that the UK is currently chairing the G8 whilst tax avoidance is the big issue is the reason Osb is getting more attention.

    2) The “Paris-based OECD” (why mention it is Paris based ?) of course did the work (that’s what they are there for) but they were commissioned by the G8 to do so (in particular UK, Fr and Ger).

    3) Being against the Robin Hood tax or in favour of lower taxes has nothing to do with not being against tax avoidance. Separate issues. Disagree iwth Osb on the Robin Hood tax if you want but don’t claim it means he’s therefore soft on transfer pricing ruses. Right wingers want lower taxes. And you can have lower taxes if you do something about tax avoidance and therefore raise tax revenues. There’s no ideological problem with right wingers being as opposed to tax abuses as the likes of UKUncut.

  3. Owen Tudor

    Owen Tudor
    Feb 17th 2013, 8:49 am

    Shinsei1967, well, you may be right – and let’s hope so – we do need to tackle tax evasion. But the government’s approach (eg HMRC’s lamentable deals with big corporate tax avoiders, and the very limited approach I outlined to contracting) has not been good so far. You’re right, of course, that right-wing politicians can be opposed to tax abuses: and Osborne is certainly right that the last Labour Government wasn’t sufficiently tough on the issue. But we need to see how THIS government does before heaping praise on what may just be fine words.

  4. Shinsei1967
    Feb 17th 2013, 9:07 am

    Owen

    Thanks. I’d agree with all that. Of course, it’s far too early to congratulate Osb (or the rest of the G8) for any progress they might make on tax avoidance. The devil will be in the detail and it is right to be sceptical of politicians’ promises.

    Like or loathe Osborne, however, I think he is genuine about tax reform because it will lead to lower taxes overall (which he wants for in his view good right wing reasons). The trouble about aggressive tax avoidance (from a purely right wing view alone) is that it doesn’t allow a level playing field. Starbucks (and the Swiss tax man) gains and Costa (and the UK taxman) loses and that’s bad for UK plc (which is any Chancellor’s main concern).

    So I just think some gentle encouragement for Osb is called for on this. There are plenty of other economic issues the Left can rightly attack him on. The Guardian has been pretty fair to Osb so far. But the usual suspects on Twitter (Blanchflower “he’s been Chancellor three years why the delay”, Sunny “Osb only paying lipservice to avoidance reforms, this is really Germany’s doings”) aren’t being terribly fair.

  5. Owen Tudor

    Owen Tudor
    Feb 17th 2013, 10:25 am

    My scepticism is due to the dissonance between this article and both past performance and other current performance:

    1. I think Cameron and Osborne have been lamentable on showing global leadership in G8 and G20 discussions on economic co-ordination – or indeed even following others, eg when Sarkozy was G20 chair. Unlike Brown, who for all his faults really did pound the phones to get global deals done (I suspect he did more for Gleneagles than Blair, and really did deliver for the London G20).

    2. On tax evasion, Osborne seems to me more driven by who the beneficiaries are than by the principle. Yes, he seems very narked indeed by foreign-based multinationals doing it to ‘his’ Treasury. But considerably more relaxed when it’s Philip Green, or British multinationals, or British tax havens (including the City of London). The point you make about tax evasion is not about whether the overall tax level goes up or down, but on whom it falls (tax is, after all, mostly about distribution) and on that issue I reserve the right to be utterly sceptical about Osborne’s motives.

    3. And the international development issue is precisely one where such dissonance rises to a roar. Tory politicians have insisted for years that they won’t ‘balance the books on the backs of the poor’ to justify their ODA policies. But they show no such scruples over benefit reform, UK tax policy, government spending etc.

  6. Shinsei1967
    Feb 17th 2013, 10:43 am

    On the Philip Green affair what would be your solution ?

    Personally I find rich people disappearing offshore to avoid tax distasteful and morally wrong but I’m not sure what you can actually do to stop this, bar shaming them (taking away knighthood or not voting for them in BBC Sports Personality of Year).

    The coalition has made a little progress with bringing in the non-dom levy and getting rid of the wheezes of buying UK property through offshore companies and avoiding stamp duty.

    But if Philip Green wants to gift Arcadia to his wife, pay a large dividend and she’s a Monaco resident then what can be done ?

  7. Owen Tudor

    Owen Tudor
    Feb 17th 2013, 10:55 am

    There are people more knowledgeable about tax law who could answer the Philip Green question – because it was a pretty obvious case of tax avoidance. But at the very least, the Government could have decided NOT to have him oversee their efficiency review or advise them on cuts!

  8. Shinsei1967
    Feb 17th 2013, 10:59 am

    Unless you think he is a genuinely one of the best supply chain managers in the world and does know how to save money in government procurement (which ultimately means more money for front line services).

    After all the police do employ convicted burglars to advise on home protection.

  9. Owen Tudor

    Owen Tudor
    Feb 17th 2013, 11:30 am

    I don’t, but realise the Government may feel that way. However, using the skills of someone whose conviction is spent is different from letting people off the hook because you want to use their talents for something completely different.

  10. Shinsei1967
    Feb 17th 2013, 11:42 am

    Don’t get me wrong, as I said I found Philip Green’s behaviour in avoiding tax disgraceful, but it was legal and I’m not sure what legislation you can bring in to stop people becoming resident in low tax foreign countries.

    So I’m not really sure that Green has been “let off the hook”. In actuality the government is getting some (probably very good) advice for free.

    Would you also object to the government using, say, Lewis Hamilton as a spokesman to get kids at school to do more exercise or to eat more healthy food ? He’s also based in Monaco to avoid tax. Unlike other international sportsmen like Andy Murray who lives in Surrey.

  11. Owen Tudor

    Owen Tudor
    Feb 17th 2013, 12:15 pm

    As I said, I suspect there are ways, but I’m not a tax expert. But I think you have to draw the line somewhere, and make the argument that avoiding your tax is bad. Governments can take moral as well as legal positions.

  12. Shinsei1967
    Feb 17th 2013, 12:18 pm

    I think we can all agree on that.

    Thanks for comments. Am off to enjoy rest of Sunday.

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