Behind The Corporation Tax Scandal

The newspapers are determined to enrage their readers with the shocking news of corporate tax avoidance. But what is behind the headlines?

The news headlines continue to be filled with rhetoric designed to enrage. Google, Amazon, Apple and Starbucks are all in the crosshairs for "evading" tax. They're "evil". It's "outrageous". We should experience "anger", "rage", "fury".

All the while, what is David Cameron doing? 


Rather than taking any sensible action to deal with the problem, Cameron simply deployed Margaret Hodge to shout at Google for a while, thus offering the media a further opportunity to write some populist rhetoric.

David Cameron has plans. They're not his plans, but he has them, and his job is to make them happen. The G8 conference in Northern Ireland which begins on the 15th June is where he has to do it.

"It" is a new global tax regime. Rather than simply making it a requirement to companies to pay an approriate amount of tax in the country should they do business there, it is much better to create some great new globalised tax regime.

Yesterday, Cameron wrote to the leaders of British offshore tax havens asking that they "get their houses in order" before the G8 summit.

"As you know," he said, "I have made fighting the scourge of tax evasion and aggressive tax avoidance a priority for the G8 Summit which the UK is hosting next month ... I am looking to all the Overseas Territories and Crown Dependencies to continue to work in partnership with the UK in taking the lead on two critical issues: tax information exchange and beneficial ownership."

Cameron's letter goes on to argue that a key part of the new tax regime will be information exchange. He "asks" all the tax havens to "commit" to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, originally developed by the Council of Europe and the OECD, "responding to the call of the G20 to make it easier for all countries to secure the benefits of the new co-operative tax environment" 

He also wants to tackle hidden company ownership. We all know, after all, that arms traffickers and drug dealers use shell companies to carry out their illicit activity, and goodness knows Cameron can't permit any competition to the day to day business of the average British Government.

This rhetoric on this issue from the mainstream media is designed to whip up a frenzy of demands for "something to be done" about Corporations avoiding tax within nation states. David Cameron intends to lead the charge for a global tax regime to answer those demands. No other options are on the table.