Reform global tax system, activists say

19 October 2018

Failure of states and corporations to pay is not right, says Conservative MP

CHURCH ACTION FOR TAX JUSTICE

Andrew Mitchell MP at the event in Birmingham, last Thursday

Andrew Mitchell MP at the event in Birmingham, last Thursday

A CONSERVATIVE MP and former Cabinet minister, Andrew Mitchell, has criticised the global tax system for failing to hold both corporations and countries to account for tax avoidance, which is driving the poorest people in the world into further destitution.

Mr Mitchell, who is the vice-chair of the All-Party Parliamentary Group on Responsible Tax, was leading a conversation on the benefits of a fair-tax society, held in Birmingham last week. The event was organised by Christian groups including Church Action on Tax Justice, Christian Aid, and the Jubilee Debt Campaign. About 40 people attended.

“It is not right that people can migrate profits to a different zone,” Mr Mitchell said. “As a society, we should say that you should not use these schemes to get around paying tax. Amazon gets all the advantages of a huge market, but doesn’t pay the equivalent tax that others pay, and that is wrong.

And should there be country-by-country reporting? Yes, absolutely. I cannot understand why we don’t have it.”

His comments come after the Archbishop of Canterbury specifically criticised “vast companies like Amazon and other online traders” for “paying almost nothing in tax” and driving working families into destitution in the process (News, 14 September).

Mr Mitchell argued that further legislation was needed to enforce a just tax system. “I am concerned about the vast amounts of money being stolen from Africans and Africa. One of the most badly organised, kleptocratic countries in the world is the Democratic Republic of the Congo.

“And it is a sad fact that some of the poorest people in the world are living on top of incredible resources. The money being stolen from these countries is far greater than the development resources going into them, and the financial investment going into them as well.”

The event was introduced by the chair of Church Action for Tax Justice, the Revd David Haslam. He said on Tuesday: “We want people to have conversations about tax in churches and beyond. We need to engage with all political parties on responsible tax, and Andrew has been very involved in the APPG.”

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Mr Mitchell and a Labour MP, Margaret Hodge, successfully tabled an amendment to the Sanctions and Anti-Money Laundering Bill 2018, which will make public beneficial ownership registers mandatory in all British Overseas Territories such as the Cayman and British Virgin Islands by the end of 2020.

The move was triggered by revelations in the Panama and Paradise Papers (News, 16 April 2016; 17 November 2017).

Mr Haslam continued: “The conversation is changing: people are looking at tax as a positive thing rather than negative; an opportunity rather than a burden. Everybody went away from the event much more aware of the issues; there is a lot of interest and support in this area.”

But there was still “some way to go” to ensure that British Overseas Territories and the Crown Dependencies such Jersey and Guernsey delivered on the public registers by 2020, he said.

Christian Aid’s global lead on economic justice, Toby Quantrill, agreed that “a lot more remains to be done” to achieve transparency in overseas territories.

“We believe that tax policy is fundamentally a moral and human-rights issue,” he said on Wednesday. “Events such as this are a vital way to continue to get this message out to the public, who are overwhelmingly in favour of greater transparency and a fairer tax system.

“Tax is a more reliable source of income for poor countries than aid or loans, and the IMF [International Monetary Fund] has estimated that developing countries lose between $100 billion and $300 billion to tax-dodging every year, and much of that flows out through places governed by the UK.”

The chair of the Jubilee Debt Campaign Birmingham, John Nightingale, said that the issues of debt relief and tax justice worked together in “either a virtuous or vicious circle”. “Debtors’ prisons in the UK were abolished some 150 years ago; there needs to be an equivalent move internationally.”

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