The Tax Dodging Bill: What it is and why we need it

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In a just tax system, everyone pays their fair share according to their means. But when those most able to pay can unfairly escape their contributions to society, the majority of people lose out. Inequality increases and there is less public money available to contribute towards improving the lives of the poorest. At a time of economic difficulty in the UK, a National Audit Office report showed that more than 400 of the 800 largest businesses in the UK paid less than
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   W HAT IT IS AND  W HY   W E NEED IT January 2015www.taxdodgingbill.org.uk  “ Indi v iduals and businesses must pay their fair share. And businesses who think they can carry on dodging that fair share, well they need to wake up and smell the coffee, because the public who buy from them ha v e had enough. ”   David Cameron, Prime Minister and Leader of the Conservative Party 1 “ Companies ha v e a responsibility to pay corporation ta x in the  jurisdictions where they operate. If big corporations fail to pay ta x and lea v e it to SMEs and middle income groups, it will undermine democracy. This is about the sur v i v al of democracy. ”   Angel Gurria, Secretary General, Organisation for Economic Cooperation and Development (OECD) 3 “ If e v eryone approaches their ta x affairs as some of these companies ha v e approached their ta x affairs we wouldn’t ha v e a health ser v ice, we wouldn’t ha v e an education system. ”   Ed Miliband, Leader of the Opposition 4 “ Politicians – not companies – set the rules. ”   Eric Schmidt, Chairman of Google 2   “  W e ha v e got to ensure the rules apply more e v enly across the piece so big companies can’t play cat and mouse with the ta x system. ”   Nick Clegg, Leader of the Liberal Democrats and Deputy Prime Minister 5 “ I regard ta x e v asion and, indeed, aggressi v e ta x a v oidance, as morally repugnant. ”   Chancellor George Osborne 6 Page  1   Page  1  “ The campaign for ta x  justice has a moral foundation. A  just society e xpects companies to contribute their fair share towards the common good.  W hen some multinational companies find ways to manipulate their profits to a v oid paying ta x where it is owed, this has a real and direct impact on others, particularly the poorest in our world, because it takes away a ma jor resource for building up a stable and ser v iceable infrastructure in society . People in de v eloping economies need such a conte xt if they are to grow and become self-sustaining; and they need decisi v e political leadership to tackle some of these practices, increase transparency, and help ta x  justice become a reality. ”   Dr Rowan Williams Page 2  ã 85 per cent of respondents said that tax avoidance by large companies is morally wrong even if it is legal.ã 80 per cent of respondents said it is currently too easy for large companies in the UK to avoid paying tax.ã 78 per cent of respondents said it is important to them that large UK companies pay their fair share of tax in developing countries.ã 73 per cent of respondents said it  was personally important for them that the next government legislates to discourage UK companies from avoiding tax in the developing countries in which they operate.Polling conducted in November 2014 by COMRES for ActionAid and Christian Aid indicates that a large majority of British people say they are angry about corporate tax dodging and worried about its effects, not just in the UK but also in poor countries: In a just tax system, everyone pays their fair share - each according to their means - to the public purse. 7   But when those most able to pay can unfairly escape their contributions to society, the majority of people lose out. Inequality increases and there is less public money available to contribute towards improving the lives of the poorest. 8 At a time of economic difficulty in the UK, scandals like those of Starbucks, Google and Amazon have underlined that some big companies get away with paying much less than their fair share of tax. A National Audit Office report showed that more than 400 of the 800 largest businesses in the UK paid less than £10 million in corporation tax in the 2012/13 fiscal year and around 160 paid no corporation tax at all. 9   Companies may have legitimate reasons to pay little or no corporation tax - because they are investing more in their business, for example, or have made a loss. But it is an abuse of the tax system for companies to use legal and accounting tricks simply to cut their tax bills. Unfortunately, such stories have become commonplace. Recent revelations based on leaked documents have shown that global firms, including British household names, channelled nearly £140 billion through the European tax haven of Luxembourg from 2002-2010 in order to cut their tax bills in the countries where their economic activity actually takes place. 10     Ma k ing  ta x  fa ir  to  fig h t po ver ty Page 3
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