Comment: Multinational companies must start paying their fair share

By Lord Collins of Highbury

For me, Margaret Hodge and her brilliant questioning as chair of the public accounts committee on taxation represented a real turning point in public attitudes to multinational companies. Her comment, "I don't think anybody running a business would keep that business going and keep investing if they weren't making money," struck a real chord with many. It wasn’t a question of being illegal, she said, more of being immoral.

There was and remains genuine public anger over this fundamental unfairness, and action was demanded, but I doubt if many people in this country had realised just how long this ‘immorality’ had been going on in developing countries nor how big the problem was. Developing countries lose three times more to tax havens than they receive in aid each year. However, thanks to the launch of the brilliant Enough Food for Everyone ‘IF’ Campaign, more people are now aware of the issues.

I welcome the government’s intention to put an end to years of tax avoidance, but so far, any real action on the issue has fallen far short of a real crackdown. The prime minister’s pledge to tackle tax avoidance as part of the UK presidency of the G8 needs to move from rhetoric to deeds.

As Ed Miliband said: "We cannot use that international action as an excuse for going at the pace of the slowest country." The UK should be a global leader.

The chancellor’s public utterances have focused narrowly on the extractive industries, and evidence shows that his changes to the controlled foreign companies rules last year will have a detrimental effect on developing countries. Despite his positive words on international development he has refused to review the impact of these rules in defiance of the all-party international development select committee.

The rhetoric of what the prime minister and the chancellor is now saying is good, but they need to follow it through with concrete action in the Budget to end tax secrecy. The government must also use the UK's chair of the G8 to make serious proposals that will make a substantial difference to the revenues of the poorest countries in the world.

As Ivan Lewis recently said, to achieve Labour's aspiration to eliminate absolute poverty, reduce inequality and end aid dependency by 2030. We can no longer tolerate a system where some multinational companies avoid paying their fair share.

Lord Ray Collins of Highbury is shadow minister for international development in the Lords, and also a member of the Shadow Health team.

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