Chancellor
reaffirms promise on aid and pledges to join forces with the developing world
to help beat 'corporate cheats'
The Guardian, The
Observer, Daniel Boffey, policy editor, Saturday 16 February 2013
 |
| George Osborne has pledged to drive forward a 'new agenda of transparency'. Photograph: Olivia Harris/Reuters |
The
chancellor George Osborne has pledged to join forces with the developing world
to crack down on multinationals avoiding tax in some of the world's poorest
countries.
Fresh from
the G20 meeting of finance ministers in Moscow, Osborne reveals in the Observer
that the UK wants to rewrite the rules of the corporate game to help developing
countries collect the tax that is due to them.
In remarks
hailed by anti-poverty campaigners, he promises to drive forward a "new
agenda of transparency" and to force oil, mining and gas giants to publish
key financial data project-by-project wherever they operate.
He also
reasserts the UK's goal of being the first country to spend 0.7% of its gross
national income on aid next year, and reveals that a major spending focus is on
improving the capacity of developing countries to hold corporate giants to
account.
Writing in this newspaper Osborne makes it clear that while it is important to force
multinationals such as Starbucks and Amazon to pay their tax bills in the UK and
the rest of the developed world, it was the world's poorest who often needed
the greatest help.
The
chancellor, who also announced that he will lead a new G20 transfer pricing
group examining how to stop firms shifting their taxable profits from country
to country, writes: "Next year, we will have met the international
commitment to spend 0.7% of GNI on overseas aid, the first country in the G20
to meet it. It's a historic moment for Britain. We should feel proud of that,
as a nation, and it's a proud moment for me as a Conservative. We have not
turned our backs on the poorest countries in these tough times.
"Our
investment means 11 million children will go to school, 55 million children
will be vaccinated against preventable diseases and we will stop 250,000
newborn babies dying needlessly. But it will also help developing countries to
build capacity to govern their countries effectively – and tax collection is a
crucial part of that."
Osborne
makes his intervention following the Observer's revelation last week that
Associated British Foods, the owner of brands including Silver Spoon sugar and
Primark, has avoided paying millions of pounds of tax in an African state
blighted by malnutrition.
The Zambian
sugar-producing subsidiary of Associated British Foods, a FTSE100 company,
contributed virtually no corporation tax to the state's exchequer between 2007
and 2012, and none at all for two of those years.
The company
benefits from generous capital allowance and tax-relief schemes in Zambia, but
an investigation by ActionAid also found that it legally funnels around a third
of its pre-tax profits to sister companies in tax havens, including Ireland,
Mauritius and the Netherlands, which it says is used to pay for genuine
services.
Osborne
commends this newspaper for highlighting the problem of tax avoidance in the
developing world and vowed that the UK would use its position as host of the G8
meeting of world leaders this summer to promote "transparency and
accountability in developing countries".
He writes:
"We're taking action through the G20. But the problem goes much wider than
the 20 major economies it represents. Last week, the Observer launched a debate
over the specific problem of tax avoidance in developing companies.
"You
are right to highlight this: often the poorer a nation is, the more they need
the tax revenues, but also the weaker their capacity to tackle tax avoidance
effectively.
"We
will use the G8 to drive greater transparency as part of ensuring that revenues
from oil, gas and mining can help developing countries to forge a path to
sustainable growth, instead of fuelling conflict and corruption."
His
comments come as research group Platform is due to publish a report on the tax
records of major oil firms including Shell, which in 2005 moved the
intellectual property ownership of its own brands to a subsidiary in
Switzerland.
Chris
Jordan, ActionAid's tax specialist, said: "George Osborne's clear
commitment in today's Observer to help the world's poorest countries tackle
corporate tax avoidance is a stunning development."
"Fresh
thinking on this issue is long overdue and as Osborne realises tweaking the
current system will not be sufficient to ensure both rich and poor countries
benefit."
Adrian
Lovett, Europe executive director of ONE, a grassroots campaign group,
applauded Osborne's reaffirmation today of the UK's aid spending but warned the
chancellor that oil, gas and mining firms would seek loopholes in any new
transparency regimes.
Meanwhile,
on Wednesday Nick Clegg will use a speech in front of a city audience at
Mansion House to call for the UK financial services to invest in the north of England as part of an effort to rebalance an economy overly dependent on
London's affluence. The deputy prime minister will say: "Crucially, growth
outside the capital strengthens London too. Their burgeoning private sectors
are your customers. The firms in need of financial and professional services. And
their breakthroughs are your gains."
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