By Christopher Hope, Senior Political Correspondent from The Telegraph
Foreign companies like Starbucks and Amazon which have avoided paying large corporation tax bills in Britain lack “moral scruples”, David Cameron has said.
The Prime Minister said he was going to make “damn sure” that foreign companies like Starbucks and Amazon which have been found to avoid legally paying a large corporation tax in the UK paid their fair share.
Mr Cameron was speaking weeks after MPs on the Public Accounts Committee accused Starbucks, Google and Amazon in a high profile report of “immorally” minimising their UK tax bills.
Last year Treasury minister David Gauke caused a row when he told The Daily Telegraph that people who paid cash in hand to tradesmen, allowing them to avoid VAT, were “morally wrong”.
Mr Cameron was asked by a business audience in the north west of England on Thursday why “Starbucks and Amazon” were allowed to avoid paying large corporation tax bills, given that they have a large presence in the UK.
Mr Cameron said:
“We’ve got to crack that, you’re absolutely right. This is a really important issue. We’re saying, are going to have a really low rate of corporation tax but I want to make damn sure that those companies pay it.”
Mr Cameron said he wanted to start a debate in the UK about “really aggressive tax avoidance”.
He said: “We do need a debate in this country, not only what is against the law – that’s tax evasion, that is against the law, that’s illegal and if you do that the Inland Revenue will come down on you like a tonne of bricks – but what is unacceptable in terms of really aggressive tax avoidance.
“Because some people say to me, ‘Well, it’s all within the law; you’re obeying the law, it’s okay’. Well, actually there are lots of things that are within the law [that] we don’t do because actually we have some moral scruples about them and I think we need this debate about tax too.
“I’m not asking people to pay massive rates of tax. We’ve got a low top rate of income tax now; we’ve got a low rate of corporation tax now; we are a fair tax country. But I think it’s fair then to say to business, you know, we’re playing fair by you; you’ve got to play fair by us.
Mr Cameron’s words go much further than his letter to other leaders of the G8 economies when he said he wanted to stop this form of tax tourism.
He continued: “I’ve put it right at the top of the agenda for the G8 this year as well as making sure we fix it nationally too.
“It’s simply not fair and not right what some of them are doing by saying, I’ve got lots of sales here in the UK but I’m going to pay a sort of royalty fee to another company that I own in another country that has some special tax dispensation.
“That is that’s not right, and so we are looking at it. I’m chairing the G8 this year so I’m going to be getting the Americans and the French and the Germans and the Italians and the Japanese all to look at this together at how can we try and stop unfair tax farming practices?
“Because look, you know, we’ve got a very low rate of corporation tax; we’re already giving business a good deal, but I think to take that deal and then say, I’m actually going to find a way of not paying any corporation tax at all that’s not right.”
Last month, MPs on the Public Accounts Committee criticised Starbucks, Google and Amazon for the “unconvincing and, in some cases, evasive” evidence they gave on why their corporation tax payments are so low.
Starbucks bowed to pressure over its accounting methods on the eve of the report’s publication saying it would review its “tax approach” in the UK.
The coffee giant told MPs it had made a loss for 14 of the 15 years it has operated in the UK, achieving just a small profit in 2006.
Starbucks, with more than 700 outlets in the UK, said it was “committed to the UK for the long term”. It said: “We are looking at our tax approach in the UK. The company has been in discussions with HMRC for some time and is also in talks with the Treasury.”
The MPs also criticised a representative from Amazon, whose responsive because he was “evasive and unprepared to answer legitimate questions”.
While the company had a UK operation involving 15,000 staff it pays little corporation tax in the UK. It said the company’s UK website reported a turnover of £207 million for 2011 but its tax expense was just £1.8 million.