Say no to tax avoidance for public service providers

Simon Birch

141692995 243x300 Say no to tax avoidance for public service providers

Are we really all in this together Mr Osborne?

If the Chancellor was serious about filling the gaping black hole in the country’s finances he’d have used the budget to stop the billions – yes billions of pounds that are gushing out of the economy every year via lawful offshore tax havens.

Research by Ethical Consumer has made a valuable contribution to the growing campaign for tax justice by revealing that 13 of the 20 biggest private companies now being awarded public service contracts by the government have subsidiaries in tax havens.

The research identifies that companies including some of biggest names in the outsourcing industry such as BUPA, Capita and Sodexo that are lining up to take a slice of the mushrooming multi-billion pound public service sector have subsidiaries in places usually used to minimise tax bills.

The global accountancy giant KPMG, which had a $21 billion turnover in 2010, itself uses 47 out of the 60 globally recognised tax havens. On its UK website the company openly states that it’s able to substantially reduce companies’ tax bills through a series of nifty financial manoeuvrings.

What this means is that as the government makes the most savage cuts to public spending in living memory, mega companies that are now making equally huge profits from running our public services may not be paying what some might view as their fair share of tax.

Hilariously, last June Capita was awarded a £100 million contract by the DVLA to crackdown on vehicle tax and insurance evasion.

So how much are these companies spiriting away through tax avoidance, which let’s not forget unlike tax evasion is all perfectly legit? Well no one knows its true scale as the the whole problem of tax havens is that they operate with a level of secrecy that’s impossible to penetrate.

Interestingly we did get some possible indication of how some sections of the UK economy treat their tax responsibilities thanks to some recent digging by the research group Corporate Watch.

They’ve focused in on the UK’s leading private healthcare providers including Care UK and Ramsay Health Care who they allege, hope to cash-in from the much-derided NHS reforms through creative tax arrangements that will, let them legitimately avoid paying tax on millions of pounds’ worth of profit.

What we do know for sure though is that according to HM Revenue and Customs, wider corporate tax avoidance now costs the UK at least £5 billion every year.

With NHS trusts across England now having to make £20 billion of cuts over the next four years, £5 billion would stop vital frontline health services and jobs from being axed for a whole year.

Richard Murphy from the Tax Justice Network says that Ethical Consumer’s research is disturbing:

“We’re seeing taxpayers money now being captured by private corporations who are using it for the benefit of a few in society at a cost to the great many ordinary people who are paying the price through reduced services, benefits and even healthcare and all at the cost of increased tax.”

Now a growing a number of MPs are demanding government action on the issue.

Following the publication of Ethical Consumer’s research, an Early Day Motion was put before the House Of Commons by the Green Party MP Caroline Lucas calling on the government to exclude companies with operations in tax havens from bidding for public service contracts.

“Taxpayers’ money is being used by the government to pay these companies to deliver public services. It’s therefore essential that these companies pay all the taxes on the profits they make to the British taxpayer,” thunders Michael Connarty, Labour MP for Linlithgow and East Falkirk, one of  the 70 MPs who’ve now signed the EDM which includes Margaret Hodge, Chair of the Public Accounts Committee.

“It’s scandalous that the government is still allowing some of them to avoid paying large amounts of tax in this country. We are clearly not ‘all in this together’ and the government needs to take action.”

Mr Osborne take note: growing numbers of people agree.

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  • shinyroundbauble

    My friend. Truth is in the eye of the beholder. Sadly, his perspective is twisted by the chip he maintains on each shoulder…

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