Tax: Aggressive Tax Avoidance

Lord Rooker Excerpts

Wednesday 9th July 2014 Lords Chamber

[Lord Newby]

My Lords, the work in that area has been carried forward by the OECD, which produced a comprehensive 15-point action plan. Work on all those points is now under way. The first deliverables, on transport pricing, are due in September this year. At the EU level, noble Lords will have seen that the EU is currently investigating the tax position in Luxembourg, Ireland and the Netherlands, specifically with Amazon, Apple and Starbucks in mind.

[Lord Rooker (Lab)]

I do not wish to be misunderstood, but is it not the case, generally speaking—there is evidence to support this—that when tax rates are lowered, more revenue flows into the Treasury?

[Lord Newby]

My Lords, there is very extensive academic literature about the so-called Laffer curve, and I suspect there are very different views on it in your Lordships’ House. It is undoubtedly the case at the extreme ends of the curve that if you tax very highly the rate falls of because people find ways of avoiding it, and if the tax rate is very low the rate falls off simply because the rate per taxable unit is so much less.