Tax Avoidance and Multinational Companies

Mark Spencer Excerpts

Wednesday 3rd February 2016 Commons Chamber

[John McDonnell]

I will give way in due course. Calm down.

The Google deal and the Chancellor’s exultation about it were immediately received with incredulity by independent tax analysts—understandably. The Chancellor and HMRC were all too keen to publicly parade the deal, but when challenged to release the detail of it, hid behind confidentiality conditions.

[Mark Spencer (Sherwood) (Con)]

What assessment does the shadow Chancellor make of the Labour Government, who were in charge of taxation during part of that period?

[John McDonnell]

I am grateful for the intervention. The hon. Gentleman probably knows that I was not the most enamoured of the Labour Government’s track record during that period, but it was a Labour Government who started this inquiry and the hon. Gentleman’s Government took six years to complete it. According to a recent estimate by the Financial Times, the measures introduced by the Labour Government will reap 10 times the amount of tax that this Government have secured.

--- Later in debate ---

[Mark Spencer (Sherwood) (Con)]

I shall do my best to make the most of the three minutes available to me. This is clearly a complicated area, and we seem to have two approaches on different sides of the House. The shadow Chancellor was passionate in his approach, and I recognise the strong feelings about this issue. The Minister’s approach was very measured and detailed. Unfortunately, the tax system must be approached in a methodical, detailed way—it cannot be emotional. I understand the strength of those emotions, and that people may feel that some large international companies do not pay their fair share. Unfortunately, however, we are blessed with a global taxation system agreement whereby companies pay tax not on the profit they make in the country but where they add the value and create the IP.

The hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) spoke about Stewart from the Kirkcaldy farm shop, who clearly sells excellent produce. If he were to export his pork pies to Paris, he would expect to pay for the profit on that pork pie in Scotland and not in Paris, and in that way this country has benefited a great deal. My constituency contains Rolls-Royce, which is a fantastic international company that creates world-leading jet engines. It uses manufacturers and subsidiaries all over the world, but those dividends and the profit of that company should be paid to the UK taxpayer, and not to other countries.

The Minister referred to the video games industry, and Nottinghamshire is blessed with Boots, which created Nurofen, a world-leading drug. The IP for that drug remains in this country, as do the profits from it. I was fortunate enough to go to the cinema to see “Spectre”, the latest James Bond movie, which was created in Pinewood Studios in the UK. Tax on the profits from those movies should be paid in this country, not all over the world.

I gently say to the Opposition that, under their regime, no tax was claimed from Google. Sadly, I am rapidly running out of time, but we must recognise that it is more important to get some of those profits, rather than all of nothing if they are exported to other countries.