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| Version 1 | Version 2 |
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| George Osborne: why I am committed to global tax reform | George Osborne: why I am committed to global tax reform |
| (7 months later) | |
| On Saturday, I was in Moscow at a meeting of G20 finance ministers, putting international tax avoidance on the agenda. Globalisation and technology have brought about huge changes in the way businesses operate. Communication is faster than ever. Finance is more mobile than ever. And the value of companies is increasingly tied up in concepts such as brand and intellectual property, which do not observe country borders. | On Saturday, I was in Moscow at a meeting of G20 finance ministers, putting international tax avoidance on the agenda. Globalisation and technology have brought about huge changes in the way businesses operate. Communication is faster than ever. Finance is more mobile than ever. And the value of companies is increasingly tied up in concepts such as brand and intellectual property, which do not observe country borders. |
| Despite this, the principles governing tax for multinational companies have barely changed since they were developed by the League of Nations almost a century ago. As a result, some large multinationals are able to restructure their business to avoid paying their fair share in tax. Some are exploiting the rules by getting profits out of high tax countries and into tax havens, allowing them to pay as little as 5% in corporate taxes while smaller businesses are paying up to 30%. This distorts competition, giving larger companies an advantage over smaller domestic companies. People are rightly asking for something to be done. | Despite this, the principles governing tax for multinational companies have barely changed since they were developed by the League of Nations almost a century ago. As a result, some large multinationals are able to restructure their business to avoid paying their fair share in tax. Some are exploiting the rules by getting profits out of high tax countries and into tax havens, allowing them to pay as little as 5% in corporate taxes while smaller businesses are paying up to 30%. This distorts competition, giving larger companies an advantage over smaller domestic companies. People are rightly asking for something to be done. |
| I want competitive taxes that say Britain is open for business and to attract global companies, with all the jobs they bring. That's why we're cutting the corporation tax rate from 28% to 21% – the lowest in the G7. But I am also clear that global companies should pay those taxes. | I want competitive taxes that say Britain is open for business and to attract global companies, with all the jobs they bring. That's why we're cutting the corporation tax rate from 28% to 21% – the lowest in the G7. But I am also clear that global companies should pay those taxes. |
| The last Labour government turned a blind eye to these abuses for too long. Britain had the worst of all worlds – uncompetitive tax rates with lax enforcement. Responsible companies were penalised and the irresponsible were rewarded. This government is taking action domestically on avoidance and evasion. Prosecutions for tax evasion are up 80%; we're introducing the first ever General Anti-Abuse Rule and as a result of this government's investment we expect to raise £22bn more a year from evasion and avoidance by the end of the parliament. But acting alone has its limits. Clamp down too hard in one country and it is all too easy for those companies to move elsewhere. | The last Labour government turned a blind eye to these abuses for too long. Britain had the worst of all worlds – uncompetitive tax rates with lax enforcement. Responsible companies were penalised and the irresponsible were rewarded. This government is taking action domestically on avoidance and evasion. Prosecutions for tax evasion are up 80%; we're introducing the first ever General Anti-Abuse Rule and as a result of this government's investment we expect to raise £22bn more a year from evasion and avoidance by the end of the parliament. But acting alone has its limits. Clamp down too hard in one country and it is all too easy for those companies to move elsewhere. |
| In November, I joined my German and French counterparts to call for co-ordinated action to strengthen the international corporate tax rules and we asked the OECD to help us do it. They presented their findings to the G20 this weekend and will now prepare a plan of action which – if agreed – will be put to the G20 in July. | In November, I joined my German and French counterparts to call for co-ordinated action to strengthen the international corporate tax rules and we asked the OECD to help us do it. They presented their findings to the G20 this weekend and will now prepare a plan of action which – if agreed – will be put to the G20 in July. |
| 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 it needs the tax revenues, but also the weaker its capacity to tackle tax avoidance. | 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 it needs the tax revenues, but also the weaker its capacity to tackle tax avoidance. |
| That's why the British government is providing support, as part of our wider commitment to overseas aid. 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 proud moment for me as a Conservative. We have not turned our backs on the poorest countries in these tough times. | That's why the British government is providing support, as part of our wider commitment to overseas aid. 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 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 babies dying needlessly. But it will also help developing countries to govern effectively – and tax collection is a crucial part of that. Our work in Ethiopia has helped to strengthen the efficiency of revenue collection; since we came into office, tax collection in Ethiopia has increased by 40%. This is just one example – we are also involved in projects in Kenya, Ghana, Uganda and Tanzania. | 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 babies dying needlessly. But it will also help developing countries to govern effectively – and tax collection is a crucial part of that. Our work in Ethiopia has helped to strengthen the efficiency of revenue collection; since we came into office, tax collection in Ethiopia has increased by 40%. This is just one example – we are also involved in projects in Kenya, Ghana, Uganda and Tanzania. |
| But there is scope to go further. This year, the UK hosts the meeting of G8 leaders. We are determined to use our presidency to drive a serious debate on tax evasion and tax avoidance. This will include action to help developing countries collect tax that is due to them. And we will champion a new agenda of transparency and accountability in developing countries. With the authority that comes from meeting our international commitments on aid, Britain is well placed to tackle the causes, not just the symptoms of poverty, such as corruption and lack of transparency. | But there is scope to go further. This year, the UK hosts the meeting of G8 leaders. We are determined to use our presidency to drive a serious debate on tax evasion and tax avoidance. This will include action to help developing countries collect tax that is due to them. And we will champion a new agenda of transparency and accountability in developing countries. With the authority that comes from meeting our international commitments on aid, Britain is well placed to tackle the causes, not just the symptoms of poverty, such as corruption and lack of transparency. |
| As part of this work, we are clear that the developed world must lead by example. Britain is leading efforts in the EU to require oil, gas and mining companies to publish key financial information for each country and project they work on, and is a strong supporter of the Extractive Industries Transparency Initiative. We will use the G8 to drive greater transparency, to ensure that revenues from these sectors can help developing countries forge a path to sustainable growth, instead of fuelling conflict and corruption. Professor Paul Collier, a leading development economist, is working with us to consider how through the G8, under Britain's leadership, we can make the biggest difference. | As part of this work, we are clear that the developed world must lead by example. Britain is leading efforts in the EU to require oil, gas and mining companies to publish key financial information for each country and project they work on, and is a strong supporter of the Extractive Industries Transparency Initiative. We will use the G8 to drive greater transparency, to ensure that revenues from these sectors can help developing countries forge a path to sustainable growth, instead of fuelling conflict and corruption. Professor Paul Collier, a leading development economist, is working with us to consider how through the G8, under Britain's leadership, we can make the biggest difference. |
| This year, we have an opportunity to turn concern over tax avoidance into a catalyst for change; creating a competitive tax system that supports businesses, but where everyone pays their fair share. Through our role in the G20 and our leadership of the G8, we can ensure this change benefits Britain's taxpayers and also helps meet our commitments to the poorest in our society. | This year, we have an opportunity to turn concern over tax avoidance into a catalyst for change; creating a competitive tax system that supports businesses, but where everyone pays their fair share. Through our role in the G20 and our leadership of the G8, we can ensure this change benefits Britain's taxpayers and also helps meet our commitments to the poorest in our society. |
| George Osborne is chancellor of the exchequer | George Osborne is chancellor of the exchequer |
| • Comments will be opened on Sunday morning | • Comments will be opened on Sunday morning |
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