Parliament debates Fair Tax Mark pioneered by co-ops

Members of Parliament looked at initiatives such as the Fair Tax Mark as part of a debate on tax avoidance and multinational companies. It is estimated that tax...

Members of Parliament looked at initiatives such as the Fair Tax Mark as part of a debate on tax avoidance and multinational companies. It is estimated that tax avoidance is costing the UK economy £129bn a year.

The House of Commons Treasury committee launched an inquiry into the UK’s tax system after the Treasury announced a deal with technology giant Google who will pay £130m in back taxes, a rate of 3%. The committee will examine the UK’s shrinking corporate tax base.

In his speech on Wednesday 3 February, shadow chancellor John McDonnell called for a “fair tax system that secures tax justice”. He also spoke in favour of full public country-by-country reporting and demanded that the current government’s tax deal with Google was made public. Mr McDonnell suggested establishing of a cross-party committee to scrutinise the HMRC and the implementation of taxation policy.

Also speaking in the debate, Labour/Co-op MP Anna Turley mentioned the Fair Tax Mark, launched in February 2014 and pioneered by co-operatives such as the Phone Co-op and Midcounties Co-operative. Enterprises that sign up for the mark show that they are paying the right amount of tax, at the right time, in the right place. Other co-operatives that have also obtained the Fair Tax Mark include East of England Co-operative, the Radstock Co-operative, the Co-operative Group and Co-operatives UK.

The UK's Fair Tax Mark
The UK’s Fair Tax Mark

Labour MP Caroline Flint also said: “The Government made the rules and HMRC enforces them, and it is about time that we had more openness.” She thinks more transparency would help restore the confidence of UK-based businesses that have much lower revenues than big corporations but pay more tax, including 20% corporation tax.

Commenting during the debate, the financial secretary to the Treasury, David Gauke said that the UK’s current tax rules were designed to tax the part of a firm’s profit that arises from value created in the UK, a principle underlying all corporate tax regimes across the OECD.

Seema Malhotra, Labour/Co-op MP and shadow chief secretary to the Treasury, said: “I pay tribute to the work of those who have campaigned for tax justice, including Richard Murphy, Christian Aid and others, as well as the co-operative movement, with its campaign for a fair tax mark that includes country-by-country reporting.”

Ms Malhotra argued that corporation tax was not a tax on the sales that happen only in the UK. “The system that operates internationally is that profits should be allocated on the basis of what is called ‘economic activity’ in each country. Economic activity is not just about sales, but about where research and development takes place and so on,” she added.

Commenting on the debate, Claire McCarthy, general secretary of the Co-operative Party, said: “With the NHS creaking and public finances at breaking point, more and more of us are choosing to do business with those pay their way – and steering clear of those who don’t.

 “As Co-operative MP Anna Turley said in last week’s Parliamentary debate, businesses should regard paying their fair share as a ‘badge of pride’. We’ll be working with Anna, other parliamentary colleagues and the Fair Tax Mark to ensure that the Mark receives broad political support, and that the co-operative movement is recognised for its leading role in the campaign for tax justice.”

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