SABMiller, Starbucks, Google and Amazon feeling heat from world leaders on tax dodging

Wednesday, December 5, 2012 - 14:31

Here in the UK, a steady drip of ever more eyebrow-raising news stories about alleged tax avoidance by big multinationals – many reported to be using exactly the same techniques that ActionAid found UK beer giant SABMiller using in Africa and India – has pushed the haemorrhage of tax revenues from corporate profit-shifting to the very top of the political agenda.

After three of these corporate giants (Starbucks, Google, Amazon) were given a highly public roasting by UK parliamentarians, politicians from all sides of the political spectrum have finally started to hunt for serious solutions. Chancellor George Osborne and his German counterpart have called for international action to prevent this kind of profit-shifting. On the other side of the table, his opposition counterpart Ed Balls has responded in kind, hunting for solutions so that “everyone pays and is seen to pay their fair share.”

The huge pressure on Starbucks has resulted in an announcement that they’re rethinking their tax avoidance techniques in the UK.

If they make the sort of systemic changes people have been demanding, this would set a vital precedent, piling the pressure on other tax dodging companies to clean up their acts.

Firm proposals from the government are still thin on the ground (although we have a few!), but it’s clear that all sides have finally woken up to the challenge of taxing global companies in a global economy – a challenge whose catastrophic effects on developing countries’ public finances our supporters have highlighted for three years, and which has now come home to roost in the UK too.

Meanwhile, the excuse that nothing can be done to stop global companies squirrelling their profits into tax havens is starting to unravel elsewhere too. To less public fanfare, tax inspectors in India and elsewhere have reportedly started efforts to claim tax back on precisely the same tactics of Google and Amazon that the UK’s public accounts committee claim have been shrinking their UK tax bills (about which more in another blog).

There’s positive political action popping up in other regions too. The European Union is preparing an action plan against tax havens and tax dodging, expected before Christmas, which aims eventually to commit European countries to an armoury of ‘sticks’ and ‘carrots’ to stamp out tax haven abuse. African tax authorities are about to finalise a new inter-African agreement that should enable them to investigate tax dodging companies operating across the African continent, and have pledged to review the corporate tax breaks that the Senegalese Finance Minister recently called a ‘budgetary cancer’ eating up as much as six percent of some African countries’ national income.   

Finally, and critically, on the global stage 2013 looks set to be a year when the world’s wealthiest countries have an opportunity to finally start using their political and economic muscle to crack down on the tax havens that enable much of this global haemorrhage of tax revenues. David Cameron’s unprecedented announcement last Wednesday that ‘tax’ and ‘transparency’ will be two of the three priorities of the meeting of G8 economies in June 2013 has turned tax justice into one of the biggest issues on next year’s global agenda. Here too, we’ve got some ideas about what the G8 needs to do to finally crack down on tax haven secrecy right around the world, and how we can campaign together to make sure they deliver.

When a small band of ActionAiders started our own Outlandish Revenue Service back in 2008 to point out the absurdity of billions of pounds of wealth gushing every year out of some of the poorest countries in the world, tax was still a footnote in most people’s thinking about international development. Last week, as David Cameron himself said, ensuring developing countries “can collect their taxes” should now be at the centre of the fight against poverty.

We’ve come a long way. And we’re about to face our biggest challenges yet. Grand rhetoric doesn’t just turn itself into results. And big, global action on tax havens and tax avoidance is likely to mean a big, global pushback from those with a vested interest in business as usual.

We need to be holding the Prime Minister accountable to delivering on his G8 priority, and ensuring that this time the rhetoric really means something. We’re going to be part of a global struggle – with an opportunity to start to transform the way that countries everywhere can raise their own resources to finance their own futures.

Next year is going to be a ride. We’d like you to join us on it.