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Tax Avoidance and Evasion

I congratulate my hon. Friend the Member for North-West Leicestershire (David Taylor) on raising this important subject. He, I and others have been lobbying Ministers and HMRC to do something about it for several others, and we have always received an interested hearing along the lines of "Gosh, we didn't know that!" but no action has resulted. Now that we are in a recession or near-depression, and the manipulations, greed and derelictions of the financial sector have produced their own nemesis, something will clearly be done. When the Minister speaks, and when Ministers do act, however, I hope that they will not just fob us off with the idea that everything is very difficult and that we can act only through international agreement. As my hon. Friend said, there are actions that this country can take at a national level. One of the basic problems that we face is the avoidance of taxation through the formation of holding companies, which can be found around the world. Thirty per cent. of Barclays subsidiaries are in tax havens, Lloyds has 80 holding companies in Jersey and BP has 3,000 holding companies, and such companies are used to manipulate profits. News Corporation is very adept at that. It makes huge profits from The Sun and now from Sky television, which do not pay tax on their earnings in this country as they should, because those earnings are manipulated through holding companies. Google is a classic instance. It must generate between £1 billion and £2 billion of its £7.5 billion worldwide profits in this country. It is headquartered in Ireland, and the money is filtered out through Ireland. It does not pay any tax in Ireland, so the Irish get no benefit from providing the European headquarters—ultimately, the headquarters are in Bermuda. Google has more advertising revenue than ITV, which produces programmes in this country, but it does not pay tax on that revenue and is making no contribution to production in this country. Last year, in an interesting pamphlet entitled "The Missing Billions", the TUC estimated—its estimates are very moderate—that such practices cost the British taxpayer £25 billion in lost revenue. That will become increasingly important, because we need the revenue to repay the debts that we are accumulating as a result of trying to expand the economy at a time of deflation. Individuals are failing to pay £13 billion in tax in this country, while companies are failing to pay £12 billion. As my hon. Friend said, we can deal with the problem through action in this country. We need not to tax companies registered as subsidiaries, but to view corporations and multinationals as a whole. We need a unitary tax system with formulaic apportionment. Where is the revenue generated? As my hon. Friend said, we need national accounts of what is generated where so that we can tax in this country the revenues accruing from profits, plants and workers in this country. Such a system of unitary tax with formulaic apportionment operates between states in the United States and it could well operate here. Why do we not introduce it? That would put an end to the loss of tax capacity and tax revenue in this country.