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Tax Avoidance and Evasion

I would rather get through my speech, because the hon. Gentleman will have some interesting opinions to give us. The system that I have set out should be the basis for our tax system given that we need the revenue in the current crisis. A second general principle that this country could and should adopt is anti-avoidance. Why not? It works well in Australia. Under legislation from 1903, Australia does not look at what the law actually says about what is due—lawyers will quibble about that for ages, and corporations have huge staffs of well-paid lawyers. Instead, it looks at the intention of the legislation. As a result, any structures that are designed to avoid taxation, rather than to improve a company's competitiveness and strength, are struck down. Why do we not have that principle in this country to avoid the manipulations that are going on? The third thing that we can do unilaterally is deal with the tax havens, although the hon. Member for Banbury (Tony Baldry) indicated some reluctance to do that. As he said, there are two categories of tax haven. The British overseas territories—particularly the West Indies—are mainly of concern to America because of tax avoidance in the United States. The hon. Gentleman was correct to say that we encouraged those territories to develop financial and banking centres as an alternative to paying them aid. We said, "We won't give those West Indian chappies aid. We'll let them develop banks such as we have"—the same successful banks that have brought this country to its knees. We used that as a substitute for paying them aid because it was cheaper—that is what it was all about. However, the countries involved are British overseas territories and they can be dealt with as such. The consequence of such development is the corruption that we see in the Turks and Caicos Islands, with its corrupt regimes and inefficiency. It failed to develop the economy's industrial and agricultural potential because it concentrated on financial services, which are skimming off the cream. The second category of overseas territory, as the hon. Gentleman intimated, is the Crown dependencies—the Channel Islands and the Isle of Man. Those are of more interest because they are escape hatches—subsidiaries—which allow finance in the City of London to manipulate its money. We can deal with such dependencies quite effectively. The only inhibition is the constitutional one, which Governments make much of, although they do not hesitate to cross that line on moral issues, equality issues or rights. The Channel Islands are a British concern, and there is not as much of an issue about American companies as there is in the West Indies, so we can deal with the problem by insisting on the principle of absolute openness. All ownership of companies should be on the public record. All the name plates that flourish in Jersey and Guernsey make a fascinating tour; people could think they were touring a mighty industrial empire as they went around looking at those name plates gleaming on the doors of companies there—but there is nothing behind them. They are just name plates. There should be openness about ownership in the public record; all accounts should be on the public record, so that we would know who was passing the money through, and could deal with that; and there should be full compliance with the European savings tax directive. In other words just paying withholding tax and keeping the accounts secret should not be allowed; full compliance with the directive should be insisted on. That transparency would produce radical change and a substantial reduction in the kind of financial sector that is found in the Channel Islands. It might drive them back to their old basics of tomatoes and tourism, and they might need financial help with that, but we cannot avoid the principle. There is a need to build such measures. We can do it on a national basis without waiting for international agreement, and we should. There is a need to act quickly rather than wait for international agreements, because we are now in a situation of some desperation. We need the companies in question, which do not pay their tax dues or their social rent to this country, to pay. I conclude with an important point, which my hon. Friend did not deal with. We are now concerned about the environment and global warming, and it must clearly be dealt with on an international scale. Global warming and the development, control and management of industries cannot be dealt with unless the financial side of the question, and the management and control of the tax capability of the relevant companies, is dealt with. It must be done, and soon.