---

Finance (No. 4) Bill

It is a pleasure to follow the detailed and forensic speech of the hon. Member for Llanelli (Nia Griffith). However, unlike her, I support the Finance Bill, and hope that it will go further, particularly on business and the reductions in corporation tax. By 2014, corporation tax will be 22%—the lowest rate in the G7. I strongly believe that if the rate is cut, the take is increased. However, in cutting the rate, we also need to take firm action to stop tax avoidance and to have a new tax compact. A low rate means great responsibility, and a greater responsibility to pay the tax that is due. We need business to pay a fair share of taxes, especially multinationals that are located not here in the UK, but overseas. For too many years, they have failed to pay their fair share. Let me give some numbers. In 1997-98, income tax raised £77 billion a year; in 2008-09, it raised £153 billion a year. In other words, income tax receipts doubled. Let us look at corporation tax. In 1997-98, corporation tax raised £30 billion; in 2008-09, it raised £43 billion, an increase of just a third. How can it be that income tax receipts doubled in the same period that corporation tax receipts went up by only a third? The rate during the period was largely unchanged. The answer is that the Labour Government allowed massive, egregious and unacceptable tax avoidance for a decade on an industrial scale. That is a disgusting record in government. There was a massive change during that period. With the rise of the internet, tax bases were threatened, but the Labour Government were asleep at the wheel and failed to reform our tax system, and to understand and take into account the new technologies and the new threats to our tax bases. Let us look at this massive and inexcusable tax avoidance by multinationals. Who am I talking about? I shall give a few examples. In the last financial year, it is estimated that Apple had earnings of about £6 billion in the UK. Apple has an operating margin of some 33%, meaning that profit in the UK would be roughly £2 billion. Tax attributable to UK profits should be roughly £500 million, but how much tax did Apple pay? It paid £10 million—not £500 million. That is unacceptable. Let us take the case of Amazon. In 2010, Amazon had revenues attributable to the UK of £2.8 billion. It is estimated that it should have paid some £35 million in tax on profits of some £125 million. How much tax did Amazon pay? The answer is nothing.