MPs have questioned whether national newspapers can be trusted to report fairly on corporate tax dodgers like Amazon and Starbucks given that their owners “are themselves engaged in some form of tax avoidance”.
While Private Eye was praised for its exposure of “lurid” tax avoidance schemes in Parliament yesterday, publishers including News International and the Guardian Media Group were accused of operating similar arrangements.
Liberal Democrat MP Ian Swales, a former senior executive at Imperial Chemical Industries, told MPs that Private Eye “deserves special mention for its exposure work” on the likes of Vodafone, the Ritz hotel, bookmakers, water companies and care homes.
He added: “We must also consider whether we can trust our media to report all this fairly, given that most of our national newspapers and their owners are themselves engaged in some form of tax avoidance.”
Commenting on his time at ICI, where he worked from 1978-1999, Swales said the company “would never have set up legal entities in countries just to avoid tax”.
“Now, News International has more than 150 companies in tax havens,” he said. “Transfer pricing, management fees, royalties, patent, copyright and interest payments are all ways to move money.
“The moving of whole businesses and headquarters to new jurisdictions is also becoming much more common.”
The work of Private Eye was also highlighted by another MP, Labour’s Michael Meacher.
“As we all know, corporation tax avoidance has become a hot political issue only as a result of the relentless highlighting of it by analysts such as Richard Murphy of Tax Justice Network and journalists such as Tom Bergin of Thomson Reuters and Richard Brooks of Private Eye, as well as campaigners such as UK Uncut,” he said.
“Why is it left to voluntary campaigners to nail the tax dodgers who are cheating honest taxpayers and the Revenue out of, according to the Government, £35 billion to £40 billion a year? That is equal to about a third of the total deficit and the sum is probably a considerable underestimate.”
Conservative MP for Lincoln Karl McCartney told the Commons: “The Starbucks precedent—and by association, one might say, any future pressure on Google, Amazon, and historically some of the mobile phone companies and indeed perhaps most notoriously the Guardian newspaper group—is a dangerous one.
“Tax should be a matter of law not moral persuasion. If any Government want Starbucks or any other corporation to pay more tax, pass an appropriate piece of legislation. Otherwise tax payment will become a matter of public image and impact”.
Former Observer journalist Paul Farrelly, the Labour MP for Newcastle-under-Lyme, used the debated to pay tribute to his former colleague Ian Griffiths, The Guardian journalist who revealed in April that Amazon made £7.6 billion of sales in the UK but had paid zero corporation tax because it is headquartered in Luxembourg.