Page last updated at 09:39 GMT, Tuesday, 8 January 2013

Corporate tax avoidance debate

Tax avoidance by large corporate companies is a "growing crisis" and the government must take action to address the problem, a Liberal Democrat MP has said.

Ian Swales said the list of national and local British businesses unable to compete with offshore-based firms will get "longer and longer" if something is not done.

"A nation of shopkeepers will be run out of business. There's also a threat to our political system. We can't expect all those who pay their taxes fully and fairly to keep on tolerating these abuses indefinitely," he warned.

Mr Swales was speaking as he opened a backbench business debate on the matter, on 7 January 2013.

The Redcar MP said the government borrowed more than predicted in October and the main reason given was lower than expected corporation tax receipts.

The Conservative MP for Lincoln, Karl McCartney, said Starbucks' decision to voluntarily pay millions of pounds more tax in face of public outrage was a "dangerous precedent".

"Tax should be a matter of law, not moral persuasion. If any government wants Starbucks - or any other corporation, for that matter - to pay more tax, pass an appropriate piece of legislation. Otherwise, tax-paying will become a matter of public image," he said.

The Conservative's Richard Bacon described it as a "bizarre way of arranging our tax affairs". He added: "The way to do it is for companies to obey the law."

Labour MP Frank Field expressed his anger at those companies "taking us and the government for fools".

He suggested the government could issue kite marks to those companies which it believes have paid their fair share of tax.

Shadow Treasury minister Catherine McKinnell said the issue of tax avoidance and the strength of feeling about it "is not going away any time soon".

She said ordinary people and businesses were "angry" at the "apparent ability of multinational corporations to use extremely complex and aggressive tax planning arrangements".

Responding to the debate, Treasury Minister David Gauke said the government was committed to making sure tax was paid properly.

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