Margaret Hodge MP

‘Immoral’ tax avoiders are only obeying EU law

As Christopher Brooker wrote: ‘It’s not on,” said Mrs Margaret Hodge, stamping her little foot. 

What aroused her ire as chairman of the public accounts committee was the news that Amazon last year paid the Treasury a pitiful £9.7 million in corporation tax on its UK earnings of £4.7billion. But last November she was branding such tax avoidance as “immoral”, referring not just to Amazon but also to Starbucks, Google, Apple, Next, Vodafone, Pizza Express, the foreign-owned companies that sell us water and electricity, and all the countless other firms that manage to pay only minimal amounts of tax on the hundreds of billions of pounds they make from their UK customers.

What Mrs Hodge and all the other politicians and commentators who ritually wax righteous about this wholesale tax avoidance never seem to mention is Chapter 4 of the Treaty on European Union. Articles 63 to 66 of this treaty spell out very clearly that “all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited”; and it is this that makes it perfectly legal for companies to move their earnings to whichever country their tax liability will be lowest, whether elsewhere in the EU, Jersey, the Cayman Islands or wherever.

No one knows this better than Her Majesty’s Revenue & Customs, which, in 2007, lost a historic test case on the matter in the European Court of Justice.

So why are Mrs Hodge and co so unwilling ever to admit that, under EU law, there is nothing we can do about a racket which, according to one estimate, could be costing Britain as much as £120billion a year in lost tax revenue? 

I think we all know the answer to that, don’t we?

But please note that the sums involved are more than the deficit and therefore alone would end the need for this government’s Austerity programme of Cuts – which are mostly falling in England.