If voters want to see a crackdown on tax dodging, Brexit won’t help. The EU is leading the charge against tax avoidance. Leaving the bloc will make it harder to cooperate on these international strategies. It will also leave the UK less able to crack down on US corporate behemoths.
Following the so-called Paradise Papers leaks, the EU has brought forward talks on creating an EU-wide blacklist of tax havens. The dump of 13.4 million documents lifts the lid on complex offshore tax avoidance arrangements made by ultra-rich individuals and companies.
One of the big stories to emerge from the leaks was Apple sidestepping an EU crackdown in 2013 by moving most of its untaxed offshore cash, now $252 billion, to Jersey.
The EU’s competition commissioner, Margrethe Vestager, today attacked tech giants for allowing a “poisonous cocktail” of fear and greed to drive their anti-competitive behaviour. She added: “We have to take democracy back and renew it because society is about people, not technology.”
The British response has been more muted. Theresa May refused to commit to a public register of offshore companies and trusts, but said: “We want people to pay the tax that’s due.”
The crisis-hit prime minister is in a more politically delicate position. Many of the tax havens likely to appear on the EU’s blacklist are British overseas territories or crown dependencies. How far are the Conservatives willing to go?
David Cameron raised tax avoidance on the international stage during his premiership. But he also shied away from demanding British territories hold public registers of company ownership and shielded offshore trusts from an EU crackdown.
But even if the UK government was as fired up as the European Commission, post-Brexit it won’t have the same clout to pursue America’s most powerful corporate giants anyway.
Jeremy Corbyn should care about this even more than the Conservatives. After all, the Labour leader has come down hard on tax avoiders, calling for a review into offshore havens and saying those involved should “not just apologise for it but also recognise what it does to our society”. But if he ever became leader of a UK split from the EU, he wouldn’t have the economic muscle to take on America’s corporate colossuses.
Donald Trump is more than willing to throw his weight around when dealing with Britain. Look at the Bombardier saga. Or yesterday when Trump’s commerce secretary told the UK it would have to accept America’s chlorine-washed chickens if it wanted a trade deal.
In contrast, the EU has recently fined Google €2.4 billion for abusing market dominance, ordered Amazon to pay €250 million in back taxes, and demanded Ireland collect €13 billion in taxes owed by Apple.
If Corbyn is to deliver on his tax avoidance rhetoric then he’s best off working as closely as possible with the EU. Could this form part of a scenario that tempts him to turn against Brexit altogether?