U.K. to target tax dodgers at G-8

Multinational companies stirring public anger, Cameron says

British Prime Minister David Cameron, seated next to Queen Rania of Jordan, speaks Thursday at the World Economic Forum in Davos, Switzerland.
British Prime Minister David Cameron, seated next to Queen Rania of Jordan, speaks Thursday at the World Economic Forum in Davos, Switzerland.

— British Prime Minister David Cameron said Thursday that he will use his country’s year-long presidency of the G-8 to target tax-dodging tactics by businesses.

Public anger has been mounting in Britain after lawmakers accused major multinational companies including Starbucks, Google and Amazon of “immorally” avoiding tax payments.

Companies operating in Europe can base themselves in any of the 27 European Union nations, allowing them to take advantage of a particular country’s low tax rates.

Google has picked Ireland and Bermuda, Starbucks is based in the Netherlands and Amazon in Luxembourg.

Cameron said he plans to “drive a more serious debate” on tax evasion and avoidance at this year’s meetings of G-8, the group of eight leading industrial countries, acknowledging that there is a difference between the two since tax evasion is illegal.

“But there are some forms of avoidance [that] have become so aggressive that I think it is right to say these raise ethical issues, and it’s time to call for more responsibility and for governments to act accordingly,” he told an audience at the World Economic Forum in Davos, Switzerland. “This is an issue whose time has come.”

He said the practice of companies navigating their way around legitimate tax systems thanks to “an army of clever accountants” needs to stop and businesses must pay their fair share.

“When one company doesn’t pay the taxes they owe, then other companies end up paying more,” said Cameron. “When some cowboys play the system, all businesses suffer.”

He didn’t name any companies but in an apparent swipe at Starbucks said it was time for businesses to “wake up and smell the coffee” about public anger over their tax practices.

“When some businesses aren’t seen to pay their taxes that is corrosive to public trust,” Cameron said.

Starbucks - along with Google, Facebook and others - has been the target of public anger and demonstrations in the U.K. over its tax practices. Last month, the coffee chain bowed to mounting pressure and said it had agreed to pay more British tax than was required by law.

Britain’s government also has said it is earmarking an extra $122 million to clamp down on major multinational companies avoiding U.K. taxes.

Cameron also shrugged off the possibility that his country may vote to leave the European Union and argued that his vision of a changed Europe on Britain’s terms is eminently achievable.

In an interview with The Associated Press, Cameron said he wanted to achieve change in Europe “so that we can secure Britain’s place within it.”

His comments come a day after he rattled nerves and raised ire across Europe by offering British citizens the prospect of a vote on whether to stay in the 27-country EU.

“We trust the people to take that choice,” he said.

“But what I want to achieve is change in Europe, to make it more open, competitive and flexible,” he said. “That is what I’m going to be fighting for over the coming years. It’s the right agenda for Britain, it’s the right agenda for Europe, and I think it is eminently achievable.”

Business, Pages 25 on 01/25/2013

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