Exclusive: Starbucks beware – union leader seeks jail terms for overseas tax avoiders
Ed Miliband is under pressure to “bang up” the British chief executives of overseas firms that use tax avoidance schemes, should he win next year’s general election.
Speaking to The Independent on the fringe of the Labour conference in Manchester, Paul Kenny, the general secretary of the GMB, said: “Tax avoidance is stealing, it’s cheating. Give them, UK CEOs, five years, more – we need to change the rules to let them know they can’t prosper like this.”
Mr Kenny, whose intervention is significant given the GMB is a major Labour party donor and represents more than 630,000 workers, cited high-profile cases involving Starbucks and Google.
The coffee chain’s UK sales fell last year in the wake of revelations that it had paid only £8.6m in tax on revenue of £3bn since 1998.
Starbucks took advantage of legal tax avoidance loopholes, including transferring money to a Dutch sister company, but has since pledged to make a voluntary contribution of £20m to the exchequer.
Similarly, Google paid only £10m of tax on £11.5bn of revenue between 2006 and 2011, which saw Margaret Hodge, the chairman of the Public Accounts Committee, claim that the internet giant “did do evil” through avoidance schemes.
In his leader’s speech yesterday, Ed Miliband vowed to “clamp down” on tax avoidance, in a move he claimed would raise money for the NHS.
Last week, the Organisation for Economic Co-operation and Development also announced strict new international rules that would clamp down on structures that allow companies to transfer profits into tax havens. This is part of a larger programme of work that will conclude next year, when national governments can look to enshrine the rules into their statute books.
Google executive chairman Eric Schmidt has said changes to rules that increase its tax bill would hit innovation.
Although Mr Kenny welcomed the changes, he wants a future Labour government to go further. “If someone can get jail for stealing a bottle of water, then I think these guys should be sharing a cell with them,” he said. “There is massive tax avoidance by big companies, household names, and they are being propped up by the taxpayer – Starbucks, Google – we should bang them up, absolutely.”
Members of the GMB, which is a general union representing everyone from hospital canteen staff to nuclear power plant technicians, have previously argued that the Coalition’s austerity cuts would not have been necessary if billions of pounds hadn’t leaked out of the company through tax avoidance schemes.
Last year, the GMB said it would cut the amount of affiliation fees it gives Labour from £1.2m to £150,000. But the unions remain a key plank of Mr Miliband’s political support.
