Miliband to Tell Google to Change Culture on U.K. Tax

U.K. Deputy Prime Minister Nick Clegg warned Google Inc. (GOOG)’s Executive Chairman Eric Schmidt to take notice of public anger over corporate tax avoidance, said an aide from his Liberal Democrat party.

At a quarterly meeting of the business advisory council on May 20 at Prime Minister David Cameron’s London office, Clegg made remarks to the 20 business leaders there saying voters in many countries are concerned about tax avoidance “as Google are finding out,” according to the aide, who briefed reporters in London today.

The announcement at a meeting two days ago raises pressure on Google after opposition Labour Party leader Ed Miliband told the company that it’s “wrong” to avoid paying tax. Miliband was speaking at the same U.K. conference as Schmidt today.

Cameron didn’t directly discuss Google’s tax affairs at the May 20 meeting, and focused instead on his priorities for the U.K.’s presidency of the Group of Eight nations, a spokeswoman for the premier said today. Schmidt also commented during the meeting and said he supported the U.K.’s G-8 agenda.

Cameron is in Brussels today discussing plans to clamp down on tax avoidance at European Union level. In a letter to fellow leaders, Cameron urged governments to join forces to act against “staggering” losses from tax evasion.

Photographer: Andrew Harrer/Bloomberg

Eric Schmidt, chairman of Google Inc. Close

Eric Schmidt, chairman of Google Inc.

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Photographer: Andrew Harrer/Bloomberg

Eric Schmidt, chairman of Google Inc.

“I want Britain to be a winner in the global race, but we’ve got to make sure as we set those tax rates that companies pay taxes,” Cameron told reporters before the EU summit. “And that means international collaboration, sharing of tax information.”

Acting Alone

While Cameron has said he wants to reach a global agreement to overhaul company taxes this year during Britain’s G-8 presidency, Miliband has said that if no agreement is reached he would be happy for the U.K. to act alone in clamping down on corporation-tax avoidance.

“I can’t be the only person here who feels disappointed that such a great company as Google (GOOG), with such great founding principles, would be reduced to arguing that when it employs thousands of people in Britain, makes billions of pounds of revenue in Britain, it pays just a fraction of that tax,” Miliband said. “When Google does great things for the world, as it does, I applaud you, but when Google goes to extraordinary lengths to avoid paying its taxes, I think it’s wrong.”

A U.K. parliamentary committee chairwoman said on May 16 Google was “evil” because of the way it sought to minimize its U.K. tax bills. Margaret Hodge, the Labour lawmaker who heads the Public Accounts Committee, told a hearing that the company was exploiting the rules and acting unethically.

To contact the reporter on this story: Kitty Donaldson in London at kdonaldson1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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