Cable Says He Understands Public Anger Over U.K. Tax Avoidance

Business Secretary Vince Cable said he understood public anger over large companies that avoid paying tax in the U.K. and urged a further crackdown by the revenue authorities.

“It’s completely unacceptable where there’s systematic abuse taking place,” he said in an interview with BBC Television’s “Andrew Marr Show” today. “You would need some pretty intensive investigation by the Inland Revenue to find what’s going on. You’ve got to have a combination of action at an international level, which the chancellor is pursuing with other governments that are just as angry as we are.”

At a U.K. parliamentary hearing last week, executives from Starbucks Corp., Inc. and Google Inc. came under attack from lawmakers who accused the U.S. companies of using complex accounting methods to reduce their tax liabilities in the U.K.

Starbucks has paid no corporation tax in the U.K. over the past three years and recorded losses for most of the 15 years it has been operating in the country. Starbucks Chief Financial Officer Troy Alstead angered lawmakers by refusing to publicly disclose details of a low-tax rate granted by the Netherlands on royalty payments from its U.K. business.

The hearing reflects public anger with large corporations that are minimizing tax bills at a time when the U.K. is driving through the biggest budget cuts since World War II to narrow the fiscal deficit. Chancellor of the Exchequer George Osborne has said he wants clearer international rules to help reduce tax avoidance.


“It’s certainly difficult, because we need inward investment, but while they’re here if they make a profit they should pay tax,” Cable said today. “Our own tax authorities have got to be very tough on things like royalty payments.” He said there was “nothing more galling” for small and medium-sized companies paying the tax they owe than to see large corporation “dodging it.”

Separately, Cable said he expected a dispute between his Liberal Democrat party and its Conservative coalition partner over taxing the wealthy to be resolved by the time of the government’s economic statement on Dec. 5.

Osborne has rejected Liberal Democrat demands for a so-called mansion tax on the most expensive homes. Asked today whether this left open the possibility of creating a new top local-authority tax band or increasing stamp duty on large properties, Cable said they were “all under discussion.”

“The principle is right that at the top of society, the best off have got to pay more,” he said

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