George Osborne has used the G20 summit in Moscow to call for a global crackdown on tax avoidance by multinationals
The chancellor was responding to an OECD report prepared for the weekend that urged governments worldwide to collaborate to close loopholes that “erode the tax base of many countries”.
Speaking from the summit on Friday evening, Osborne said Britain had cut its corporation tax rate by more than any other country in the G20 over the past two years, which he said was "a message to the world that we are open for business that has seen companies return to Britain, and helping to create and secure thousands of jobs and millions in investment".
"We want a tax system that makes it competitive for businesses to set up in Britain and create jobs, but we also want a tax system where business pay their taxes and that's what we're setting up achieving here with other countries at this meeting in Moscow.
"International companies are an important source of jobs - we want them in Britain. We are making sure the taxes in Britain are low but we do expect those international companies to pay those taxes."
He bemoaned international tax laws that have “not really changed in decades, even though the international economy has changed a lot”, adding that "Britain will lead the international effort to bring them into the 21st century".
However, the Labour leader Ed Miliband said George Osborne makes “lots of promises on tackling tax avoidance, but I don't see much evidence of it.”
"What he should be worrying about is the living standards of people in this country.
"Of course, he should be dealing with tax avoidance, but one of the things he's doing is cutting taxes for the richest people in society - £100,000 tax cut for the richest people in Britain - the wrong thing to do at a time when everyone else's living standards are squeezed."
Chris Morgan, head of tax policy at KPMG, argues it will “just replace one set of complicated rules with another and companies would get round it. The government needs to be very careful”.
Later today, Nick Clegg will argue that the coalition’s plans to raise income tax-free allowances are “twice as good” as Labour’s proposals to re-introduce the 10p tax rate.
Clegg will also reportedly dismiss Labour’s newfound support for a mansion tax.
“We have waited two and a half years for Labour to apologise for messing up the economy and to come up with some new ideas on how to fix it but all we’ve got from Ed Miliband is some blatant plagiarism of Liberal Democrat ideas,” he is set to say.
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