This month has seen the launch of my new campaign: ‘Own-Up, Pay-Up’ calling for multinational companies in the developing world to pay their fair share of tax and to be open about the payments they make to governments.
Currently, companies who operate in more than one country only need to submit consolidated accounts where their company is registered – normally in a developed western country. This allows some large companies to hide details of their business activities abroad. They can then avoid paying taxes and put the money into off-shore savings accounts instead.
These hidden, tax-dodging businesses are often based in poorer countries that have rich natural resources but lack decent infrastructure, and democratic governments.
Last year multinational firms avoided taxes of more than $160 billion in the developing world –that’s nearly double the amount of the global aid budget!
We can only imagine what a difference would be made if these companies were not cheating these countries out of the taxes they are owed.
This is something we don’t think about when watching the television or boiling the kettle. But the fuel used to create the electricity which we depend on, or the wood used for our household furniture, could have been extracted from a developing country by a tax-dodging company, depriving that nation of desperately needed tax income.
Since I became Chair of the Economic and Monetary Affairs Committee, I have pushed the European Commission to ensure that these firms agree to declare full details of their operations in all countries.
The Commission has made a good start, and has published proposals for more detailed reporting by industries who extract natural resources from a country. However, I believe the proposals should cover all industries and I will work to ensure that all companies own up, and pay up when the relevant legislation – the Transparency and Accounting Directives – passes through my Committee.
Please do add your signature to my petition today to stop this shameful tax dodging.
The latest bailout of Greece, costing €130 billion, is a big deal. It stops Greece from crashing out of the Euro, which many feel would be a disaster. One only has to think back to the collapse of Lehman Brothers in 2008 to see how global the tidal wave from a sinking financial island can be.
It is the prospect of another ‘Lehman moment’ that terrifies Eurozone leaders. Greece dragging other Euro countries down with it is never far from mind.
We’ve been here before. In 2010, an €80 billion bailout package was agreed which many thought would set Greece on the path to recovery. The money was lent with the caveat that Greece would cut its public spending. Reductions in public sector pay and pensions, increased unemployment, and civil unrest followed. Such are the consequences of extreme austerity. However, the cuts didn’t go far enough, largely due to the high cost of interest payments on the Greek debt. The difference this time is that a ‘troika’ of EU, IMF and ECB inspectors has been set up in Athens to make sure necessary cuts are implemented, however harsh, to balance the Greek books again. Welcome moves have also been made to slash the debt and lower interest payments.
To some extent, Greece has been the architect of its own undoing. In 2001, the Greek Government paid Goldman Sachs to ‘duke the stats’ (hide its debts). However, money owed does not just disappear and, since joining the Euro, Greece’s debts have come knocking at the door. Sharing a currency with your European neighbours makes your problems their problems to some extent, meaning that Greek debts have cast a shadow over the Eurozone.
But problems don’t stop with the Eurozone as the effects of any serious debt crisis can, and have been, felt beyond our continent.
Last week, I led a delegation of my committee to Singapore and Hong Kong where finance ministers and businesses are very concerned by the over-spill of the Eurozone crisis. In particular, they are worried that belt-tightening and a climate of instability in Europe results in lower demand for imports and moves to strengthen bank capital are having a detrimental effect on trade financing instruments. Since trade is a two-way street, this also impacts businesses here. I have assured them that in Europe we are doing what we can to solve the crisis and in particular I have been taking a lead on the issue of trade financing in the legislation that we are doing.
Europe is hoping that, with this new deal in place, Greece will claw its way out of its current situation. Even those who think more help to Greece might be needed acknowledge that time is enabling other countries like Portugal, Spain and Italy to break free from the ‘contagion’ effect.
The political will for survival of the Euro is still strong and the sums show that keeping it all together is more cost effective than any break up.
This month I have also:
Spoken at the Liberal Democrat South Central Conference
Led my Committee on a delegation to Singapore and Hong Kong
Spoken at the EU Competition Day
Wrapped up the negotiations on derivatives infrastructure (EMIR)
Look out for my next issue on March 31st!