Monday, October 21, 2019
Why is the UK Government supporting tax havens?
There was a very interesting report in yesterday's Observer, which revealed the findings of thinktank, Demos, that almost three-quarters of companies who have been given major government contracts have operations based in tax havens:
Value Added, published on Sunday by the thinktank Demos, reveals that 25 of the government’s 34 strategic suppliers – organisations that receive £100m or more in revenue from the government – operate in offshore centres.
According to estimates, they account for about a fifth of total central government procurement spend. Of these, 19 had operations in jurisdictions included on the EU’s “blacklist” or “greylist” of countries that are considered to be non-compliant with EU international standards for “good tax behaviour”, according to the report.
Given the problems over the last decade in trying to balance Government books, one would think that those responsible for these contract awards might wish to avoid encouraging firms basing themselves in these havens:
The Demos report states: “Large multinational companies, for example, continue to squeeze their tax contributions ever lower: the OECD estimates that US$100–$240bn (£78bn-£186bn) is lost globally in revenue each year from base erosion and profit shifting by multinational companies.”
Demos is quite right when they say that we need new measures, including minimum standards for public procurement that takes account of a bidder’s exchequer contribution.
An annual National Audit Office report on central government procurement transparency, including a “league table” ranking of departments, with the bottom three departments compelled to make a statement to parliament would also be useful.
It is not right that public money should be sent to tax havens in this way.
Value Added, published on Sunday by the thinktank Demos, reveals that 25 of the government’s 34 strategic suppliers – organisations that receive £100m or more in revenue from the government – operate in offshore centres.
According to estimates, they account for about a fifth of total central government procurement spend. Of these, 19 had operations in jurisdictions included on the EU’s “blacklist” or “greylist” of countries that are considered to be non-compliant with EU international standards for “good tax behaviour”, according to the report.
Given the problems over the last decade in trying to balance Government books, one would think that those responsible for these contract awards might wish to avoid encouraging firms basing themselves in these havens:
The Demos report states: “Large multinational companies, for example, continue to squeeze their tax contributions ever lower: the OECD estimates that US$100–$240bn (£78bn-£186bn) is lost globally in revenue each year from base erosion and profit shifting by multinational companies.”
Procurement is the UK government’s largest expenditure, valued at £284bn. Of the 25 organisations with links to tax havens, 20 benefited from contracts worth a combined £41bn awarded between 2011 and 2017.
Demos is quite right when they say that we need new measures, including minimum standards for public procurement that takes account of a bidder’s exchequer contribution.
An annual National Audit Office report on central government procurement transparency, including a “league table” ranking of departments, with the bottom three departments compelled to make a statement to parliament would also be useful.
It is not right that public money should be sent to tax havens in this way.
