Published on 24 Jan 2013 Sections

Cameron calls on business to ‘wake up, smell the coffee’

David Cameron tells Davos that Britain will push for global action against “aggressive” tax avoidance during its year-long presidency of the G8 – and makes a dig at Starbucks along the way.

The prime minister said that abuse of the tax system was “an issue whose time has come” and that he wanted to make sure individuals and companies pay “their fair share”.

But David Cameron was at pains to stress that he is still pro-business. He called himself a “low-tax Conservative“, as opposed to a “companies should pay no tax Conservative,” and said that tackling tax avoidance would ultimately benefit business.

“Doesn’t this sound like an anti-business, bash the rich, tax success agenda? Absolutely not,” he added. “This is a resolutely pro-business agenda.”

In a speech to the World Economic Forum in Davos, Switzerland, David Cameron also made an apparent swipe at Starbucks – which failed to pay any corporation tax in the UK since 2009 – saying it was time for business to “wake up and smell the coffee” about public anger at tax-avoidance.

Representatives from Starbucks, Amazon and Google were grilled by MPs last November over accusations that they were using legal – but undesirable – methods to minimise their UK tax payments.

Doesn’t this sound like an anti-business, bash the rich, tax success agenda? Absolutely not. This is a resolutely pro-business agenda.
David Cameron

Britain is president of the G8 group in 2013, and Mr Cameron also said he would use the role to “put turbo-boosters” under the issue of transparency in developing world economies. Greater openness about who owns companies and land as well as the movement of assets and money has “staggering” potential in the fight against poverty, he said, by ensuring a country’s resources benefit its people and not just a super-rich elite.

“What the prime minister said in Davos was his clearest ever recognition that poor countries face a fierce struggle to collect the taxes they need to tackle poverty and hunger,” Christian Aid tax expert Joseph Stead told Channel 4 News. “We’re also really pleased to see his acceptance that rich countries have a responsibility to work with developing countries to tackle corporate tax dodging.”

The prime minister was speaking to an audience of world leaders, business figures and non-governmental organisations (NGOs) in the Swiss ski resort of Davos. His pledge to focus on the three ‘T’s of trade, tax and transparency, comes a day after he made the most important foreign policy speech of his premiership, in which he promised a referendum on Britain’s membership of the EU – if the Conservatives win the next election.

Ending world hunger through tax and transparency
The prime minister’s pledge to crack down on tax avoidance as a means to tackling world poverty comes a day after the launch of major “IF” campaign to end world hunger by tackling four key issues: tax, aid, land and transparency.

Two of these were addressed by Mr Cameron in his G8 address on Thursday, and the Enough Food for Everyone IF campaign welcomed his comments, adding that they would hold him to his commitment.

According to Christian Aid, tax avoidance by multinational companies costs developing countries $160bn (£101.5bn) a year. A report by MPs on tax and poverty published in August last year also found that the ability of authorities in developing countries to collect taxes owed to them was of “fundamental importance” in escaping from aid dependency. And regulation of tax at a global level, not just within each country, plays a major role in doing so, the report read.

While Mr Cameron’s comments were welcomed by charities, convincing politicians worldwide to commit to cracking down on tax may prove difficult, even with if the goal to advance developing countries, as even richer economies struggle in the grip of recession.

On tax avoidance, he said there was a global appetite for more action, as well as a “gathering political will” to do something about it, and that it was time for a serious debate on the issue.

“There’s nothing wrong with sensible tax planning, and there are some things governments want people to do that reduce tax bills, such as investing in pensions, start-up businesses or charities,” he said. “But some forms of avoidance have become so aggressive that I think it is right to say these raise ethical issues and it’s time to call for more responsibility and for governments to act accordingly.”

The prime minister said he was a “low-tax” Conservative, but that he believed individuals and businesses should pay their fair share.

He added that tax evasion deprived public sector of revenue, but also results in other companies paying more.

“When some cowboys play the system, all businesses suffer the fall-out to their reputation,” he said, adding that successful companies, as well as NGOs, had been urging the government to tackle tax evasion.

Read more on FactCheck: the cracks in the latest tax evasion crackdown