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'Genuinely angry' Cameron blames Labour in Google tax row

Published 27/01/2016

Downing Street says the £130 million settlement with Google covering the last 10 years is a 'good deal'
Downing Street says the £130 million settlement with Google covering the last 10 years is a 'good deal'

David Cameron has said he is "genuinely angry" about Google's tax treatment - but insisted his Government is making up for lax rules under Labour.

The Prime Minister said he "disputed" claims that a £130 million back-tax settlement by the internet giant meant it was paying a rate of just 3%.

He said those upset about the firm's tax should blame Tony Blair, Gordon Brown and Alistair Darling, who allowed it to pay "zero percent".

The comments, in angry clashes with Labour leader Jeremy Corbyn at Prime Minister's Questions, came with ministers under fresh pressure to justify the deal struck by HM Revenue & Customs.

Italy is said to be about to seal an agreement which will see Google pay a higher proportion of its profits, while Mr Cameron, Chancellor George Osborne and other senior figures are under close scrutiny over their links to the internet giant.

French MEP Eva Joly, vice chairwoman of the Special European Parliamentary Committee on Tax Rulings, said it wanted Mr Osborne to answer questions about the "very bad deal".

"This bad deal is very bad news for everybody because it shows that the UK prepares itself to become a kind of a tax haven to attract the multinationals," she told the BBC Radio 4 Today programme.

In the Commons, Mr Corbyn asked the premier whether it was correct that Google's settlement meant it had an effective 3% tax rate.

Mr Cameron replied: "We're talking about tax that should have been collected under a Labour government, raised by a Conservative government.

"I do dispute the figures that he gives. It's quite right this is done independently by HMRC, but I'm absolutely clear that no government has done more than this one to crack down on tax evasion and aggressive tax avoidance. No government and certainly not the last Labour government."

Mr Corbyn, who pointed out that the inquiries into Google had started under Labour, said ordinary taxpayers would be angry that such firms were getting special treatment.

But Mr Cameron said the new Diverted Profit Tax would mean companies would "pay more tax in future".

He said the coalition had raised £100 billion extra from business in the last parliament by closing loopholes.

Mr Cameron insisted he was "genuinely angry" about the situation with Google, which he said had been allowed to pay "zero percent" under Labour.

"Maybe he should start by calling Tony Blair - you can get him at JP Morgan. Call Gordon Brown - apparently you can get him at a Californian bond dealer called Pimco. Call Alistair Darling - I think he is at Morgan Stanley, but it is hard to keep up," he told MPs.

"Those are the people to blame for Google not paying their taxes."

Speaking outside the chamber, a senior Downing Street source insisted the agreement with Google was "a decision for HM Revenue and Customs" rather than ministers.

"The Prime Minister's view is that it is HMRC's role to ensure that companies are paying tax owed," said the source. "We had a situation under Labour where these companies were paying no tax."

Asked about reports that other European countries were taking a tougher line with the internet search giant, the source said: "My understanding is that the French and Italians have said how much tax they would like Google to pay. Let's see what is actually paid. I'm not sure if any tax has been paid in those countries.

"The situation here is that HMRC has actually been paid, and this is money that should have been paid under a Labour government."

The source described Labour's complaints as "breathtaking hypocrisy", as the Government had closed more than 40 tax loopholes which had been exploited by companies under the previous administration.

But a Labour source said: "The Government is responsible for Revenue and Customs, there's ministerial sign-off. Osborne has to take responsibility for what's going on. He didn't even turn up in the House yesterday to take questions about it.

"We're calling for a proper deal for everyone, including global corporations, and also transparency."

Business minister Anna Soubry said the Google settlement was a "huge step forward", and warned it was "dangerous" to second-guess the HMRC officials who struck the deal.

But she admitted it did not appear to be an "awful lot of money".

"Of course everybody is going to look at it and say it doesn't seem like an awful lot of money," she told BBC Radio 4's World At One.

"These companies that operate in this way, it is hugely complicated, and there are little gaps and holes that they can get through, and we are plugging them."

Ms Soubry added: "It doesn't sound like an awful lot of money, of course it doesn't. It would be silly to say otherwise. But if it is within the rules ... "

Asked why ministers including Mr Cameron had met Google executives on a number of occasions in recent years, the PM's official spokeswoman said: "There are a number of important policy issues where the Prime Minister might be engaging with companies such as Google."

The spokeswoman added: "I think protecting our children online and the safety of our country and the risks online are more than enough reason to justify meetings."

Asked whether Mr Cameron would support changes to require companies to publish their tax returns, the spokeswoman said: "There is a long-standing issue of taxpayer confidentiality. That's something that's reflected in many countries around the world.

"So as you look at how to increase transparency, you need to think how you are driving an international, global approach, so that other countries are taking similar action to you. That's what the Prime Minister did during the course of the last Parliament when he put this issue front and centre of the G8 agenda."

Shadow Treasury chief secretary Seema Malhotra released a letter to National Audit Office (NAO) head Sir Amyas Morse calling on the public spending watchdog to investigate the deal - after the PM told MPs it was responsible for scrutinising HMRC's work.

"Tax revenue not collected is revenue foregone - this has important implications for the funding of public services," she told him.

She also urged the NAO to investigate "whether the level of cuts that HMRC has been subject to since 2010, and the numbers of specialist staff, has impacted on its ability to negotiate fair tax settlements with multinational corporations such as Google".

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