Five years ago I would have thought a double Irish would have been a potent drink and a Dutch sandwich a nice snack in the Netherlands.
My innocence was shattered on the rollercoaster ride as the public accounts committee uncovered a world of corporate tax arrangements that were shocking to the majority of citizens who just pay their tax as demanded.
It was in 2011, under my predecessor Margaret Hodge, that the PAC first began to look at the world of corporate tax. We uncovered bewildering and complex structures, with companies aggressively avoiding tax and tying up tax revenue officials for years. It was HMRC’s attempts to unblock the logjam of unpaid corporate tax that led to the settlements with Goldman Sachs and Vodafone that first caught the committee’s attention.
So what do the Panama Papers show that we did not know already? Crucially they strip away the confidentiality which was clearly so important to the companies and wealthy individuals concerned. This transparency is vital. Country-by-country reporting is a start but all members of the cross-party PAC backed Caroline Flint’s recent bill to have corporate financial arrangements in Companies House returns. Sunlight is the best disinfectant.
The PAC hosted a conference on international tax towards the end of the last parliament. Those attending acknowledged that had it not been for the publicity and voice that the committee had given the issue there would not have been as swift an international reaction as there has been.
Too often when the tax arrangements of the wealthiest hit the headlines we see much wringing of hands about how difficult is it to tackle – it is complex, it is international and the advisers outgun national tax officials. All true, but it is time for the handwringing to stop and for there to be some action.
So what should happen now? For all the talk of tax simplification this is not very likely. The lowest paid have been removed from paying tax altogether but governments of all colours complicate the rules. There is never a budget without some tax break, rise, cut or taper.
Closing tax havens would be a good step. A number of national authorities now require disclosure to the nation of domicile – so secret Swiss bank accounts should be a thing of the past. Closing down tax havens does require international action – closing one will mean the wicked and wily will simply shift to another. That does not mean the United Kingdom should not go it alone, but we should not kid ourselves that this will solve it.
On transparency the government could act more quickly. The legal change bringing in more openness in June is a first step but we should not allow the prime minister to use this as cover for serious action.
Britain is a big market (Google’s second largest after the United States, despite what its low UK tax bill suggests) so I do not believe there is a real risk that business would desert the UK.
The prime minister is hosting an anti-corruption summit in May. This is his opportunity to put fair tax centre-stage. It is the poorest around the world who lose out most when the wealthiest avoid tax. He has been talking the talk but he should now adopt rules requiring greater transparency and be clear that tax havens have no place in today’s world.
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Meg Hillier MP is chair of the public accounts committee. She tweets @Meg_HillerMP
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