It's panto time - and Margaret Hodge has more tax baddies in her sights

Westminster Outlook

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The Independent Online

The most headline-grabbing select committee chairs have a clear idea of what their roles entail: to create good theatre.

This might not be the most intellectually compelling way of arguing matters of state, but there is no doubt that unabashedly exploiting the advantages of parliamentary privilege has highlighted some of the biggest issues of our time.

Margaret Hodge’s pursuit of corporate tax avoidance is one such example. The prospective Labour London mayoral candidate’s devastating verbal dress-down of Google’s northern Europe boss, Matt Brittin, last year was a highlight of this Parliament: “You are a company that says you ‘do no evil’. And I think that you do do evil.”

On Monday she was at it again, telling PricewaterhouseCoopers’ head of tax, Kevin Nicholson, that the Big Four accountant was “selling tax avoidance on an industrial scale”.

Nicholson had been hauled in front of the committee to explain why PwC was allegedly helping major companies, including FTSE-100 pharmaceuticals giant Shire, channel money made in the UK through Luxembourg. Hodge also argued that Nicholson had misled the committee in a hearing last year, though he steadfastly defended PwC’s record.

Later in the week, Hodge was fuming at further allegations that Jean-Claude Juncker, the newly installed European Commission president, had courted Amazon while he was the Grand Duchy’s prime minister for nearly two decades. Bob Comfort, the internet giant’s former head of tax, said that the Luxembourg government “presents itself as a business partner” that would help “solve problems” – meaning many corporations ended up paying just a fraction of one per cent on profits.

Hodge and other chairs that share her combative abilities should be applauded. But the Treasury has let it be known that HM Revenue & Customs are ready to pounce on companies that operate this type of avoidance through the Chancellor’s new “diverted profits tax”.

From April, this will enforce a 25 per cent tax on companies viewed to be artificially diverting tax out of the UK. This is four per cent more than corporation tax, meaning that, in many cases, there is a risk of paying out millions of pounds more in levies by breaking the rules.

On Tuesday, the US ambassador to the UK, Matthew Barzun, told the press in Westminster that major US companies, including Google and Amazon, are not “international tax dodgers”, rather they are “clever about using” international rules. He added: “I hope that if and when rules change they will play by those new rules as well.”

The final curtain is calling for theatrical performances on tax avoidance. Now it’s time to see if big accountants, clever multinationals and Britain’s blue chips can adapt to the emerging tax system.

If they don’t, then they must suffer an extended encore with Hodge, not to mention authorities that wield more power than simply a sharp tongue and an even sharper mind.

‘Dog-end’ comment puts Garnier in the doghouse

Last year, Mark Garnier deftly averted a minor political nightmare. A quietly impressive member of the powerful Treasury select committee, the Wyre Forest MP is a Europhile, arguing that Britain’s financial services industry thrives because of EU membership.

His mum Pat, a former Auto Trader journalist, was one of the first members of Ukip when it formed in the early 1990s and died in early 2013.

Accompanied by a note from Nigel Farage, the St Ives branch sent a large wreath to her funeral. This consisted of purple flowers forming a pound sign, surrounded by yellow flowers. Completing the Ukip logo was a circle of yet more purple flowers.

He could not reject a wreath from a party his mother had so loved, but neither could a Tory MP be seen to back Ukip. Garnier insisted that the photographer did not snap him anywhere near the wreath, managing to offend no one.

On the eve of the Autumn Statement last week, the 51-year-old found himself immersed in a worse problem, entirely of his own making. Garnier was secretly recorded telling an Institute of Economic Affairs audience  that politicians needed to stop “mucking around with tax rates in order to try and attract a few, sort of dog-end voters in the outlying regions”.

Charterhouse-educated with a posh accent, Labour seized on the “dog-end” comments, arguing that this was the “true face” of Conservatism. Garnier knows he is on his last life politically – and that his ridiculous language overshadowed a sensible, pro-business argument.

Garnier was arguing that Gordon Brown’s last “cynical” electoral stunts in power was to raise the top rate of income tax to 50p on those earning £150,000 a year.

Having set up a London office for a Japanese bank when he was in his twenties, Garnier is well aware that those he sees as creating broader wealth will happily invest in countries that welcome their investment and snub those who attack them for their efforts.

Garnier said “dog-end” voters; what he meant was politicians shouldn’t chase every last vote if that meant hurting the economy.  Hopefully, he will say it more eloquently next time.

Twitter: @mleftly

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