After the John Major government tied the UK to the Maastricht Treaty, Douglas Hurd was reported as saying:
I suppose we had now better go away and read what we have signed up to.
It’s a lesson that successive intakes of politicians have failed to learn. Most recently this has been demonstrated by the Chairman of the Public Accounts Committee, Margaret Hodge. The Mail reports on today’s session of the PAC where the HMRC Annual Report and Accounts 2012-13 was being examined. The witnesses were Edward Troup, Tax Assurance Commissioner at HMRC, Jim Harra, Director-General Business Tax at HMRC and Jennie Granger, HMRC’s Director General Enforcement and Compliance. Some of Hodge’s reported comments include the following:
The tax gap is really the tip of the iceberg in the gap between the money that you collect and the many if everyone paid their fair share.
It looks to me that you should be litigating. Why have you not chosen to litigate and test your powers? Why have you not litigated against one single internet company?
Make a few cases, a few show cases. It’s so bloody obvious.
According to the Mail, Hodge named Google, Facebook, Amazon and Starbucks as companies whose tax affairs had sparked public anger and doubts about whether they were paying their fair share in Britain. However, if Hodge had the first bloody clue about what she was bloody well talking about, she would bloody well know that she was spouting a load of bloody nonsense. What Hodge is encouraging HMRC to do is spend public money pursuing cases that would be lost.
Why would HMRC lose? Posting about a separate issue over on EU Referendum, Richard makes clear that companies moving money between EU countries in the way Google, Facebook, Amazon and Starbucks are being demonised for doing, is one of the most fundamental provisions of the European treaties, the “free movement of capital” which was one of the “four freedoms” in the original 1957 Treaty of Rome.
Chapter 4 of the Treaty of the European Union (the Lisbon Treaty) , Article 63 declares that “all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited”. Furthermore, the article states that: “all restrictions on payments between Member States and between Member States and third countries shall be prohibited”.
Hodge, as a well remunerated Committee Chairman of one of the most muscular select committees in Parliament, with significant research resources available to her, should know this. The fact she doesn’t demonstrates the incredible ignorance of our politicians. Despite the supposedly powerful position she occupies, she doesn’t understand that what Google, Facebook, Amazon and Starbucks are doing is what the EU’s rules permit them to do.
Any show case would simply show up the stupidity of the UK authorities and result in a win for the demonised firms. But it seems no case will be forthcoming because, unlike Hodge and the expenses troughers in Westminster, HMRC understands the rules – and that seems to be why Edward Troup told the committee:
We make sure we collect the tax due under the law.
It is because of corporate friendly rules such as the free movement of capital that company bosses like Richard Branson and CBI stooges like John Cridland are desperate to keep the UK in the EU. it suits big business to engage in tax tourism and it suits them to hire in the cheapest labour from around the union.
Politicians like Margaret Hodge can grandstand, rant, rave, stamp their feet and pretend to be the conscience of the population, but it is she and her ilk who signed the UK up to EU rules they clearly don’t understand, and who want to keep the UK firmly inside the EU. It is at times like this, when they are constantly telling us why the UK’s future has to be within the EU, that the consequences of EU membership – the loss of tax sovereignty – become apparent.
But rather than acknowledge the reality and the self imposed limitations under the structures they are constantly trying to convince us we should remain part of, they depart into the realm of fantasy like today’s performance in Room 15 of the Palace of Westminster, where they resort to bluster and blather and playing to the audience, but ultimately will change nothing.