Anneliese Dodds MEP

The South East's Voice in Europe

Stop this ‘zero - zero economy’

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Many people are working harder than ever yet seeing their quality of life deteriorate, while those at the very top seem to be getting richer.

A symbol of this inequality is the fact that so many people are now working on zero-hours contracts while many of the very richest seem to get away with paying close to zero tax.

As Ed said, the "zero-zero economy is a symptom of a deeply unequal, deeply unfair, deeply unjust country". But we do not have to accept this level of unfairness. Labour in government would act against zero-hours contracts, increase the level of the minimum wage and make sure it is properly enforced, and promote wider take-up of a higher, living, wage.  Labour would also crack down on exploitative landlords, tackle forced ‘self-employment’ and above all, act to ensure that the long-overdue financial recovery benefits everyone, and not just a small number of very well-off people.

That's how Labour would tackle one of the 'zeroes'.  But what about the other zeroes - those multinational firms and very well-off individuals who evade tax? I was delighted to hear from Ed Balls that he is planning to reform the ‘General Anti-Abuse Rule’, so that those who wilfully abuse tax rules will not only have to pay up, but will also face a penalty for their actions.

Ed Balls’ intervention is a significant step forward in the fight to ensure fairness in the tax system. Nonetheless, it has to be accompanied by international action, given that most companies and individuals engaged in avoiding tax play different countries off against each other. Ed highlighted attempts by the OECD to promote more transparent and consistent accounting methods across developed countries. But we can- and should- go further.

In particular, we need three measures to be adopted at EU level: a common definition of ‘tax havens’, so countries- including Britain- can be shamed into taking action against overseas territories which promote tax avoidance on an industrial scale; country-by-country reporting of multinationals’ profits, which should help prevent scandals like the recent Vodaphone revelations; and a blacklist of multinational firms which systematically evade tax.

As I recently stated in a hearing with the EU’s Commissioner for Competition, the fact that action isn’t being taken against tax dodgers means not only that public services are starved of cash, but also that small and medium-sized enterprises are being undercut. I have spoken to many businesspeople in the South East who are struggling to keep their companies going, because they pay their taxes, but their larger competitors can avoid them through fancy accounting deals.  I've spoken to the owners of small high street cafes who face going out of business because they can't compete with the big multinationals, and independent record stores who are going to the wall.  It just can't be right that these small businesses have pay a completely different rate of tax to companies like Starbucks and Amazon, who devise clever schemes to ensure they pay next to nothing.  That's totally anti-competitive.

The 'Lux Leaks' scandal that emerged last week has brought the immoral practice of tax evasion and large-scale tax avoidance front and centre. The head of the European Commission himself, when leader of Luxembourg, appears to have turned a blind eye to these practices. This offers us a rare opportunity to pile on the pressure and see some real action taken.

Some MEPs have said they want to see that action take the form of a Commission of Enquiry into the LuxLeaks scandal. While there may be some merits to this, it could delay action when people have already been calling for many years for the policies mentioned above to be put into place. Now is not the time for more hand-wringing about tax-fiddling. It is time for real action to tackle the ‘zero-zero economy’ once and for all.

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