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Paradise Papers: Government urged to tackle tax avoidance in Budget

The government should use next week’s Budget to crack down on issues of tax avoidance raised by the release of the Paradise Papers, an ex-minister says.

Labour MP Dame Margaret Hodge, who led an emergency debate on the leaked documents, said tax avoidance was “a national and international disgrace”.

She called for new laws to force big firms to report profits more openly.

Treasury Minister Mel Stride said the government had a “very strong track record” in tackling tax avoidance.

The leak, dubbed the Paradise Papers, contained 13.4m documents, mostly from one leading offshore finance firm.

The papers raised questions about how politicians, multinational companies, celebrities and other high-net-worth individuals use complex structures to protect their cash from higher taxes.

Speaking in the Commons, Dame Margaret – who was in the cabinet under Tony Blair and Gordon Brown and is also a former chairman of the Commons Public Accounts Committee – said tax avoidance was now a “widely accepted behaviour of too many of those who are rich and influential”.

The practice is taking place on an “industrial scale”, she told MPs.

She said the record of the last Labour government had not been “as good as I would have wanted”, but added that the actions of the current government had been “inadequate and somewhat hypocritical”.

The Paradise Papers show firms and individuals are using certain financial jurisdictions – viewed as tax havens by some, offshore finance centres by others – to lower their taxes on profits or assets.

They include a number of UK Crown Dependencies or Overseas Territories, such as the Isle of Man and Jersey.

Dame Margaret called for legislation to force multinational firms to have to report their profits “on a country-by-country basis, so that companies can be taxed where they make their profits”.

And she called on the Treasury to introduce a new public register of property ownership and to help British tax havens “in transforming their economies”.

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“The government needs to grasp this moment to act. They have an opportunity to do so in next week’s Budget,” she said.

“Britain will never get rich on dirty money and our public services cannot function if the most wealthy individuals and the most powerful companies deliberately avoid paying their fair share.”

Mr Stride said the government had raised £160bn as a consequence of clamping down on tax avoidance since 2010.

He told MPs: “One of the problems is we have been so active in bringing in so many measures that unfortunately not all of them have been noticed.”

However, Labour’s shadow chief secretary to the Treasury, Peter Dowd, called for the government to introduce a public register of offshore trusts.

“It should also stop cuts to HMRC [HM Revenue and Customs] and ensure HMRC has the staff and resources it needs to enable it to tackle avoidance at its core,” he added.

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