Saturday 23 November 2019 / 9:59 AM Jeremy Corbyn / John McDonnell / Workers' Rights

Labour vows to challenge the “tax and wage cheat” culture of multinational companies

Labour Leader Jeremy Corbyn and Shadow Employment Rights Secretary Laura Pidcock will call out the “tax and wage cheat” culture of some multinationals, who “use their power and our weak laws to rip off both the taxpayer and their workers” at an event in Yorkshire tomorrow (Saturday).


Corbyn and Pidcock will make the intervention outside an Amazon depot, as Labour launches its Fair Tax Programme to make the City, big business and tax dodgers pay more of a fair share.


Real terms pay is still lower than before the financial crisis while dividends paid to shareholders have risen 85%. 14.3 million people live in relative poverty in the UK, while the wealth of the richest 1000 people have increased their wealth by £253 billion in the last five years.


The next Labour government deliver real change by taking on the bad bosses and the tax dodgers.


Labour will act against tax dodging by introducing unitary taxation of multinationals to stop tax avoiding profit shifting. This measure is expected to bring in £6.3 billion in 2023-24.


Labour will introduce a package of further measures to deal with tax dodging through a Fair Tax Programme that will return £6.2 billion to the public purse in 2023/24 to help fund Labour’s real change manifesto by:

  • Clamping down on the enablers of tax dodging
  • Increasing HMRC’s targeted audits
  • Establishing an inquiry into the finance sector
  • Introducing a 20% Offshore Company Property Levy, on top of existing stamp duties and surcharges
  • Scrapping non-dom status
  • Requiring greater scrutiny of MPs’ tax affairs

Labour will deliver real change for workers and their families by:

  • Ending in-work poverty in our first term
  • Introducing a Real Living Wage of at least £10 per hour for all workers aged 16 and over
  • Giving workers a stake in the companies they work for – and a share of the profits they help create – by requiring large companies to set up Inclusive Ownership Funds
  • Giving every worker full rights from day one on the job
  • Banning zero-hour contracts and strengthening the law so that those who work regular hours for more than 12 weeks will have a right to a regular contract, reflecting those hours
  • Strengthening trade union rights, including rights to access for recruitment

Ahead of the visit to Yorkshire, Jeremy Corbyn, Leader of the Labour Party, said:


“The next Labour government will deliver real change because we aren’t afraid to take on the corporate giants and the elite few, who are hoarding wealth and power.


“Huge multinational companies often act as if the rules we all live by don’t apply to them. They use loopholes to claim they don’t owe tax and cynically push their workers to the limit.


“I don’t want to live in a country of a few billionaires and millions of stressed people, worried about making ends meet every month.


“The next Labour government will challenge head on the tax and wage cheat culture of so many multinational companies, who use their power and our weak laws to rip off both the taxpayer and their workers. That’s real change.”


Announcing Labour’s Fair Tax Programme, Shadow Chancellor John McDonnell, said:


“This will be the most ambitious and detailed plan for tackling tax avoidance and evasion ever enacted in government.


“The Tories have run down the law and resources we have to achieve tax justice.


“Under this Fair Tax Programme a Labour Government will end the scourge of tax avoidance and evasion, and raise essential revenue for our public services.”


Ahead of the visit, Laura Pidcock, Labour’s Shadow Employment Rights Secretary, said:


“Britain’s workers need a government that’s on their side. Bosses are paying too many workers too little to live on.


“Labour will stand up for Britain’s workers and their families with more pay and crucially more power. Workers will not only be better paid but have more rights, both individually and collectively through their unions, and more of a say in the running of companies. Work must pay, and it must allow you to live a good life.


“For too long, multinational corporations have been able to exploit Britain’s workers while the government did nothing. No more. It’s time for real change.”




Notes to editors

  • Nine million of the 14.3 million people in relative poverty live in working households.
  • A household is defined as being in relative poverty when its income is less than 60% of the average – less than £17,040 a year. For comparison, a 35 hour week paid at £10 per hour would provide £18,200.
  • Currently multinationals operate with separate companies at ‘arm’s-length’: for example, Facebook Ireland or Facebook UK. Multinationals can ‘book’ or ‘bank’ profits in a way that is beneficial from a tax-planning perspective. Facebook’s advertising profits, for example, can be booked or banked in a low-tax jurisdiction such as Ireland. Labour will adopt a different approach: treating corporate groups under common ownership as unitary enterprises, so that profits are declared where economic activity occurs and where value is created. The system outlined in the independent report ‘Tax Multinationals: a New Approach’ is based on sales, assets and labour. It was endorsed by Professor Joseph Stiglitz, Nobel laureate in economics, who said: “It is time for countries to take both unilateral and multilateral actions to tax multinationals; Labour’s proposal to start taxing multinationals through formulary apportionment is the right way forward.”
  • The report cites figures from a paper by Alex Cobham, Tommaso Faccio, and Valpy Fitzgerald that shows that if the UK adopted unitary taxation of US multinationals with turnover of $750 million or more alone, $3.96 billion could be gained. Based on the proportion of UK foreign direct investment made up of US multinationals, and on different assumptions about the profiles of non-US multinationals, they estimate a potential yield between £6.0bn and £13.7bn. The authors of the report, and other experts, have said that unitary taxation is consistent with existing tax treaties.
  • Even this lower bound estimate is likely to under-estimate revenues, since it is based only on US multinationals with turnover of $750 million or more, when there are a number of US multinationals with less than $750 million. Adjusting for the higher rate of corporation tax under Labour, and removing 30% for uncertainty and behavioural change, gives a lower estimate of £5.8bn in 2016 (uprated with inflation).