Business

Tax not 'voluntary', Alexander tells firms

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Media captionDanny Alexander: "Everyone has an obligation to play by the same tax rules"

Danny Alexander has told multinational firms that paying tax is an obligation, not "a voluntary choice" they can make to please their customers.

The chief secretary to the Treasury was speaking in regard to Starbucks, which last week said it would voluntarily pay more UK corporation tax.

Mr Alexander told the BBC's Andrew Marr Show that the government was continuing efforts to tackle tax avoidance.

He said this work was taking place both in the UK and abroad.

'Responsibility'

"Taxation for big companies, or for anyone in society, can't be, and mustn't be, a voluntary arrangement," said Mr Alexander.

"Thinking of the tax system as if it is like the church plate going around on a Sunday morning is completely the wrong way to think about it."

He added: "Paying tax is not a voluntary choice, it is not something you can just chose to do willy nilly because you think it will please your customers, it is an obligation."

Coffee chain Starbucks announced on Thursday of last week that it would pay about £20m in UK corporation tax [tax on its profits] over the next two years, following a public outcry over how little it pays.

The company has paid just £8.6m in corporation tax in its 14 years of trading in the UK, and nothing in the last three years, despite UK sales of nearly £400m in 2011.

Two other multinational companies which have also been criticised for paying too little corporation tax - Amazon and Google - both said they would not be following Starbucks' voluntary contribution lead.

London Mayor Boris Johnson on Sunday defended companies, such as Starbucks, for seeking to minimise the level of tax they paid in the UK.

In an interview on Sky News, he said: "Imagine that you are the corporate finance director of one of these companies.

"Your job is to look at the law as it stands. Your fiduciary duty to your shareholders is to minimise your tax exposure."

Mr Johnson added that Starbucks should be praised for announcing that going forward it would voluntarily pay UK corporation tax.

"Now that Starbucks has stepped up to the plate and announced they are going to be making this payment I think rather than everybody sneering at them, people should welcome that," he said.

"My point is it is a bit unfair to bash the companies and then sneer at them when they try to do good."

'Play by rules'

Mr Alexander also reiterated that the government had announced in last week's Autumn Statement that it was giving HM Revenue & Customs more funds to tackle tax avoidance and evasion.

He said the aim was to get an additional £9bn in tax revenues per year.

Mr Alexander added that the government, together with Germany and France, was putting additional funds into the Organisation for Economic Co-operation and Development, to aid work on establishing global agreements to prevent companies avoiding tax by moving profits from one country to another with a lower tax rate.

"At a time of austerity, everyone has an obligation to to play by the tax rules," he added.

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