Government ‘failing’ to crack down on tax avoidance in state-owned banks

The government is being accused of “failing to accept its responsibilities as
owner” to prevent tax avoidance activity within banks.

Newcastle Labour MP Jim Cousins spoke out following a series of questions in
the Commons to chancellor Alistair Darling over the requirements or advice the
Treasury is giving to “banks in receipt of assistance under the asset protection
scheme and credit guarantee scheme.

Cousins complained that in one response, Exchequer secretary Sarah
McCarthy-Fry made it plain: “We expect all banks to comply fully with their tax
obligations and although avoidance is not illegal we vigorously challenge it,
through the courts if necessary, including where the bank is partly owned by the
government.”

He said later the point of his questions was to establish what the government
is doing in banks it owns about “tax mitigation”, not its overall enforcement
policies.

He said: “I want to know what action the government is taking as owner.

“We have the government raising at an international level issues of tax
arbitrage and tax havens and yet the government as an owner of banks failing to
use its ownership to bring their use to an end.

“It does not make sense. The issue is not just for HMRC but for the
government as an owner and what the minister has done is dodge answering the
question.

“It cannot escape the responsibilities of ownership. It should be closing
these activities down and winding them up.”