Labour calls on UK to back Biden’s global corporate tax overhaul
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Boris Johnson must back US plans for a global minimum corporate tax rate to target tax avoidance, the Labour Party has warned.
The Biden administration set out a tax regime overhaul last month, proposing a new tax based on sales in each country to the global profits of large corporations, regardless of their physical presence in the country.
The proposals have been met with enthusiasm across Europe but Britain is the only G7 country not to back the plan.
The German finance minister last week said it marked “really a big progress… We will really have the chance that in this summer this deal and agreement that we were working for so long can happen”.
The overhaul would mean an increase in Britain’s rate from the current 18 per cent to President Biden’s target of 21 per cent, which would add an extra £13.5bn to companies’ tax bill.
Shadow Chancellor Rachel Reeves and Shadow Foreign Secretary Lisa Nandy have jointly written to the government saying the proposal is a “once in a generation opportunity to stop huge multinationals avoiding British tax”.
“The UK is the only member of the G7 that is lukewarm to the idea. This is concerning given that we, as hosts, control the agenda for the summit. We risk being isolated at the G7 on this issue, when we should be showing leadership,” the pair said.
The letter also said the government should look to negotiate a rate which is equal to or higher than the Biden administration’s target and not lower than the UK’s main rate.
Labour said the cash could be used to fund health, the public sector and boost local communities.