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Cameron calls for action on tax

January 24th, 2013 Bussines

UK Prime Minister David Cameron has said that countries must work together to clamp down on tax avoidance.

“Individuals and businesses must pay their fair share,” he told leaders at the World Economic Forum in Davos.

He said that “trade, tax and transparency” were the UK’s economic priorities.

It comes a day after he called for negotiations on the UK’s place in the European Union, followed by a referendum.

Those that avoid tax “need to wake up and smell the coffee” – an apparent reference to US coffee giant Starbucks, which was widely castigated for paying little tax in the UK but then pledged to pay millions of pounds in corporation tax after a backlash.

Other multinationals Amazon and Google have also come under fire for paying little UK tax.

The prime minister also defended his choice to offer a referendum on the EU after 2015, if the Conservatives win the next election, and said that the 27-member bloc needed to change.

“Europe is being out-competed, out-invested and out-innovated,” Mr Cameron said.

‘Aggressive’

Mr Cameron said that cutting down on tax avoidance was one of the UK’s main priorities for its presidency of the G8 group of richest nations this year.

“There are some forms of tax avoidance that have become so aggressive” that it is time for international co-operation to make sure that global companies pay their fair share of tax, he said.

“This is a problem for all countries, not just for Britain,” he said.

Tax evasion is illegal, whereas tax avoidance is legal but has been put under the microscope by politicians and campaigners in recent months.

In the UK, the government announced in last year’s Autumn Statement that it was giving HM Revenue & Customs more funds to tackle tax avoidance and evasion, with the aim to get an additional £9bn in tax revenues per year.

Mr Cameron said he planned to push hard to tackle “trade bureaucracy” at a World Trade Organization conference in Bali later this year, saying this would be worth an extra £70bn to world trade.

The UK heads the G8 for the whole of 2013.