Category Archives: Ed Miliband
Google boss calls for a ‘rational and predictable international tax system’
Eric Schmidt rejects Ed Miliband’s criticisms of tax affairs, saying firm fears being ‘double or quadruple taxed’ under any changes
The Google chairman, Eric Schmidt, has told political leaders to sort out a rational and predictable international tax system, as he faced a wave of criticism over the firm’s failure to pay more tax.
Ed Miliband attempted to deliver his rebuke direct to Schmidt when invited to speak at the Google Big Tent conference, although the US executive missed the Labour leader’s address on Wednesday, saying he had to attend a meeting in London.
Nick Clegg disclosed at a press conference he had also criticised Google at a Downing Street meeting earlier in the week at which Schmidt was present. David Cameron’s aides, after earlier denying the prime minister rounded on Schmidt at that meeting, later briefed that Google had been implicitly rebuked in the context of the prime minister’s general call for greater tax transparency as part of his agenda for the G8 summit next month.
Speaking at the annual Big Tent event after Miliband had left, Schmidt said one of his key concerns about changes to the tax structure was that Google might be “doubly or quadruply taxed”.
Asked by Labour MP Stella Creasy how he would reform the tax system, he suggested: “Have a rational system that’s predictable and doesn’t change very much.
“Virtually all the American companies have tax structures like this, and UK companies operating in the US do too. But if we pay more taxes in one area, then we pay less in another.
“Google feels very, very strongly that tax information, tax policy should be done openly. I don’t think companies should decide tax policy, governments should … we’re in a very long-standing tax regime … we need to have a conversation about this, we’re not trying to do the wrong thing, we’re trying to do the right thing.
“We don’t want to be in a situation where we get double or quadruple taxed.”
Asked how he would cope if Miliband were to come to power and, as promised, stop transfer pricing, Schmidt said: “If he does – if he does so, we will follow the rules.” Transfer pricing involves firms shifting profits between countries.
Schmidt also said Google would continue to invest in the UK, no matter what tax regime was in place: “We love you guys too much. We will continue investing in the UK no matter what.”
He rebuffed Miliband’s suggestion there was a distinction between the letter and the spirit of the law. “You’ll have to define the difference,” he said to a barrister who challenged him to say whether Google would comply with the “spirit” of the tax laws, which might then lead to it being taxed more. “We’re governed by US securities laws – in that scenario it might be seen as incompetence,” added Schmidt.
Earlier Miliband told the meeting of the firm’s staff that he was “disappointed” it had paid £6m in corporation tax on UK sales worth £3.2bn in 2011. Most of Google’s profits are routed through Ireland. Miliband said the US company’s employees expected it to do the “right thing”, as its motto was “Don’t be evil.”
He said: “I can’t be the only person who feels deeply disappointed that a great company like Google, with great founding principles, should be reduced to arguing that when it employs thousands of people in Britain, makes billions of pounds in revenue in Britain, it is fair that it should pay just a fraction of 1% of that in tax.
“So when Google does great things, I will praise you … But when Google goes to extraordinary lengths to avoid paying its taxes, I say it’s wrong.”
Labour rejected Schmidt’s explanation, saying Google has been making sales to UK customers from its UK staff, but pretending the transactions were being made from Ireland so the firm could register the profits as made in Ireland rather than the UK.
Booking those sales in the UK would not mean taxing profits twice – just taxing them in the UK, not Ireland.
Even after profits were shifted to Ireland, Google avoids paying 12.5% corporation tax there by switching the surpluses to tax havens such as Bermuda, according to a Reuters investigation.
This is done by using two Irish firms, (hence the name, “double Irish”) one a tax resident in Bermuda and owning the intellectual property of the company. The offshore firm then charges the onshore one royalties, which shifts the profits out of Ireland and into Bermuda.
By doing so Google would not be taxed on the same profits in different countries; it is shifting profits between tax jurisdictions to avoid paying tax.
Clegg told a press conference in London on Wednesday morning: “My overall approach to tax is the obvious one. I put this directly to Eric Schmidt from Google and other business leaders at a meeting in Downing Street a couple of days ago.
“We are bringing the tax burden on corporations down by lowering the rate of corporation tax but in return people have to pay their fair share.”
He said tax havens were symptoms of the growing pains of globalisation. “You have got tax systems that are national rooted in an old economy, and now we have got these new corporate goliaths that operate in this disembodied way particularly in the digital sector, that quite unsurprisingly think they can exploit the best deal for themselves in the cracks and crevices between the national tax systems.”
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Google chief rejects Ed Miliband’s call for ‘responsible capitalism’
Eric Schmidt says search giant follows international rules after Labour leader criticised company over tax practices
Google executive chairman Eric Schmidt rejected the idea put forward by Labour leader Ed Miliband that the search giant should practise “responsible capitalism”, arguing the company simply follows international tax laws – which he described as “irrational”.
Speaking at Google’s annual Big Tent event in the UK, Schmidt said one of his key concerns about reform of the tax structure was that the company might be “doubly or triply taxed”. Asked by Labour MP Stella Creasy how he would reform the tax system, he suggested: “Have a rational system that’s predictable and doesn’t change very much.” But he said he wasn’t arguing for uniform tax rates: “I don’t think taxes should be the same everywhere – they’re a cultural construct,” he said.”
After being lambasted in his absence by Labour leader Ed Miliband in the morning for having overseen the creation of a tax system which uses “transfer pricing” – where different parts of a company charge themselves for “services” to shift profits – Schmidt was unrepentant. Asked how he would cope if Miliband were to come to power and, as promised, erase transfer pricing, Schmidt responded: “If he does – if he does so, we will follow the rules.”
His comments seemed to mark an end of what had looked like a softening of Google’s line over its taxation setup, which has come under sustained attack from MPs and ministers who have called it “evil” and “amoral”, and over which whistleblowers have come forward to question its claims that no sales are concluded in the UK, where they would attract taxes.
But Schmidt also said the company would continue to invest in the UK, no matter what tax regime was in place: “Google will continue to invest in the UK, no matter what you guys do, we love you guys too much. We will continue investing in the UK no matter what.”
He also rebuffed the suggestion that there is a distinction between the letter and the spirit of the law – a distinction that was emphatically made by Apple chief executive Tim Cook in testimony to the US Senate on Tuesday, who said that Apple complied with both.
“You’ll have to define the difference,” he said to a barrister who challenged him to say whether Google would comply with the “spirit” of the tax laws, which might then lead to it being taxed more. “We’re governed by US securities laws – in that scenario it might be seen as incompetence.”
Asked whether Britain has a different approach to capitalism than the US, Schmidt made a rare speaking slip: “Google is a capitalist country … company,” he corrected himself, to laughter from the audience. “It’s easy to say you would like us to have to have less profits and have that somewhere else. We will comply with the letter of the law, but we’re trying to avoid being doubly and triply taxes, which would prevent us investing in some of the wilder things we do.”
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Google Big Tent: Ed Miliband, Eric Schmidt and more
Labour leader makes a speech in which he says the internet company needs to ‘do the right thing’ on tax. By Charles ArthurCharles Arthur
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Cameron’s Today interview and Clegg’s speech: Politics live blog
Andrew Sparrow’s rolling coverage of all the day’s political developments, including David Cameron’s Today programme interview, Nick Clegg’s speech and Ed Miliband’s speech at a Google eventAndrew Sparrow
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Ed Miliband criticises Google over tax avoidance – video
Labour’s leader, Ed Miliband, says Google’s Eric Schmidt was wrong to argue that the company’s controversial tax system was ‘just capitalism’
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Ed Miliband criticises Google over tax avoidance – video
Labour’s leader, Ed Miliband, says Google’s Eric Schmidt was wrong to argue that the company’s controversial tax system was ‘just capitalism’
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Google tax avoidance is ‘wrong’, insists Ed Miliband
Labour leader cites Google founders’ 2004 promise in which they said they would forgo short-term gains to do good things
Labour Leader Ed Miliband has said Google is “wrong” to avoid paying taxes on UK revenues, citing its founders’ 2004 promise to forgo short-term gains in order to do good things.
At an event hosted by the search giant near London, Miliband also pledged that a future Labour government would change laws unilaterally to stop “transfer pricing” by which companies such as Amazon shift profits between countries and to increase transparency about profits and revenues. Miliband called the system “crazy” and said he would also lead a crackdown on offshore tax havens.
He warned too that internet companies risked taking the same approach as banks had during the early part of the century, when their corporate culture meant they took a short-term approach which ignored wider effects.
Speaking at the company’s annual “Big Tent” event, Miliband pointed to the letter written by founders Larry Page and Sergey Brin in 2004 in which they said they would sometimes ignore short-term interests in favour of the long term.
Miliband read out the passage, in which Page and Brin wrote: “Don’t be evil. We believe strongly that in the long term, we will be better served – as shareholders and in all other ways – by a company that does good things for the world even if we forgo some short-term gains. This is an important aspect of our culture and is broadly shared within the company.”
Referring to that, the Labour leader said: “I can’t be the only person in this room who feels deeply disappointed that a great company like Google, with great founding principles, should be reduced to arguing that even though it employs thousands of people here in Britain, makes billions of pounds in revenue here in Britain, that it’s fair that it should pay just a fraction of 1% of that in tax.”
Miliband referred to comments by Google chairman Eric Schmidt, who has previously said that Google’s tax arrangements – by which “sales” are begun in the UK but “completed” in Ireland, where it pays a small corporation tax rate – are “just capitalism”.
Miliband retorted: “I’m sorry that Eric Schmidt isn’t here this morning to hear me say this directly. When Google does great things I will praise you. But when Eric Schmidt says that its current approach to tax is just capitalism, I disagree. And when when Google goes to extraordinary lengths to avoid paying its taxes, I say it’s wrong. And it’s not just me that says it, it’s Google’s founding principles, and it’s crystal clear from them.”
He said that paying fair levels of taxes was important to support health, education and transport services, and was part of “responsible capitalism”.
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Gay marriage bill survives after Ed Miliband votes against amendment
Labour leader votes against amendment extending civil partnerships to heterosexual couples after appeal by Tory whips
The gay marriage bill has been saved after Ed Miliband agreed at the last minute to vote against an amendment to extend civil partnerships to heterosexual couples that had prompted government warnings that it would derail the entire measure.
The Labour leader, who had planned to abstain in a Commons vote on the amendment, agreed to change tack after the government chief whip Sir George Young sent a message to his opposition counterparts that the Tory leadership was facing defeat.
The move meant that the amendment, tabled by the anti-gay marriage Tory, former children’s minister Tim Loughton, was defeated by 375 to 70 votes, a majority of 305.
The decision by the Labour leadership, which has gone from supporting the amendment on civil partnerships to rejecting it within the space of 24 hours, means that the marriage (same-sex couples) bill will now experience a safer journey through parliament.
The government had warned earlier in the day that the Loughton amendment would have threatened the entire bill by adding £4bn to the costs and delaying its implementation. The costs would have come from increased pension survivor rates for new civil partners.
Labour sources said that the party, which had announced earlier in the day that it would abstain on the Loughton amendment after overnight warnings from the government about the threat to bill, denied that Miliband had embarked on a double U-turn.
One source said: “We had an eleventh hour appeal from the government that they did not have the numbers to defeat the Tim Loughton amendment. They made repeated approaches to us at ever increasing levels.
“Ed’s overriding priority is to ensure that the bill gets on to the statute book. Ed and Yvette Cooper will therefore be voting against the Tim Loughton amendment. We expect a large number of MPs to join Ed and Yvette. Since there was a genuine threat to the bill Ed decided the best thing to do was to act in this way.”
The appeal by Tory whips for Labour support to ensure the safety of the bill highlighted deep divisions in the Conservative party in the wake of claims that a senior member of his entourage described party activists as “swivel-eyed”. Lord Feldman, the Tory co-chairman, denied making the remarks.
More than 100 Tory MPs planned to register their opposition to the marriage (same-sex couples) bill by voting in favour of a series of amendments to water down the measure. In the first vote of the evening, more than 150 MPs voted in favour of an amendment that would allow registrars to refuse to perform same-sex ceremonies.
Tory opponents of the bill were alarmed when Labour and the Tories embarked on negotiations during the day. The government agreed during the day to a Labour request to amend its own plans by launching an immediate review into extending civil partnerships to heterosexual couples.
Maria Miller, the equalities minister, agreed to the Labour request. But she suggested that the review could lead to the end of civil partnerships when she said the review will see “if there is a demand for [civil partnerships]“.
The deal meant that the government amendment, altered by Labour, was approved by 391 to 57 votes, a majority of 334.
But Labour initially said that it would abstain on the Loughton amendment on the grounds that it agreed with it but did not want to risk the overall bill.
The leaders of all the main parties offered all their MPs, including ministers and shadow ministers, a free votes on the grounds that marriage is a “conscience” social issue in which the party whips have no official say. But the prime minister devoted government time to the gay marriage legislation in the belief that it would help reach out to centre ground voters who may feel uncomfortable about supporting a party whose leader voted in favour of the retention of section 28 as recently as ten years ago.
The divisions among Tories was highlighted when Sir Gerald Howarth, knighted on the advice of the prime minister last year when he sacked him as a defence minister, warned of an “aggressive homosexual community” during a clash with a member of Cameron’s policy board. Howarth made the remarks when Margot James, a fellow Tory MP who is in a civil partnership and who was recently appointed to the new Conservative policy board, said that the equal marriage legislation would level the playing field after gay people suffered discrimination in the 1980s.
Howarth replied: “I warn you, and MPs on all sides of the house, that I fear that the playing field has not been levelled. I believe that the pendulum is now swinging so far the other way and there are plenty in the aggressive homosexual community who see this as but a stepping stone to something even further.”
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Labour saves David Cameron’s gay marriage bill
Rebel Tories are defeated in Commons after PM’s last minute plea to Ed Miliband
The government’s gay marriage bill was saved after David Cameron was forced to rely on Ed Miliband to defeat an attempt by his own MPs to derail the measure by trying to extend civil partnerships to heterosexual couples.
An 11th-hour plea to the Labour leadership by the Tory chief whip Sir George Young, who warned that the government was in danger of losing the vote, prompted a change of heart by Miliband, who had been planning to abstain on the amendment.
The Labour move meant that the amendment, tabled by the anti-gay marriage Tory and former children’s minister Tim Loughton, was defeated by 375 to 70 votes, a majority of 305.
The decision by the Labour leadership, which has gone from supporting the amendment on civil partnerships to rejecting it within the space of 24 hours, means that the marriage (same-sex couples) bill will now experience a safer journey through parliament.
But the prime minister, who attempted to reach out to his party by emailing a “personal note” to all members saying that he would never work with anyone who “sneered” at them, suffered the humiliation of having to plead with the Labour party for support. He also saw more than 100 Tory MPs, including the cabinet ministers Iain Duncan Smith and Owen Paterson, vote against him on the first amendment of the day.
The prime minister will understand the dangers of relying on opposition support for a flagship measure after he personally ensured that Tony Blair’s schools reforms survived with Tory support in 2006 three months after he became leader. Within months, supporters of Gordon Brown forced Blair to name the date of his departure the following year.
As the debate was under way in the Commons the prime minister moved to shore up his position amid anger in the party over allegations that Lord Feldman, the Tory co-chairman, described grassroots activists as “mad swivel-eyed loons”. Lord Feldman strenuously denies having made the allegations.
In his email to party members, Cameron wrote: “I am proud to lead this party. I am proud of what you do. And I would never have around me those who sneered or thought otherwise. We are a team, from the parish council to the local association to parliament, and I never forget it.”
But deep divisions in the Tory party were highlighted in the commons when Iain Duncan Smith, the work and pensions secretary, and his long standing ally Owen Paterson, the environment secretary, joined more than 100 Tory MPs to vote against Cameron in favour of an amendment that would allow registrars to opt out of conducting same sex marriage ceremonies. This amendment failed as did an amendment to protect the religious beliefs of a person who believes marriage can only take place between a man and women. All votes were classified as free which meant that MPs could vote according to their consciences.
In one of the most dramatic moments the former defence minister, Sir Gerald Howarth, complained to a lesbian member of the prime minister’s policy board about “the aggressive homosexual community”. Howarth made the remarks after Margot James, the MP for Stourbridge, said that the legislation was part of recent changes that have created a level playing fields for everyone regardless of sexual orientation.
The prime minister came under fire from the anti-gay marriage MP Tim Loughton after his amendment, which would have legalised civil partnerships for heterosexual couples, failed after the deal between Labour and the Tories. Loughton warned of a “grubby deal” between the two frontbenches as he told MPs: “We are in danger to a stitch up, a last minute stitch up between frontbenches.”
The deal was reached after the government had warned earlier in the day that the Loughton amendment would have threatened the entire bill by adding £4bn to the costs and delaying its implementation. The costs would have come from increased pension survivor rates for new civil partners.
The government agreed during the day to a Labour request to amend its own plans by launching an immediate review into extending civil partnerships to heterosexual couples. The goverment had initially said it would do this no later than five years after the passage of the bill, though the equalities minister Maria Miller said the Labour amendment would make little practical difference.
The deal meant that the government amendment, altered by Labour, was approved by 391 to 57 votes, a majority of 334.
But Miller indicated that the review could end up leading to the abolition of civil partnerships once gay marriage becomes legal. She told MPs of the review: “It is important for us to understand what the demand is among individuals who might wish to embark on such an arrangement.”
Labour sources said that the party, which had announced earlier in the day that it would abstain on the Loughton amendment after overnight warnings from the government about the threat to bill, denied that Miliband had embarked on a double U-turn.
One source said: “We had an eleventh hour appeal from the government that they did not have the numbers to defeat the Tim Loughton amendment. They made repeated approaches to us at ever increasing levels.
“Ed’s overriding priority is to ensure that the bill gets on to the statute book. Ed and Yvette Cooper will therefore be voting against the Tim Loughton amendment. We expect a large number of MPs to join Ed and Yvette. Since there was a genuine threat to the bill Ed decided the best thing to do was to act in this way.”
The leaders of all the main parties offered all their MPs, including ministers and shadow ministers, a free vote on the grounds that marriage is a “conscience” social issue in which the party whips have no official say. But the prime minister devoted government time to the gay marriage legislation in the belief that it would help reach out to centre ground voters who may feel uncomfortable about supporting a party whose leader voted in favour of the retention of section 28 as recently as 10 years ago. A source close to Miller said: “We are pleased that the House has accepted our amendment offering a review of civil partnerships and that our warnings around the potential delay to same sex marriage have been heeded. A review is the right way forward and no changes should be made to civil partnerships, without being fully thought through.” Tory supporters of the bill were scathing about some of their fellow MPs. One said: “You know how to vote when you see who’s in the other division lobby.”
One minister said: “We are such an inclusive party we have our own opposition built in. We generally shoot ourselves in the foot and then rely on the Labour party to finish the job for us. And all the time we seem to have a smile on our face.”
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Hugh Muir’s diary: we’re holding out for a hero over tax. Could it be Ed Miliband?
Will the Labour leader read the riot act to Google?
• It must have seemed a no-brainer. The people who rule the 21st century offering a platform to the man who would run the country. And so it was little surprise that Ed Miliband made himself available. He wasn’t to know that in the intervening period, his hosts Google would be reborn as public enemy No 1; castigated as tax-dodging “evil” by Margaret Hodge, the Labour chair of the public accounts committee; condemned by Vince Cable as “immoral”. So what will he do now, as keynote speaker on Wednesday at the Google conference Big Tent UK, alongside Google’s top man Eric Schmidt. He’ll send a message says the party: “loud and clear”. Something PM Dave was apparently reluctant to do when he met Schmidt yesterday? Perhaps he will speak truth to power? A first time for everything.
• Now what was it we said about the enforced departure of Peter Davies, the former un-PC supermayor given his marching orders by the electorate of Doncaster a fortnight ago? “He came, he served. But the mess he caused can be rectified.” Here’s a matter from the supermayor years that recently needed sorting. When he was being patted on the back by the Daily Mail and the self-styled Campaign Against Political Correctness for socking it to the lefties his administration cut funding to ethnic minority groups. When they complained, a letter was sent justifying the cuts. It was signed, not by the mayor, but Nadeem Murtuja, then one of the council’s most senior minority employees. This, one assumes, was to head off accusations that the cuts were discriminatory. And perhaps it might have done just that. But what we now know is that, in fact, Murtuja never signed it at all; it was never his decision. His signature was electronically inserted without his consent. The council has apologised “unreservedly”. Davies has gone, of course, and Labour’s Ros Jones runs Doncaster now. One wonders what other legacy items she will find in the coming weeks.
• While attention is focused on Ukip’s talisman Nigel Farage, what are we to make of the party’s other talent, chairman Stuart Agnew. The Ukip MEP for Eastern England (and former Rhodesian ranger) is certainly colourful enough to take his place alongside the idealists, waifs and oddballs who proudly wear the colours. A fixture on the pundit circuit, he’s due to debate with Will Hutton at Hertford College Oxford next month on the EU, and there’ll be no problem recognising him on arrival. The registration number of his car is EU03 OUT.
• On the subject of Oxford, is the Murdoch name still toxic at his alma mater? Readers will recall that Rupert was a bit of a red when at Worcester College six decades ago. Time and experience changed him drastically, as we know. But he never forgot Oxford, and some of the Murdoch millions found their way back to endow an annual News International visiting professor of broadcast media. Big names sat on that chair: ex-ITN editor Stewart Purvis, film and TV producer Stephen Garrett and, in 2011, the writer and editor Matthew Engel. But since the Milly Dowler affair and the closure of the News of the World, the chair has sat empty. Will it ever be filled again?
• An innovative answer, meanwhile, to the rodent problem at the all-new citadel of truth that is Broadcasting House. Someone has officially rota-ed a kitten – black with pointy ears – to deal with it. “There’s been a never-happen event and someone has saved a picture of their cat in the rota folder. If anyone recognises it can they pls return it to the rightful owner,” says the sniffy guardian of the work schedules. “I’ve deleted it.” Quite right. A serious problem demands a serious solution.
• Finally this from the exciting new commercial brand that is Melanie Phillips in the Mail. Under the headline The more abuse Mr Gove gets from teachers, the more you know he’s right, she says: “Sometimes, you can gauge someone’s quality from the enemies they make. By that standard, education secretary Michael Gove is a person of the highest quality.” After his barracking by the headteachers, it’s Brand Mel to the aid of the education secretary. If that doesn’t mark this out as a time of crisis for Michael Gove, nothing will.
twitter: @hugh_muir
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