Gordon Brown calls on Boris Johnson to stop ‘wrecking’ Joe Biden’s plans for minimum corporation tax

G7 summit in Cornwall ‘will force Johnson to decide whether he stands with tax havens or taxpayers’

The former prime minister Gordon Brown has called on Boris Johnson to ditch “wrecking tactics” that threaten to derail Joe Biden’s proposals for a new tax regime to ensure multinational corporations and tech giants pay their fair share.

When Mr Johnson hosts the US president and other world leaders at the G7 summit in Cornwall next month, he must decide whether he wants to align the UK with tax havens or to help usher in a global minimum corporation tax rate that could raise more than $500bn for public services worldwide, Mr Brown said.

Writing in The Independent, the former PM said that the UK had emerged as “the biggest obstacle to a successful negotiation” on Mr Biden’s proposals, which would block multinationals from shifting profits across borders to exploit the most attractive low-tax locations.

And he said it appeared that Mr Johnson’s position was driven by the desire to protect tax avoidance practices in British overseas territories, rather than to promote the interests of UK taxpayers who stand to benefit by as much as $21bn (£15bn) a year in additional revenues from super-profitable digital behemoths like Amazon.

Ministers last night defeated a Labour motion backing the plans, and campaigners say Mr Johnson’s government has been “lukewarm and evasive” over a multilateral agreement that Mr Biden hopes could be reached by the autumn.

Ahead of the Carbis Bay summit, momentum has been building behind the proposal for a minimum corporation tax rate of as much as 21 per cent, with support voiced by G7 members Germany, France, Canada, Italy and Japan.

With finance ministers from the group of leading economies meeting virtually on Friday and in person next week to finalise their positions for Cornwall, Mr Brown said: “It is time for the UK to take on the role the chair of the G7 should play and ensure an ambitious outcome.

“It must abandon its current public stance, which looks more like a wrecking tactic, designed to protect the tax avoidance practices of British overseas territories, than a genuine attempt by the G7 president to break the impasse.”

Mr Brown wrote: “Only an ambitious minimum tax will ensure multinationals pay what they should in the countries like the UK where they actually make their money.  Rooting out this corporate tax abuse is in line with the British people’s priorities as consistently identified in nationwide polling.

“If the UK continues to block, countries committed to acting as corporate tax havens will simply be left behind as a grand coalition of the willing take forward the Biden proposals. 

“And so,  Boris Johnson has a simple choice to make. Will he align the UK with the tax havens and be left behind – or will he use the G7 chair to bring home what would be an unprecedented victory against tax dodging, with all the much-needed revenues that would raise?”

Mr Brown said that a 21 per cent corporation tax rate would have doubled Amazon’s tax payments over recent years and would raise more than $500bn a year from the world’s biggest companies, with $21bn coming to the UK.

Even a compromise rate of 15 per cent floated by Washington would raise between $11bn and $15bn for the UK, while lower-income countries could garner sums equivalent to 20 per cent of their public health budgets.

Imposing worldwide the 25 per cent rate that Rishi Sunak has pencilled in for the UK in 2023 would bring the additional revenues close to $1 trillion and would be worth as much as $30bn to Britain, Mr Brown said.

The UK’s presidency of the G7 gives Mr Johnson “an unprecedented opportunity to shepherd in an agreement to end corporate tax abuse”, said the Labour former PM.

“The arguments are strong and pressing,” he added. “Curbing tax abuse would isolate tax havens that have been hiding billions offshore for too long, deliver a major revenue boost to fund pandemic recovery worldwide, and establish ‘global Britain’ as a positive leader in a strong alliance with the Biden administration.”