Senior executives from Google UK, Starbucks and Amazon are to face tough questions from MPs at the Public Accounts Committee(PAC) today over their tax strategies. MPs of all parties have voiced concern over tax avoidance after intense scrutiny by the media of the low corporate tax bills of some foreign-owned multinationals. Pressure is also being exerted by campaign groups such as UK Uncut, which has announced plans to target Starbucks stores in December, and the Tax Justice Network. Margaret Hodge, who chairs the PAC, said at the weekend the Treasury should look into a sales tax as a way of raising extra revenue from global companies. This idea is favoured by some economists but would need to be adopted internationally, particularly as VAT is the only turnover tax allowed under EU rules. The European Commission has offered its own solution – a common tax system across Europe for businesses, using a formula to apportion tax revenues to member states –reducing the scope for shifting profits to low tax jurisdictions. (Financial Times*,Guardian, Reuters)
Pressure on Shell/Eni over Nigeria deal
A Nigerian oil deal that saw a $1.1bn payment from Shell and Eni passed on to a company controlled by a former oil minister “could fall foul of anti-corruption legislation”, according to the transparency campaigners, Global Witness. The multinationals paid the money in April 2011 to Nigeria’s Government for a deep-water concession. The Government then transferred the exact proceeds, $1,092,040,000, to Malabu Oil & Gas, which had been locked in a dispute with Shell for ownership of the concession. Malabu is controlled by Dan Etete, oil minister under the late dictator Sani Abacha and a convicted money launderer. Details of the transactions only emerged this year in New York, where Mr Etete is being sued for a $66m commission by a Russian consultant. Shell and Eni say they only paid the Nigerian authorities and were not involved in the Government’s simultaneous settlement with Malabu. But Global Witness says evidence suggests the multinationals knew the $1.1bn would flow to the Nigerian company. Responding to a parliamentary hearing into the deal, Nigeria’s attorney-general, Mohammed Adoke, wrote in July that Shell and Eni “agreed to pay Malabu through the federal Government acting as an obligor”. (Financial Times*)
Environment
M&S green chief attacks ‘uncertainty’ of policy
The head of sustainable business at Marks & Spencer has accused the coalition government of overseeing two years of uncertainty for businesses embarking on green measures. Mike Barry, the man who helped Stuart Rose launch the company's 'Plan A' five years ago, said that policy moves by the government had eroded earlier business certainty provided by the 2008 Climate Change Act. He also urged the Government to bring in a plastic bag charge in England, along similar lines to the Welsh scheme introduced last year, where consumers pay 5p per bag. Barry was critical in general of the government shifting the goalposts over green policies, "The certainty of the Climate Change Act has been replaced by the brief uncertainty of seeing the CRC [the carbon reduction commitment] come and be reinvented as a tax” said Barry. He was also critical of some environmental efforts by rivals, citing Tesco's promise that it would label the carbon footprint of all its 70,000 products just days after M&S launched Plan A. (Guardian)
Mounting energy security fears in UK business
A survey by the British Chambers of Commerce (BCC) has shown that large numbers of businesses in the UK are increasingly concerned about energy security, and broadly supportive of Government plans to deliver a "diverse energy mix". The BCC surveyed 3,500 firms ahead of the anticipated release of the Government's Energy Bill later this month. The survey revealed that 90 percent of businesses believe the UK requires a more "diverse energy mix" that addresses supply security risks. It also confirmed that 59 percent of large businesses, 44 percent of medium-sized businesses, and 38 percent of small firms are worried about future energy supply security. "Energy security is one of the most profound challenges facing the UK, and government energy policies require clarity and consistency to ensure that it meets the challenge," said Dr Adam Marshall, Director of Policy at the BCC. The report echoes recent interventions from the CBI calling for the creation of a stable energy policy framework that delivers a diverse low carbon energy mix and does not leave the UK overly reliant on natural gas. (Business Green)
H&M, C&A, Nike top organic cotton users
H&M was the biggest user of organic cotton worldwide for the second consecutive year in 2011, according to Textile Exchange’s latest Organic Cotton Market Report. Dutch retail chain C&A, Nike and fashion retailer Zara, the flagship store of Inditex Group, take the next places on the list. Walmart, the world’s largest retailer, failed to submit data to the report. H&M continued to increase its already world-leading use of organic cotton, as part of its strategic goal to only use sustainable cotton by 2020. Although 81 percent of brands and retailers responding to the 2011 survey said they plan to use more organic cotton, production fell by 37 percent — the first drop in 10 years. Textile Exchange says this shows a disconnect between supply and demand, and that companies are failing to communicate their increased demand down the supply chain to farmers. (Environmental Leader)
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