Billions of pounds could be poured into the NHS if the UK backs Joe Biden’s tax plan to take on global giants like Amazon, Labour has said.
Ahead of a meeting of G7 finance ministers on Friday, Shadow Chancellor Rachel Reeves urged Rishi Sunak to sign up to the US President’s call for a 21% minimum corporation tax rate.
She accused the Government of “gifting the biggest multinationals £131 million a week” which could go to the NHS, as she pointed to IPPR analysis showing the move could raise £14.7 billion for Britain every year.
Mr Biden initially proposed a minimum global rate for corporation tax – the tax businesses pay on their profits – of 21%.
But last month the US Treasury Department put forward a plan for a “floor” of 15%, while calling for discussions to continue to “push that rate higher”.
Labour’s analysis of IPPR figures said dropping from 21% to 15% for the threshold would mean the UK takes £6.8bn less per year at the lower rate.
This would amount to some £131m a week, the party said.
In a letter to the Chancellor, Ms Reeves pushed him to rally behind the original proposal when he meets G7 colleagues in London on Friday.
She said: “This week is a chance for the Government to back British business and help our public services rebuild out of the pandemic.
“Boris Johnson is gifting the biggest multinationals £131 million a week. Labour says let’s fund our NHS instead.”
“Now that we’re out of the EU we have even more reason to show global leadership in cracking down on tax avoidance.
“Yet this government seems set on weakening a deal that would bring billions back to Britain and stop our high streets being undercut by the likes of Amazon, Google and other big multinationals.”
Amazon, Facebook and Google have always insisted they pay all taxes due in each country.
At the Budget in March, the Chancellor announced that corporation tax would rise from 19% to 25% by 2023 as part of efforts to rebuild the public finances following record Government borrowing during the pandemic.
Amid criticism from senior Conservatives, ministers have defended the 25% headline rate, arguing it will remain the lowest in the G7 and the full rate will only be paid by around 10% of companies.
A Treasury spokesman said: “Reaching an international agreement on how large digital companies are taxed has been a priority for the Chancellor since he took office.
“Our consistent position has been that it matters where tax is paid and any agreement must ensure digital businesses pay tax in the UK that reflects their economic activities. That is what our taxpayers would expect and is the right thing for our public services.
“We welcome the US’s renewed commitment to tackling the issue and agree that minimum taxes might help to ensure businesses pay tax – as long as they are part of that package approach.”