Margaret Hodge, a member of the Labour Party and a prominent tax reform advocate, said Monday that companies that don't contribute to the public purse shouldn't expect assistance in times of crisis. During an interview on London-based Talkradio, Hodge also suggested the U.K. government take stakes in businesses to which it awards money.
The lawmaker said it was outrageous for companies that have deliberately established financial structures with tax avoidance as their only purpose to expect "money out of the common purse to save their businesses."
Hodge added that the government "might take an equity in the firms for the Exchequer — for us, the people — to own a part of the company if [companies] expect some money out of the taxpayer."
Hodge's remarks follow announcements by Denmark, France and Poland that they plan to block novel coronavirus aid to companies that make use of tax havens.
In April, France became the third European Union country to adopt a law banning COVID-19 relief to companies registered in tax havens after an amendment to the country's emergency pandemic measures was passed into law. COVID-19 is the respiratory ailment caused by the coronavirus.
France's finance minister, Bruno Le Maire, said at the time that companies receiving aid were prohibited from paying dividends or buying back shares.
"The state is not there to finance shareholders," he said.
Meanwhile, some tax reform campaigners have said the three countries' measures fall short because they don't account for tax havens within the EU.
"Eighty percent of corporate tax dodging in France goes to EU tax havens," Quentin Parrinello, senior tax policy officer at Oxfam in France, told Law360. "Only 52 companies could be subject to the [French] rule, providing they actually resort to state support. This shows the limitations."
But an EU spokesperson said last week that the bloc's freedom-of-capital rules would disallow any measure that discriminates against a company based in another EU country.
The Labour Party could not be reached for comment, nor could HM Treasury.
--Editing by Neil Cohen.
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