PMQs: British taxes for British companies, says Clegg

11.26.00am GMT Thu 5th Feb 2009

Liberal Democrat leader accuses Brown of allowing companies to avoid £14 billion of taxes

Speaking at Prime Minister's Questions, Nick Clegg urged the Prime Minister to clamp down on tax avoidance by Britain's biggest firms. Big companies, he said, were taking advantage of tax loopholes to avoid paying £14 billion in corporation tax alone.

He accused Gordon Brown of creating the system that is "losing this country billions of pounds, which could be used to give big permanent tax cuts to ordinary families.

"Why should anyone trust him when he makes one rule for the fat cats and another for everyone else?"

Read the full exchange below

Mr. Nick Clegg (Sheffield, Hallam) (LD): I add my expressions of sympathy and condolence to the family and friends of Corporal Danny Nield, who tragically lost his life serving this country and the people of Afghanistan in Helmand province.

Week after week, I have been asking the Prime Minister why he is not getting tough on tax avoidance. Every time, he tells me that he is doing all that he can. This week, newspapers have confirmed that big companies are using loopholes to get out of paying £14 billion in corporation tax alone. Instead of going on about British jobs for British workers, is it not time that he went on about British taxes for British companies?

The Prime Minister: This needs not only the efforts that we are making to clamp down on tax avoidance and tax evasion, but an international agreement. The right hon. Gentleman may be aware that there is a case in America at the moment in relation to Swiss tax avoidance. Once it is resolved, I believe that it is possible to get an international agreement for the exchange of information about tax cases. That would be the way to move forward our proposals for the exchange of information on tax and clamping down on tax evaders.

Mr. Clegg: The Prime Minister is living in denial. He created a system that lets big companies run rings round the Treasury, lets peers in the other place not pay their full taxes in this country and allows City bosses to pay less in tax on their capital gains than their cleaners pay on their wages. He is losing this country billions of pounds, which could be used to give big permanent tax cuts to ordinary families. Why should anyone trust him when he makes one rule for the fat cats and another for everyone else?

The Prime Minister: I remember that the chief donor to the Liberal party got into real trouble because he was a tax evader, and the Liberals never returned the money. Perhaps it is the leader of the Liberal party who is in denial at the moment.

We do everything we can, and will continue to do so, Budget after Budget, to remove the possibility of tax avoidance and tax evasion. In the end, it will need what the right hon. Gentleman should support - an international agreement. In the light of the Swiss case in the United States of America, I hope that we can make big progress on that, and I hope that the hon. Gentleman will support it.