:00:03. > :00:13.Hall. I will be back with a full bulletin at 1pm. Now it is time for
:00:13. > :00:25.
:00:25. > :00:29.Dateline London. Welcome to Dateline London.
:00:29. > :00:35.Starbucks has promised to donate �20 million to the UK authorities.
:00:35. > :00:40.His tax now optional for multinational country --
:00:40. > :00:44.multinational companies? Is the way to finish it -- its economy? And
:00:44. > :00:53.Russia squares up over the Magnitsky Law. Joining us it is
:00:53. > :00:56.Greg Katz, Dmitri Shishkin of the BBC World Service... Multinational
:00:56. > :01:01.companies acting legally and in their own interest are paying their
:01:01. > :01:05.-- paying low taxes by paying off one regime against another as they
:01:05. > :01:08.move their profits around the world. As the scandal became about the
:01:08. > :01:12.morality of their actions, Starbucks has offered to pay the
:01:12. > :01:16.Government's �20 million which they do not have to do. Should they be
:01:16. > :01:20.congratulated or made to pay more or by Loch rather than by
:01:20. > :01:25.discretionary donations? What about Amazon and other companies to use
:01:26. > :01:34.similar methods? Should we congratulate them because they do
:01:34. > :01:37.not have to do this? No. It reminds me of a post by a Clement Attlee --
:01:37. > :01:40.a quad bike Clement Attlee that if a writ -- if a rich man wants to
:01:40. > :01:44.help the pull they should pay their taxes grad -- pay their taxes
:01:44. > :01:50.gladly rather than delight money on a whim. The problem with Starbucks,
:01:50. > :01:54.they have only paid -- they have paid no corporation tax in the last
:01:54. > :01:58.12 years. The argument is that this is perfectly legal and do is a
:01:58. > :02:03.point to be made about how the state allows large corporations
:02:03. > :02:08.access to these loopholes. Presumably they're just doing what
:02:08. > :02:13.companies do, which is minimising tax. It is the Revenue and Customs
:02:13. > :02:18.that we should be. Within the rat. This is aggressive avoidance. They
:02:18. > :02:22.are not just sitting down with a checklist of things which they have
:02:22. > :02:25.accepted. They're not abiding by the spirit of the law, which is
:02:25. > :02:28.that they pay corporation tax. They're very profitable and this
:02:28. > :02:32.country and they have loaded the profitability of their business,
:02:32. > :02:35.but they keep reporting losses. They're doing something that a
:02:35. > :02:39.local coffee shop in Britain could never dream of doing. Small
:02:39. > :02:42.businesses could not dream of putting money into offshore
:02:42. > :02:48.entities, saddling domestic businesses with debts from other
:02:48. > :02:52.parts of your business... As well as the proper thing about tax, it
:02:52. > :02:56.is not competitive because if you're a corner bookstore, you
:02:56. > :03:00.cannot compete with Amazon. You cannot compete with these companies.
:03:00. > :03:05.You are at an immense competitive disadvantage. It could help to
:03:05. > :03:07.drive businesses out altogether. If you take Amazon, for example, a
:03:08. > :03:10.company pursued -- pursuing aggressive tax avoidance, local
:03:10. > :03:15.bookshops have been going out of business across the country for
:03:15. > :03:21.many years that. They are at a huge advantage because they are not
:03:21. > :03:26.paying taxes. At the same time, we need to clamp down on tax avoidance
:03:26. > :03:33.on the part of the state. The Government are talking about doing
:03:33. > :03:36.that but there are cuts of staff at HMRC and we need a general anti-tax
:03:36. > :03:40.avoidance principle which would reclaim some lost tax. Does this
:03:40. > :03:46.affect Germany, to? We have seen many companies, including France,
:03:46. > :03:50.saying that it is a problem. It is a problem all over Europe. I think
:03:50. > :03:54.we need to get our heads together and devise a new regime.
:03:54. > :03:59.Unfortunately, up to this moment there is a beggar-my-neighbour
:03:59. > :04:02.policy, where little countries like Luxembourg are happy to house the
:04:02. > :04:08.headquarters of large companies, whether as a little turnover in the
:04:08. > :04:13.country concerned. We need to enforce a more rigid regime. The
:04:13. > :04:19.idea that Starbucks converts its tax liability into a donation is
:04:19. > :04:24.laughable. I wish I could be gusset with the tax people here my tax
:04:24. > :04:32.liabilities through donations. could pay more if you wish.
:04:33. > :04:36.question. I'm far too generous according to my tax donations.
:04:36. > :04:40.There is a problem that needs to be taking care of an Starbucks have
:04:40. > :04:45.not been paying anything for years and years. It is a moral and it
:04:45. > :04:49.flies in the face of the hypocritical social conscience that
:04:49. > :04:54.they have acquired for themselves. And it is just as well that the
:04:54. > :04:59.public outcry has now led them to go forward and do something about
:04:59. > :05:05.it. What is the position in the United States? Presumably you are
:05:05. > :05:10.not immune although the tax authorities are pretty aggressive.
:05:10. > :05:15.I do not think it is an analogy situation. This is a European Union
:05:15. > :05:22.problem. EU laws is -- EU law is set up in a way that allows
:05:22. > :05:28.Starbucks to pay their royalties and taxes to the Netherlands. They
:05:28. > :05:30.are applying with EU law. It is this classic thing. They have a
:05:30. > :05:33.broad umbrella and there are many different ways of taking advantage
:05:33. > :05:38.of it. I do not think they are hiding money, they're just applying
:05:38. > :05:42.the regime the best way they can. They are maximising their profits.
:05:42. > :05:48.Added the US, we have a single jurisdiction so it is not really a
:05:48. > :05:56.good analogy. If I do not think they should be lauded for kicking
:05:56. > :06:00.in this �20 million but it is shrewd PR. Is it? They are now the
:06:00. > :06:05.poster boys for aggressive tax avoidance. But Google, Amazon and
:06:05. > :06:10.others who are not doing this, they are not being pursued in the same
:06:10. > :06:14.way. I think this puts pressure on Google and Amazon and defers
:06:14. > :06:19.pressure from Starbucks. What do you make of it? Russian tax
:06:19. > :06:26.avoidance, I take it, is not unknown entirely(!). I remember the
:06:26. > :06:31.time in my first job for an entertainment show. My salary was
:06:31. > :06:35.in an envelope given to make quarterly. It was much easier for
:06:35. > :06:38.people to distribute the money like that. Equally, the same thing would
:06:38. > :06:42.probably have applied to companies as well. What does the Russian
:06:42. > :06:50.government done? In the late Eighties, they introduced a flat
:06:50. > :06:56.tax for everybody else, 30% for private people. There was a much
:06:56. > :06:59.simpler form for corporation tax. It is a complicated and much more
:06:59. > :07:05.or -- much less straightforward than Britain, but I think that if
:07:05. > :07:11.you think about tax avoidance at how Russian companies are pushing
:07:11. > :07:18.their money from Russia abroad, into tax havens and everything else,
:07:18. > :07:22.hundreds of millions every year, the problem is the money is leaving
:07:22. > :07:26.the Federation for another real -- another reason. You are using
:07:26. > :07:31.social media, how much is public pressure part of this? Starbucks
:07:31. > :07:35.did say that our customers do not like this, and presumably the same
:07:35. > :07:39.is true with Amazon and Google. Does it actually work? I think
:07:39. > :07:42.we're seeing PR management. That has come under huge pressure. There
:07:42. > :07:47.is talk of boycotts. The reason this has become such an issue, not
:07:47. > :07:54.just in Britain but elsewhere, is because we are enduring the bigger
:07:54. > :08:01.spending cut since the 1920s. he say enjoying? Certainly not
:08:01. > :08:05.enjoying. We are seeing basic services slashed and benefits taken
:08:05. > :08:09.away from disabled people, for example, there is the sense that
:08:09. > :08:12.that is taking place while corporations are systematically
:08:12. > :08:16.avoiding tax, and there is an outcry. Do think we did not care
:08:16. > :08:20.about it in the good times, when there was growth and there was
:08:20. > :08:27.enough money for most people? was certainly not on the radar.
:08:27. > :08:30.Actually, it is interesting that we are talking today, and UK Uncut
:08:30. > :08:35.have taken to the streets to protest this. More than any other
:08:35. > :08:40.group, they have forced onto the agenda and issued that was
:08:40. > :08:44.languishing on the fringes. -- an issue. I think we can concentrate
:08:44. > :08:49.on the term "Legitimate tax- avoidance". There is a grey area
:08:49. > :08:54.which we realise exists and needs to be taken care of. We need to
:08:54. > :08:58.remove a legitimate tax avoidance. It needs to be calibrated for large
:08:58. > :09:03.companies who are global players. It needs to be understood how they
:09:03. > :09:08.are liable. That may be a great idea about how difficult would it
:09:08. > :09:12.be to get the EU to legislate and enact this. We have agreements with
:09:12. > :09:17.companies -- countries like America, the Channel Islands and the Isle of
:09:17. > :09:24.Man to open their books and let us see what is being avoided. Maybe
:09:24. > :09:28.that way is the way to go. There are so many complex forms. If you
:09:28. > :09:31.look at Sir Philip Green, I see it has registered his company in
:09:31. > :09:39.Monaco to avoid paying tax, which is a different form of tax
:09:39. > :09:43.avoidance from what Amazon are proposing, which is enshrined in
:09:43. > :09:46.law. And moving on to the general economy, how would that help, to
:09:46. > :09:51.have a principle? In order to nail people, you have to say that this
:09:51. > :09:56.is the law and it has been broken, not just a principle. How do you
:09:56. > :09:59.nail people? This is a piece of legislation drawn up by the tax
:09:59. > :10:05.justice network and it tries to combat all forms of tax avoidance,
:10:05. > :10:09.whether it be the sort that Amazon are engaging in, witches partly
:10:09. > :10:12.because it is an international business and they can play
:10:12. > :10:17.different tax regimes against each other, or registering your company
:10:17. > :10:23.on your wife's in the Monaco. They think that could recoup over �5
:10:23. > :10:27.billion a year, which at a time of austerity, is no small amount.
:10:27. > :10:35.are all suffering from this in the EU. It is impossible to legislate
:10:35. > :10:38.agreement in the UK. I do not know that it is. That gets us into an
:10:38. > :10:42.area that we had discussed before. Moving on, in Britain the
:10:42. > :10:46.Government has failed to hit some of the targets it set itself to
:10:46. > :10:50.improve the economy. More cuts and other austerity measures on the way.
:10:50. > :10:54.Britain's mini-budget comes as Germany's growth prospects are
:10:54. > :10:58.revised downwards, the Eurozone remain stagnant and the United
:10:58. > :11:02.States faces the possibility of a political stand-up -- political
:11:02. > :11:06.stand-off damaging the economy. Is the economy healing and is there a
:11:07. > :11:12.better cure? It seems to go on forever. And we have heard
:11:12. > :11:17.austerity until 2018. In Greece, 2020. It goes on unending late. We
:11:18. > :11:20.are paying a horrible price for 12 years of growth that went on before
:11:20. > :11:24.where nobody was paying attention to what lay down the road. The
:11:24. > :11:31.Government told us that there was no end and that boom-and-bust have
:11:31. > :11:35.been vanquished. -- had been vanquished. To some extent, you can
:11:35. > :11:40.begin to concentrate on more public expenditure and public works like
:11:40. > :11:43.infrastructure, building roads, bridges, houses. I find that this
:11:43. > :11:47.government is woefully inadequate of the task. They had been talking
:11:47. > :11:52.about building houses and nothing is happening. Boris Johnson talks
:11:52. > :11:56.about the crisis in the aircraft industry, and he is suggesting the
:11:56. > :11:59.Thames estuary for a new airport, but wouldn't it be a wonderful idea
:11:59. > :12:02.to have the real big project like this and concentrate the mind for
:12:02. > :12:11.something that might be accomplished within the next
:12:11. > :12:14.decade? Clearly, -- Kennedy, when he became President, he said by the
:12:14. > :12:19.end of the decade they would have reached the moon. Sadly he did well
:12:19. > :12:22.see that but that is something that we need, something to bring jobs
:12:22. > :12:28.into the economy. We talk about housing and jobs at building, but
:12:28. > :12:33.very little is happening. The EU subscribe to the red tape argument
:12:33. > :12:38.that you cannot just stick an airport somewhere? It is quite
:12:38. > :12:41.different from 50 years ago were 400,000 housing units were built
:12:41. > :12:48.per year. We no longer have that wonderful regime. We have special
:12:48. > :12:57.interest groups everywhere crapping everyone's style. -- cramping
:12:57. > :13:03.everyone's style. We need to move the issue forward. The German
:13:03. > :13:08.economy has been doing extremely well within Europe. Angela Merkel
:13:08. > :13:12.is facing political challengers next year. That is a problem we
:13:12. > :13:16.face. People are holding back on spending. They are not spending
:13:16. > :13:19.enough and we have done very little in my company -- in my country to
:13:19. > :13:24.stimulate domestic demand. The problem is not that growth is
:13:24. > :13:29.stalling but that we have a -- we export too much and nobody is
:13:29. > :13:33.consuming. The debtor countries in the south of Europe are finding it
:13:33. > :13:37.harder to export to places like Germany, which should be a wash in
:13:37. > :13:40.people with money. They are not spending it. Maybe if they had a
:13:40. > :13:45.devalued currency, that would help. The United States has its own
:13:45. > :13:52.problems. There are political ones compounding the economic ones.
:13:52. > :13:56.have never had gridlock in Congress like we do now. I just go back from
:13:56. > :14:00.the States. I was there when the Duchess of Cambridge's Britain's it
:14:00. > :14:08.was announced so we got to see the reaction. The mood in the States is
:14:08. > :14:12.more dynamic than here and less totally downbeat. My Wrexham to the
:14:12. > :14:15.Autumn Statement is partly based on the age of my daughter. -- my
:14:15. > :14:19.reaction. I'm thinking, how will this affect young people when they
:14:19. > :14:22.are being told that there will be cuts for six years? You are looking
:14:22. > :14:27.at finishing college are committed to economy where you cannot expect
:14:28. > :14:31.job growth. -- finishing college and coming out into an economy. You
:14:31. > :14:34.may have to fight for an entry- level job and then be let go at the
:14:34. > :14:38.end of your probation term. There may well be social problems in the
:14:38. > :14:43.next few years. How do you get optimism going? That is an
:14:43. > :14:46.important point. The idea about galvanising the relations behind
:14:46. > :14:52.this is -- galvanising the nation behind something is a wonderful one
:14:52. > :14:58.but what kills it immediately are stories about Starbucks and bankers.
:14:58. > :15:02.Every now and then we stumble over a malfunction. In headline terms,
:15:02. > :15:06.do you think that people want to believe the idea that we are all in
:15:06. > :15:09.it together? But they do not think that we are. Some of us are more in
:15:09. > :15:12.it than others. I have spoken to many people who warned that small
:15:12. > :15:16.businesses and their reaction has been varied. Some of them say that
:15:16. > :15:20.everybody needs to do the same thing, the same role needs to apply
:15:20. > :15:25.to everyone, and others say, you know what, I am really, really
:15:25. > :15:29.cross that my accountant has not been able to do that for me. For a
:15:29. > :15:36.small business, with maybe only tens of thousands of pounds of
:15:36. > :15:39.revenue. I talked to quite a lot of business people. One of the things
:15:39. > :15:44.they say, there is quite a bit of money around with their bigger
:15:44. > :15:47.businesses, which they do not want to spend because they are
:15:47. > :15:52.frightened. I suppose that is the simple way of putting it. It is all
:15:52. > :15:56.about job growth. Would you want to put more permanent positions in
:15:56. > :16:00.your company if you knew that one you down the line, you might be to
:16:00. > :16:10.lay them off? People will not take off -- people will take on
:16:10. > :16:13.
:16:13. > :16:16.temporary staff. It is all about It is estimated that large
:16:16. > :16:21.corporations are sitting on billions of pounds that they are
:16:21. > :16:25.not willing to invest. Austerity on its own terms has failed. The well-
:16:25. > :16:32.known bastion of socialism, the Standard & Poor credit agency, when
:16:32. > :16:40.it slashed the credit ratings of nine he you countries -- 9 U
:16:40. > :16:47.countries this year, debt went up. We have seen in this country this
:16:47. > :16:50.week with the Autumn Statement which George Osborne unveiled,
:16:50. > :16:55.commentators have been warning of a lost decade of economic growth,
:16:55. > :17:00.that is already upon us. The Office of budget responsibility appointed
:17:00. > :17:03.by this government are showing projections that over the decade
:17:03. > :17:07.since Lehmann Brothers collapsed, we will have lower growth and Japan
:17:07. > :17:17.had in their last -- last decade. Underlying deficit is also
:17:17. > :17:18.
:17:18. > :17:25.increasing. It is in -- important for the Government to lead the way.
:17:26. > :17:33.The Government has to lead the way in a major project that will siphon
:17:33. > :17:36.the willingness to people... Olympics, people thought that would
:17:36. > :17:40.never work, and then most British people were quite proud of it.
:17:40. > :17:43.is the time of something of that British bulldog spirit to make
:17:43. > :17:47.people realise that a major effort is needed and that you have got it
:17:47. > :17:56.in your bones to provided and that we will lead the way and this is
:17:56. > :18:01.what we're going to do. I believe Boris Johnson has his own agenda.
:18:01. > :18:11.That is a very valid point! I am absolutely convinced of that idea,
:18:11. > :18:12.
:18:12. > :18:16.of a major project. You need to knock heads together. Let's say
:18:16. > :18:22.that the airport project is the most brilliant engineering and has
:18:22. > :18:26.the most four-sided terms of transport and is top notch, but in
:18:26. > :18:28.terms of red tape, you are looking at 15 terms of environmental impact
:18:28. > :18:34.statements and hearing before we could break grand on a project like
:18:34. > :18:37.that. I have heard this argument made, but I want to see a broken
:18:37. > :18:40.down. I want to see the beginning of the process and to name and
:18:40. > :18:45.shame those who are standing it in the way of this country going
:18:45. > :18:49.forward. So you would argue that Brazil and Russia are entering this
:18:49. > :18:54.decade of big ideas, for example that Russia will stage the Olympics
:18:54. > :19:00.next year, Brazil in 2014 for the World Cup... China has already done
:19:00. > :19:04.that. Big ideas can drive people for it. Let's return to a small
:19:04. > :19:07.idea they is causing problems. Politicians in Russia squared up to
:19:07. > :19:15.the United States this week after the passing of the law, named after
:19:15. > :19:23.a Russian whistleblower who died in suspicious circumstances --
:19:23. > :19:28.Magnitsky Law. In Moscow, some said that it was like a return to be
:19:28. > :19:31.called off. Is this a grandstanding? In practical terms,
:19:31. > :19:34.it is grandstanding, it is showing off, it is trying to impose
:19:34. > :19:41.morality across borders and across continents in a way that does not
:19:41. > :19:45.really work. It certainly reflects American disillusion with what has
:19:45. > :19:50.happened in Russia in the past 15 years. The other thing about the
:19:50. > :19:55.way the question is raised, I think Americans would like to have the
:19:55. > :20:04.Cold War back. The Government in general felt a lot safer in a Cold
:20:04. > :20:13.War world. You both liked the Cold War! We liked it find! The thought
:20:13. > :20:19.of the entire planet evaporating was a slight downside to that. We
:20:19. > :20:28.will come back to the front line in the second, but the Cold War
:20:28. > :20:37.rhetoric on both sides Bo absolutely. It is like for like.
:20:37. > :20:41.The question here is, if Russian officials it I indicated in the
:20:41. > :20:47.death of Sergei Magnitsky and are prevented from using their revenues
:20:47. > :20:52.or houses in America, the question is, if Russians adopt the same act,
:20:52. > :20:57.how many Americans actually live in Russia for leisure? How many
:20:57. > :21:00.Americans keep money in Russia? It is about disillusionment in what is
:21:00. > :21:06.happening in Russia. There was a powerful article in the Moscow
:21:06. > :21:09.Times, an English-language newspaper, this week, about
:21:09. > :21:13.Washington waking up to the fact that what has been happening in
:21:13. > :21:17.Russia and the way it is being courted by people. It is never
:21:17. > :21:22.about human rights, but always a bad business deals. What you are
:21:22. > :21:29.saying now is that we will see that the corporation will still be there.
:21:29. > :21:34.Regardless of the rhetoric, when big business interests come to the
:21:34. > :21:40.fore and you need to explore another oilfield in Russia, who
:21:40. > :21:43.were remembered the Magnitsky Act? I am less critical of Congress year,
:21:44. > :21:53.because I see a continuation of the Human Rights Concern which emerged
:21:54. > :21:58.
:21:58. > :22:04.at the tail-end of the Cold War. Solzhenitsyn and other dissidents
:22:04. > :22:08.were received in the White House to great fanfare. America is always
:22:08. > :22:13.but in this issue before world opinion, never mind the commercial
:22:13. > :22:16.implications, which, I think, has little to do with the Cold War. It
:22:16. > :22:22.is an American tradition which has gone to the last -- goes back to
:22:22. > :22:25.the last 30 years. We are so cosy with Russia in many ways, but
:22:25. > :22:30.behind it, there is something sinister still going on that we
:22:30. > :22:35.have not quite grappled with, and this is one way of highlighting
:22:35. > :22:39.what is still desperately wrong with Russia. We have had this
:22:39. > :22:44.hyperbole about the return of the cold war since the Soviet Union
:22:44. > :22:48.collapsed. The Cold War was raised huge struggle for global supremacy
:22:48. > :22:52.waged across six continents, with an ideological element, at least on
:22:52. > :22:56.the surface, injected into that. What we are seeing here is some
:22:57. > :23:03.tetchiness between two great powers. What is interesting about what we
:23:03. > :23:09.are seeing in Russia, there was an interesting article in the Times,
:23:09. > :23:14.which said that when people make these absurd comparisons between
:23:14. > :23:21.Vladimir Putin and Stalin, they are missing the point. There are more
:23:21. > :23:27.parallels with the stagnation of the Brezhnev era. There has been
:23:27. > :23:32.huge decline in living standards in Russia, and Putin restored order by
:23:32. > :23:36.centralising power. That is no longer the case. Living standards
:23:36. > :23:42.are stagnating in Russia, which is why we are seeing this clampdown.
:23:42. > :23:47.And also, the degree of order that was necessary to. They were crying
:23:47. > :23:52.for that order after the 1990s. The first couple of years of Bouton
:23:52. > :24:02.being in power, compared to beat Boris Yeltsin era, it was a new
:24:02. > :24:03.
:24:03. > :24:08.chapter. Then, as see -- as he started to screw things tighter and
:24:08. > :24:12.tighter, with the Magnitsky Act, what is important to understand is
:24:12. > :24:15.who will really suffer. I realise that there was a lot of lobbying
:24:15. > :24:20.going on in America and the European Parliament and all the
:24:20. > :24:25.other places, but who really suffer is probably not government
:24:25. > :24:33.organisations in Russia itself. the British Council to... Bailiff
:24:33. > :24:38.on foreign money. -- they live on foreign money. The more important
:24:38. > :24:43.dispute is between be American and Russian positions on Syria. That is
:24:43. > :24:48.having a real impact on international security. People are
:24:49. > :24:53.dying because of that. But, this is a naive question, do you think it
:24:53. > :24:57.is useful for the United States to have an enemy? Russia, as a
:24:57. > :25:01.potential threat or enemy or irritation, it's quite good,
:25:01. > :25:08.because it is a known quantity. but I think there is a bit of
:25:08. > :25:12.nostalgia. I don't think that dynamic of Us versus Russia can be
:25:12. > :25:16.resurrected. Having said all that, I probably agree with you, but at
:25:16. > :25:20.the same time, Angela Merkel is supposed to have taken more of a
:25:20. > :25:26.stringent position on Vladimir pewter and lately, but if you think
:25:26. > :25:36.about it, Germany and the EU and the US and Britain have much bigger
:25:36. > :25:39.
:25:39. > :25:43.problems to deal with at the moment. This Moody's the water even more.
:25:43. > :25:47.What is interesting is that Russia send observers to America to make
:25:47. > :25:53.sure that the Human Rights upheld at their elections. There is
:25:53. > :25:57.possibly a good reason for that! We are going to leave it there.