08/12/2012 Dateline London

Hall. I will be back with a full bulletin at 1pm. Now it is time for

Dateline London. Welcome to Dateline London.

Starbucks has promised to donate �20 million to the UK authorities.

His tax now optional for multinational country --

multinational companies? Is the way to finish it -- its economy? And

Russia squares up over the Magnitsky Law. Joining us it is

Greg Katz, Dmitri Shishkin of the BBC World Service... Multinational

companies acting legally and in their own interest are paying their

-- paying low taxes by paying off one regime against another as they

move their profits around the world. As the scandal became about the

morality of their actions, Starbucks has offered to pay the

Government's �20 million which they do not have to do. Should they be

congratulated or made to pay more or by Loch rather than by

discretionary donations? What about Amazon and other companies to use

similar methods? Should we congratulate them because they do

not have to do this? No. It reminds me of a post by a Clement Attlee --

a quad bike Clement Attlee that if a writ -- if a rich man wants to

help the pull they should pay their taxes grad -- pay their taxes

gladly rather than delight money on a whim. The problem with Starbucks,

they have only paid -- they have paid no corporation tax in the last

12 years. The argument is that this is perfectly legal and do is a

point to be made about how the state allows large corporations

access to these loopholes. Presumably they're just doing what

companies do, which is minimising tax. It is the Revenue and Customs

that we should be. Within the rat. This is aggressive avoidance. They

are not just sitting down with a checklist of things which they have

accepted. They're not abiding by the spirit of the law, which is

that they pay corporation tax. They're very profitable and this

country and they have loaded the profitability of their business,

but they keep reporting losses. They're doing something that a

local coffee shop in Britain could never dream of doing. Small

businesses could not dream of putting money into offshore

entities, saddling domestic businesses with debts from other

parts of your business... As well as the proper thing about tax, it

is not competitive because if you're a corner bookstore, you

cannot compete with Amazon. You cannot compete with these companies.

You are at an immense competitive disadvantage. It could help to

drive businesses out altogether. If you take Amazon, for example, a

company pursued -- pursuing aggressive tax avoidance, local

bookshops have been going out of business across the country for

many years that. They are at a huge advantage because they are not

paying taxes. At the same time, we need to clamp down on tax avoidance

on the part of the state. The Government are talking about doing

that but there are cuts of staff at HMRC and we need a general anti-tax

avoidance principle which would reclaim some lost tax. Does this

affect Germany, to? We have seen many companies, including France,

saying that it is a problem. It is a problem all over Europe. I think

we need to get our heads together and devise a new regime.

Unfortunately, up to this moment there is a beggar-my-neighbour

policy, where little countries like Luxembourg are happy to house the

headquarters of large companies, whether as a little turnover in the

country concerned. We need to enforce a more rigid regime. The

idea that Starbucks converts its tax liability into a donation is

laughable. I wish I could be gusset with the tax people here my tax

liabilities through donations. could pay more if you wish.

question. I'm far too generous according to my tax donations.

There is a problem that needs to be taking care of an Starbucks have

not been paying anything for years and years. It is a moral and it

flies in the face of the hypocritical social conscience that

they have acquired for themselves. And it is just as well that the

public outcry has now led them to go forward and do something about

it. What is the position in the United States? Presumably you are

not immune although the tax authorities are pretty aggressive.

I do not think it is an analogy situation. This is a European Union

problem. EU laws is -- EU law is set up in a way that allows

Starbucks to pay their royalties and taxes to the Netherlands. They

are applying with EU law. It is this classic thing. They have a

broad umbrella and there are many different ways of taking advantage

of it. I do not think they are hiding money, they're just applying

the regime the best way they can. They are maximising their profits.

Added the US, we have a single jurisdiction so it is not really a

good analogy. If I do not think they should be lauded for kicking

in this �20 million but it is shrewd PR. Is it? They are now the

poster boys for aggressive tax avoidance. But Google, Amazon and

others who are not doing this, they are not being pursued in the same

way. I think this puts pressure on Google and Amazon and defers

pressure from Starbucks. What do you make of it? Russian tax

avoidance, I take it, is not unknown entirely(!). I remember the

time in my first job for an entertainment show. My salary was

in an envelope given to make quarterly. It was much easier for

people to distribute the money like that. Equally, the same thing would

probably have applied to companies as well. What does the Russian

government done? In the late Eighties, they introduced a flat

tax for everybody else, 30% for private people. There was a much

simpler form for corporation tax. It is a complicated and much more

or -- much less straightforward than Britain, but I think that if

you think about tax avoidance at how Russian companies are pushing

their money from Russia abroad, into tax havens and everything else,

hundreds of millions every year, the problem is the money is leaving

the Federation for another real -- another reason. You are using

social media, how much is public pressure part of this? Starbucks

did say that our customers do not like this, and presumably the same

is true with Amazon and Google. Does it actually work? I think

we're seeing PR management. That has come under huge pressure. There

is talk of boycotts. The reason this has become such an issue, not

just in Britain but elsewhere, is because we are enduring the bigger

spending cut since the 1920s. he say enjoying? Certainly not

enjoying. We are seeing basic services slashed and benefits taken

away from disabled people, for example, there is the sense that

that is taking place while corporations are systematically

avoiding tax, and there is an outcry. Do think we did not care

about it in the good times, when there was growth and there was

enough money for most people? was certainly not on the radar.

Actually, it is interesting that we are talking today, and UK Uncut

have taken to the streets to protest this. More than any other

group, they have forced onto the agenda and issued that was

languishing on the fringes. -- an issue. I think we can concentrate

on the term "Legitimate tax- avoidance". There is a grey area

which we realise exists and needs to be taken care of. We need to

remove a legitimate tax avoidance. It needs to be calibrated for large

companies who are global players. It needs to be understood how they

are liable. That may be a great idea about how difficult would it

be to get the EU to legislate and enact this. We have agreements with

companies -- countries like America, the Channel Islands and the Isle of

Man to open their books and let us see what is being avoided. Maybe

that way is the way to go. There are so many complex forms. If you

look at Sir Philip Green, I see it has registered his company in

Monaco to avoid paying tax, which is a different form of tax

avoidance from what Amazon are proposing, which is enshrined in

law. And moving on to the general economy, how would that help, to

have a principle? In order to nail people, you have to say that this

is the law and it has been broken, not just a principle. How do you

nail people? This is a piece of legislation drawn up by the tax

justice network and it tries to combat all forms of tax avoidance,

whether it be the sort that Amazon are engaging in, witches partly

because it is an international business and they can play

different tax regimes against each other, or registering your company

on your wife's in the Monaco. They think that could recoup over �5

billion a year, which at a time of austerity, is no small amount.

are all suffering from this in the EU. It is impossible to legislate

agreement in the UK. I do not know that it is. That gets us into an

area that we had discussed before. Moving on, in Britain the

Government has failed to hit some of the targets it set itself to

improve the economy. More cuts and other austerity measures on the way.

Britain's mini-budget comes as Germany's growth prospects are

revised downwards, the Eurozone remain stagnant and the United

States faces the possibility of a political stand-up -- political

stand-off damaging the economy. Is the economy healing and is there a

better cure? It seems to go on forever. And we have heard

austerity until 2018. In Greece, 2020. It goes on unending late. We

are paying a horrible price for 12 years of growth that went on before

where nobody was paying attention to what lay down the road. The

Government told us that there was no end and that boom-and-bust have

been vanquished. -- had been vanquished. To some extent, you can

begin to concentrate on more public expenditure and public works like

infrastructure, building roads, bridges, houses. I find that this

government is woefully inadequate of the task. They had been talking

about building houses and nothing is happening. Boris Johnson talks

about the crisis in the aircraft industry, and he is suggesting the

Thames estuary for a new airport, but wouldn't it be a wonderful idea

to have the real big project like this and concentrate the mind for

something that might be accomplished within the next

decade? Clearly, -- Kennedy, when he became President, he said by the

end of the decade they would have reached the moon. Sadly he did well

see that but that is something that we need, something to bring jobs

into the economy. We talk about housing and jobs at building, but

very little is happening. The EU subscribe to the red tape argument

that you cannot just stick an airport somewhere? It is quite

different from 50 years ago were 400,000 housing units were built

per year. We no longer have that wonderful regime. We have special

interest groups everywhere crapping everyone's style. -- cramping

everyone's style. We need to move the issue forward. The German

economy has been doing extremely well within Europe. Angela Merkel

is facing political challengers next year. That is a problem we

face. People are holding back on spending. They are not spending

enough and we have done very little in my company -- in my country to

stimulate domestic demand. The problem is not that growth is

stalling but that we have a -- we export too much and nobody is

consuming. The debtor countries in the south of Europe are finding it

harder to export to places like Germany, which should be a wash in

people with money. They are not spending it. Maybe if they had a

devalued currency, that would help. The United States has its own

problems. There are political ones compounding the economic ones.

have never had gridlock in Congress like we do now. I just go back from

the States. I was there when the Duchess of Cambridge's Britain's it

was announced so we got to see the reaction. The mood in the States is

more dynamic than here and less totally downbeat. My Wrexham to the

Autumn Statement is partly based on the age of my daughter. -- my

reaction. I'm thinking, how will this affect young people when they

are being told that there will be cuts for six years? You are looking

at finishing college are committed to economy where you cannot expect

job growth. -- finishing college and coming out into an economy. You

may have to fight for an entry- level job and then be let go at the

end of your probation term. There may well be social problems in the

next few years. How do you get optimism going? That is an

important point. The idea about galvanising the relations behind

this is -- galvanising the nation behind something is a wonderful one

but what kills it immediately are stories about Starbucks and bankers.

Every now and then we stumble over a malfunction. In headline terms,

do you think that people want to believe the idea that we are all in

it together? But they do not think that we are. Some of us are more in

it than others. I have spoken to many people who warned that small

businesses and their reaction has been varied. Some of them say that

everybody needs to do the same thing, the same role needs to apply

to everyone, and others say, you know what, I am really, really

cross that my accountant has not been able to do that for me. For a

small business, with maybe only tens of thousands of pounds of

revenue. I talked to quite a lot of business people. One of the things

they say, there is quite a bit of money around with their bigger

businesses, which they do not want to spend because they are

frightened. I suppose that is the simple way of putting it. It is all

about job growth. Would you want to put more permanent positions in

your company if you knew that one you down the line, you might be to

lay them off? People will not take off -- people will take on

temporary staff. It is all about It is estimated that large

corporations are sitting on billions of pounds that they are

not willing to invest. Austerity on its own terms has failed. The well-

known bastion of socialism, the Standard & Poor credit agency, when

it slashed the credit ratings of nine he you countries -- 9 U

countries this year, debt went up. We have seen in this country this

week with the Autumn Statement which George Osborne unveiled,

commentators have been warning of a lost decade of economic growth,

that is already upon us. The Office of budget responsibility appointed

by this government are showing projections that over the decade

since Lehmann Brothers collapsed, we will have lower growth and Japan

had in their last -- last decade. Underlying deficit is also

increasing. It is in -- important for the Government to lead the way.

The Government has to lead the way in a major project that will siphon

the willingness to people... Olympics, people thought that would

never work, and then most British people were quite proud of it.

is the time of something of that British bulldog spirit to make

people realise that a major effort is needed and that you have got it

in your bones to provided and that we will lead the way and this is

what we're going to do. I believe Boris Johnson has his own agenda.

That is a very valid point! I am absolutely convinced of that idea,

of a major project. You need to knock heads together. Let's say

that the airport project is the most brilliant engineering and has

the most four-sided terms of transport and is top notch, but in

terms of red tape, you are looking at 15 terms of environmental impact

statements and hearing before we could break grand on a project like

that. I have heard this argument made, but I want to see a broken

down. I want to see the beginning of the process and to name and

shame those who are standing it in the way of this country going

forward. So you would argue that Brazil and Russia are entering this

decade of big ideas, for example that Russia will stage the Olympics

next year, Brazil in 2014 for the World Cup... China has already done

that. Big ideas can drive people for it. Let's return to a small

idea they is causing problems. Politicians in Russia squared up to

the United States this week after the passing of the law, named after

a Russian whistleblower who died in suspicious circumstances --

Magnitsky Law. In Moscow, some said that it was like a return to be

called off. Is this a grandstanding? In practical terms,

it is grandstanding, it is showing off, it is trying to impose

morality across borders and across continents in a way that does not

really work. It certainly reflects American disillusion with what has

happened in Russia in the past 15 years. The other thing about the

way the question is raised, I think Americans would like to have the

Cold War back. The Government in general felt a lot safer in a Cold

War world. You both liked the Cold War! We liked it find! The thought

of the entire planet evaporating was a slight downside to that. We

will come back to the front line in the second, but the Cold War

rhetoric on both sides Bo absolutely. It is like for like.

The question here is, if Russian officials it I indicated in the

death of Sergei Magnitsky and are prevented from using their revenues

or houses in America, the question is, if Russians adopt the same act,

how many Americans actually live in Russia for leisure? How many

Americans keep money in Russia? It is about disillusionment in what is

happening in Russia. There was a powerful article in the Moscow

Times, an English-language newspaper, this week, about

Washington waking up to the fact that what has been happening in

Russia and the way it is being courted by people. It is never

about human rights, but always a bad business deals. What you are

saying now is that we will see that the corporation will still be there.

Regardless of the rhetoric, when big business interests come to the

fore and you need to explore another oilfield in Russia, who

were remembered the Magnitsky Act? I am less critical of Congress year,

because I see a continuation of the Human Rights Concern which emerged

at the tail-end of the Cold War. Solzhenitsyn and other dissidents

were received in the White House to great fanfare. America is always

but in this issue before world opinion, never mind the commercial

implications, which, I think, has little to do with the Cold War. It

is an American tradition which has gone to the last -- goes back to

the last 30 years. We are so cosy with Russia in many ways, but

behind it, there is something sinister still going on that we

have not quite grappled with, and this is one way of highlighting

what is still desperately wrong with Russia. We have had this

hyperbole about the return of the cold war since the Soviet Union

collapsed. The Cold War was raised huge struggle for global supremacy

waged across six continents, with an ideological element, at least on

the surface, injected into that. What we are seeing here is some

tetchiness between two great powers. What is interesting about what we

are seeing in Russia, there was an interesting article in the Times,

which said that when people make these absurd comparisons between

Vladimir Putin and Stalin, they are missing the point. There are more

parallels with the stagnation of the Brezhnev era. There has been

huge decline in living standards in Russia, and Putin restored order by

centralising power. That is no longer the case. Living standards

are stagnating in Russia, which is why we are seeing this clampdown.

And also, the degree of order that was necessary to. They were crying

for that order after the 1990s. The first couple of years of Bouton

being in power, compared to beat Boris Yeltsin era, it was a new

chapter. Then, as see -- as he started to screw things tighter and

tighter, with the Magnitsky Act, what is important to understand is

who will really suffer. I realise that there was a lot of lobbying

going on in America and the European Parliament and all the

other places, but who really suffer is probably not government

organisations in Russia itself. the British Council to... Bailiff

on foreign money. -- they live on foreign money. The more important

dispute is between be American and Russian positions on Syria. That is

having a real impact on international security. People are

dying because of that. But, this is a naive question, do you think it

is useful for the United States to have an enemy? Russia, as a

potential threat or enemy or irritation, it's quite good,

because it is a known quantity. but I think there is a bit of

nostalgia. I don't think that dynamic of Us versus Russia can be

resurrected. Having said all that, I probably agree with you, but at

the same time, Angela Merkel is supposed to have taken more of a

stringent position on Vladimir pewter and lately, but if you think

about it, Germany and the EU and the US and Britain have much bigger

problems to deal with at the moment. This Moody's the water even more.

What is interesting is that Russia send observers to America to make

sure that the Human Rights upheld at their elections. There is

possibly a good reason for that! We are going to leave it there.