Are Cameron and Osborne serious about stamping on tax avoidance? The foot stamping test says "no!"

The spectacle of David Cameron and George Osborne calling for an international crackdown on tax avoidance brings to mind an old school teacher of mine. A few decades ago my former French teacher, who had earlier served in the British Army during WWII, enlivened the class with tales of the crafty methods used by the Germans. One was a method to test whether a prisoner was a true Frenchman or a British spy wearing a beret. The German would stamp on the suspect's foot to see whether he said "Ow!" (British) or "Ai!" (French). 

The cry of pain is an instinctive reaction and difficult to feign, with the "Ow!" heralding a quick march for the presumed spy to a firing squad.

When David Cameron had his foot stamped on during Prime Minister's Questions of February 13th 2013, we got an insight into his instinctive reaction:

Q12. [142834] Stephen Pound (Ealing North) (Lab): Further to the Prime Minister’s rather acerbic exchange with the Leader of the Opposition earlier, will he tell the House whether he will personally benefit from the millionaires’ tax cut to be introduced this April?

The Prime Minister: I will pay all the taxes that are due in the proper way. 

There is a spooky similarity between Cameron's statement and that of Mr.Troy Alstead of Starbucks, when Alstead was being grilled by a parliamentary select committee on Starbucks' tax dodging shenanigans. 

"we strive to follow the letter of the law and have done so in the case of our tax obligations. All taxes owed to the UK have been timely and fully paid"

And also with that from Mr. Matt Brittin of Google, also on the tax dodgers' naughty step in the same select committee:

"We pay all the tax you require us to pay in the UK."

Messrs Alstead (Starbucks), Brittin (Google) and also Cecil (Amazon) were being grilled by the UK Parliament's Public Accounts Committee (PAC) looking into the near absence of corporation tax paid by their companies. 
http://www.parliamentlive.tv/main/Player.aspx?meetingId=11764

“Because some people say to me, ‘Well, it’s all within the law; you’re obeying the law, it’s okay'. Well, actually there are lots of things that are within the law [that] we don’t do because actually we have some moral scruples about them and I think we need this debate about tax too."

That statement was made not by a frustrated member of the Public Accounts Committee. It was made by  David Cameron. The same Cameron who answered, in Prime Minister's Questions, "I will pay all the taxes that are due in the proper way".

What a frustrated member of the Public Accounts Committee did say about Mr.Cecil of Amazon, one of the witnesses:

"At the hearing we were frustrated with the representative from Amazon, who we found evasive and unprepared to answer legitimate questions"

All rather like Cameron's evasive response to the perfectly legitimate question of "whether he will personally benefit from the millionaires’ tax cut to be introduced this April".

Google, one of the companies being grilled by the Public Accounts Committee, claimed in its evidence that

 "The 17,000 engineers in California who build and continue to invest in developing the technology create the economic value for Google."

Presumably the sweat of those 17,000 Californians mean the US Treasury would get a bonanza in taxes from Google? However, according to a report by Bloomberg

"Google Inc. cut its taxes [payable in the USA] by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda. Google’s income shifting helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization."

This whole "through Ireland and the Netherlands to Bermuda" escapade is known in tax and boardroom circles as the "Double Irish Dutch Sandwich". Best explained by a tax specialist:



Could it have escaped Cameron's notice that Bermuda is a British Overseas Territory operating under the jurisdiction of the UK? And the fact that providing tax dodging services is one of the UK's most successful industries.

http://www.economist.com/news/special-report/21571549-offshore-financial-centres-have-taken-battering-recently-they-have-shown-remarkable

Cameron may condemn tax avoidance to please the crowds. But when his foot gets stamped on by his tax-dodging friends his baser instincts will come to the fore.