Labour has called on Rishi Sunak to pump £93million a day into hospitals and rescuing struggling schoolkids after a historic tax deal landed a near‑£8billion boost.
The money will come from a landmark global agreement reached yesterday to stop online giants shirking their tax responsibilities.
Shadow Chancellor Rachel Reeves said: “We want that money going into the NHS, our hospitals and schools.”
Warning that the NHS has a record backlog of care due to Covid, British Medical Association chair Dr Chaand Nagpaul insisted: “The Government must use this opportunity to make health an absolute priority.”
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And TUC general secretary Frances O’Grady added: “It’s only right that big global corporations pay their way. “They make profits here and rely on the public services the rest of us pay for – so they should contribute too.”
The deal means giants such as Amazon, Google and Facebook will have to pay “at least” 15% corporation tax wherever they are in the world – rather than marking all their profits up to countries where tax is lowest.
If a firm trading in the UK moves to a lower-tax country such as Singapore, the Treasury will be able to levy a “topup” tax on profits generated here.
Last week Mr Sunak came up with just £1.4billion for his schools Covid recovery plan, in spite of experts advising it needed 10 times as much.
Victory The Chancellor hailed the tax breakthrough at a meeting of G7 finance ministers in London yesterday as a great victory for Britain.
But Ms Reeves accused Mr Sunak of watering down the 21% which US President Joe Biden had originally called for.
She said: “An ambitious 21% rate would have brought £131million extra a week to Britain for our NHS and other public services, while stopping our High Streets being aggressively undercut.”
But Mr Sunak insisted: “This demonstrates we as a country can play a leadership role. I hope people feel proud the UK has stepped up and done this.”
Britain’s budget deficit in April was running at £303billion, a peacetime record – representing 14.4% of GDP. And Covid is costing the NHS an extra £1billion a month.
Yet despite a measly 1% pay offer, the number of applicants to become nurses has risen by 17%.
(Image: REUTERS)
The new tax system will mean global firms will pay taxes in the countries where they make sales, and not just where they are operationally based.
It was claimed last week an Irish subsidiary of Microsoft had paid zero corporation tax on £222billion profit last year because it was resident in Bermuda for tax purposes.
Amazon’s Luxembourg-based operation collected £38billion in European sales income last year, including in the UK, yet paid no corporation tax in Europe.
The Institute for Public Policy Research said a 21% global minimum rate would have raised £14.7bn for Britain annually.
At the lower 15% Mr Sunak has brokered, it drops to £7.9bn.
Britain was the only country not to back Mr Biden’s 21% rate, with Germany, France, Canada, Italy and Japan getting behind his bid.
And the IPPR slammed the 15% rate as inadequate to end “the race to the bottom” by firms seeking the lowest possible tax burden.
Oxfam’s Max Lawson said: “It’s absurd for the G7 to claim it is ‘overhauling’ a broken system by setting a minimum rate similar to tax havens like Ireland, Switzerland and Singapore.
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“They’re setting the bar so low that companies can just step over.”
Tech giants breathed a united sigh of relief at getting off so lightly.
Facebook’s Nick Clegg said: “We want the reform to succeed and recognise this could mean Facebook paying more tax and in different places.”
Amazon called it “a welcome step forward”.
And Google added: “We strongly support the work being done.”
Experts estimate that in the first three months of 2021 Amazon, Facebook, Google, Microsoft and Apple made a combined profits of £1.8million a minute.
The deal must still be approved by lawmakers in 100 countries. Ireland, which charges firms just 12.5%, fears it could lead to a loss of £2billion a year in revenue.
