‘The problem with a lot of countries is not a shortage of capitalism, it is a shortage of capital’
Interview: David Cameron’s message to colleagues at the G8 will be simple: a tax rate set must be a rate paid
He adds that tax authorities should be better able to track hidden assets, so that a tax rate set must be the tax rate paid. “You need to have exchange of tax information so that countries’ tax authorities can see how they are operating across different places.”
The Republic’s 12½ per cent corporation rate is not a problem for Cameron, partly because he is trying to do something similar in the UK by lowering its rate from 28 per cent to 20 per cent – potentially the lowest among the G8 – by the time of the next election in 2015.
“I don’t criticise the Republic of Ireland for having a low corporate tax rate. We have a low corporate tax rate in the UK, but I do believe that it is important that having set the tax rate that companies pay it.”
“There are issues about the ‘Double Irish’ and the ‘Dutch sandwich’ and all of the rest of it, but I think if people really understood how some of these work I think they would be rather disturbed.”
Varied national tax codes
The “Double Irish” with a “Dutch sandwich” technique is just one of several similar global tax avoidance schemes. Each involves arranging transactions between subsidiary firms to take advantage of the idiosyncrasies of varied national tax codes.
For the North, the G8 summit offers a global stage to display its wares to the world. “That is why I chose Northern Ireland, it was very much my decision,” he says, smiling ironically, “It was very much like Yes Minister when people say, ‘Yes, that’s a brave decision, minister’.”
Freed from the paperwork, Cameron hopes the environment in Lough Erne over the next two days will enable the G8 leaders the chance to talk “about the genuine problems, without too many officials and advisers present”.
“I want it to be that sort of summit . . . I have put a lot of work in. I went myself to the place that we are going. I wanted to see it, I wanted to walk around it, I wanted to see how it worked. I met some of the neighbours who are very excited, it is a beautiful spot. There had just been a fire, which is not a good omen,” he says, adding with a laugh, “but I am hoping that they have got rid of the traces of that. I’m hopeful, but you shouldn’t ever raise expectations about these things.”
Nevertheless, he is convinced there will be a legacy.
“I think people will look back on this and say, ‘tax, transparency and trade has an amazing ability to transform the world’s fortunes, particularly for the poorest in our world’. That is a good thing to be spending your time on.”
Turning to the music coming from Horse Guards, which is blocked from sight by the terraced seating installed for the day, he says: “Pity you can’t see out, it is a good view,” before determining that he must do something about that sock. “Let me go and put on a proper one.”