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A group of left-wing non-governmental organizations have upped the pressure on the UK Government to modernize an "outdated" tax system that "allows companies to manipulate their profits to avoid taxes."
The call is made in a new report released by the UK's largest trade union, Unite, together with the anti-poverty charity War on Want, and the Change to Win federation of US trade unions.
Neil Geiser, associate director of retail initiatives at Change to Win, warned that "corporate tax avoidance is not going to go away unless we shine a light on it and unless policy makers act decisively. This is an international issue, but our report gives the UK Government every reason to act forcefully to limit abuses by private equity backed firms."
The report focuses on an allegation that Alliance Boots, the owner of high street chemists Boots, has avoided at least GBP1.2bn (USD1.9bn) in tax since going private six years ago. It claims that the company took on huge levels of debt to fund its 2007 buyout, and "is likely to have apportioned this liability to reduce its corporation tax by about 95 percent over six years." The holding company that owns Alliance Boots is located in Gibraltar, and in 2008, the firm re-located to the low-tax canton of Zug, Switzerland.
Alliance Boots draws around 40 percent of its UK revenues from prescriptions and related services.
The three sponsoring organizations argue that Alliance Boots should disclose key tax and financial information, and urge the Government to launch an investigation of the company's tax practices. They also stress the need for transparency and accountability in cases where public contracts are undertaken by private companies, changes to the taxation of private equity-backed businesses, and reform of the tax systems in British Overseas Territories.
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