Sequel to leaked papers from Panama law firm, Mossack Fonseca, over investments in tax havens, David Cameron has defended the right of Britons to “make money lawfully” as he faced members of parliament yesterday for the first time since the row over his family’s tax affairs broke last week.
The BBC reported that he told MPs a distinction must be drawn between enterprise, aspiration and “artificially reducing tax.”
In his statement, Mr Cameron, who published a summary of his tax returns on Sunday, addressed what he said were “deeply hurtful and profoundly untrue” allegations about his late father’s offshore investment fund.
He said the fund, in which the PM owned shares which he sold for a £19,000 profit in 2010 after paying tax, was perfectly legitimate.
He said a number of public sector organisations, including trade unions and the BBC, had similar investment arrangements, describing them as a “standard practice and not designed to avoid tax.
“It is right to tighten the law and change the culture around investment to further outlaw tax evasion and to discourage aggressive tax avoidance,” he said.
“But as we do so, we should differentiate between schemes designed to artificially reduce tax and those that are encouraging investment. This is a government – and this should be a country – that believes in aspiration and wealth creation.”
He told MPs that he had decided to sell the shares in 2010, before he became PM, to avoid any perception of a conflict of interest.
Mr Cameron told MPs that he had released an “unprecedented” amount of information about his own tax affairs and believed the leader of the opposition, chancellor and shadow chancellor should also follow suit as they either ran or aspired to the run the nation’s finances.
But he said that he did not believe MPs should be compelled to routinely publish similar information as the principle of confidentiality in tax information should be maintained.
The chancellor’s aides have stressed Mr Osborne has never held any offshore funds – and that his sources of income are “straightforward” – his salary, rental income and shares in his father’s firm.
Responding, Labour leader in the House of Commons, Mr Jeremy Corbyn said the prime minister had failed to give a “full account of his involvement in tax havens until this week or take essential action to clean up the system.”
Mr Cameron was backed by Conservative MPs but amid heated exchanges in the Commons, veteran Labour MP Dennis Skinner was suspended from the chamber for the day after referring to the prime minister as “dodgy Dave” and refusing to withdraw the remark.
The prime minister released a summary of earnings and tax going back six years after being accused by Labour of misleading the public over money he had invested in his father Ian Cameron’s company, Blairmore Holdings.
Labour is continuing to press him to publish his full tax returns dating back to before he became prime minister and are questioning why the original investment was not disclosed in the register of MPs’ interests.
Labour has announced a 10 point plan to “clean out” tax havens – including forcing MPs to disclose any offshore holdings.