Labour leader Ed Miliband has slammed Google's tax arrangements at Google's Big Tent event today.
Google had denied accusations from MPs that it minimises the amount of tax paid in Britain. Its sales in the UK are worth £3.2bn, but it paid only £6m in corporation tax in 2011 which it claimed was because its sales staff are based in Dublin, Ireland, and not in the UK.
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Miliband pointed to Google's 2004 IPO prospectus which said: "Don't be evil. We will be stronger in the long term, we will be better served - as shareholders and in all other ways by a company that does good things for the world, even if we forego some short-term gains."
"Your employees want a culture where they feel they are doing the right thing. Your customers want it too," said Miliband.
"Our economy needs proper tax revenues to pay down the deficit and fund the services upon which we all rely. Our society depends on the right messages being sent out from the top. And the reputation of business depends on the most prominent businesses doing the right thing," he added.
Ahead of next month's G8 meeting, at which multinational corporation tax will be at the forefront of prime minister David Cameron's agenda, Miliband said he was disappointed that Google pays such little tax.
"I can't be the only person here who feels disappointed that such a great company as Google, with such great founding principles, would be reduced to arguing that when it employs thousands of people in Britain, makes billions of pounds of revenue in Britain, but pays just a fraction of that in tax," he stated.
"So when Google does great things for the world, as it does, I applaud you. And when Google goes to extraordinary lengths to avoid paying its taxes, I think it's wrong," he added.
Miliband said that the internet was a powerful tool that could be used in a positive way, such as breaking down existing hierarchies, but he added that it could create "new powerful vested interests" and called for more "responsible capitalism".
Google's Eric Schmidt had encouraged the UK government to open up a debate about reforming international tax laws, and Miliband supported the idea of a discussion on taxation.
"We welcome Google's call for international tax reform. This is what Labour supports to ensure transparency, proper rules on transfer pricing and a crackdown on tax havens," he said.
