Hodge, the chair of the All-Party Parliamentary Group on Responsible Tax, was speaking after recent revelations about the low tax bills of internet giants PayPal and Facebook.
A BBC investigation found PayPal’s tax bill jumped by £2.7m after a review by HMRC and The Guardian newspaper has discovered Facebook paid less than 1% of total sales in tax, despite record high revenue in the UK.
Hodge called Facebook’s UK tax bill “outrageous”.
Multinational Facebook paid £15.8m in tax in the UK last year despite collecting a record £1.3bn in sales. Because it was able to claim £8.4m in tax credits from granting employees shares in the company, its net tax was £7.4m – less than 1% of its total sales.
The e-payments firm PayPal’s tax bill rose from £158,356 in 2016 to £4.1m after the review by the British tax authorities.
Hodge, former chair of the Public Accounts Committee, said on Twitter that it was “absolutely outrageous” that Facebook’s UK tax bill is just 0.62% of their revenue.
Absolutely outrageous that Facebook's UK tax bill is 0.62% of their revenue here; on an income of £1.2 billion they really should be paying much more than £7.4 million.
— Margaret Hodge (@margarethodge) 8 October 2018
She told PF: “The UK authorities need to be much tougher on the multinational digital companies so that they pay a fair share on the profits they earn in the UK - and we should start getting much tougher on the advisers and hold them to account.
“The thing is that Facebook and other similar companies want a well-educated workforce and they use our transportation systems and health service and that has all been paid for by the British taxpayer – they should contribute to that,” she said.
Last week, chancellor Philip Hammond at the Conservative Party conference raised the prospects of a new tax for large technology companies, which are often criticised for moving sales through other countries and paying the lowest tax possible in the UK.
The OECD is also trying to tackle the problem but is struggling to get consensus from all of its 36 members.
Twitter UK has also filed accounts showing a jump in corporate tax from £815,000 in 2016 to £2.4m last year. But the company said this was not due to any involvement from the HMRC but adjustments relating to previous years.
Calling on Hammond to act, the boss of Tesco Dave Lewis said a new tax on online products could bring in £1.25bn a year to ease pressure on high street retailers, who he said were “going” bust because of the online companies.
He said: “"Has the government thought through what happens when retail starts to decline and if the job losses start to become significant?
“The tax burden has reached the point where companies are now going bust.”
