Saturday, 19 June 2010

Cut Tax Abuse, Not Jobs

On Monday 21 June Britain’s first Green MP is to issue a new report – 'Cuts: the callous con trick' – in which she will make the case that cuts are unnecessary “because the economy could instead be rebalanced using additional tax revenues.”

The report, written jointly with tax expert Richard Murphy and Colin Hines of Finance for the Future, condemns the government “for failing to the electorate the option of fair tax instead of cuts,” and accuses ministers of increasing the likelihood of a double-dip recession.

Green Party leader Caroline Lucas MP said:
“Whilst these appalling losses to the nation’s coffers are occurring, HM Revenue & Customs are pursuing a programme of job cuts which will ultimately reduce their own staff by 20,000 – close to one quarter of the total. This makes absolutely no sense. This programme should be reversed, staff re-employed, and local tax offices re-opened in order to tackle tax abuse. It has been calculated that at least £15 billion of extra tax could be collected each year as a result. That could prevent a massive range of cuts."

Richard Murphy, tax expert, chartered accountant and co-author of the report said:
“Our report sets out a range of additional options for changing the tax rules for the UK so that more than £40 billion of additional taxes could be raised each year by the end of the life of this parliament. That, together with the tax collecting efficiency savings already noted, would together deliver more than £60 billion of tax revenues for the UK – so preventing the need for any cuts at all.”

Who benefits from cutting back on tax collection? Tax avoiders. Yet our big three parties talk endlessly and direct polict to benefit cheats, a target the tabloids seem to prefer.

The amount of Tax avoidance and evasion is “truly staggering” – it could be as high as £100bn a year.

The report can be read at:


Jonathan said...

Employing more HMRC staff won't stop tax avoidance because tax avoidance is completely legal. Closing these loopholes is easier said than done. The previous government put a lot of effort into trying to close them, and doubled the amount of tax legislation to 11520 pages in the process. It hasn't worked, because everytime you close one loophole, you introduce at least one more.

Adrian Windisch said...

Reducing tax employess will increase tax dodgers.

The last Govt put little effort into catching tax avoiders. They may have intended their legislation to be ineffective. Similarly Labour said they were reducing emissions but they actually went up.

'Tax evasion is easy: it involves breaking the law.... This can be contrasted with acceptable tax planning. What is critical is transparency.'

Jonathan said...

Additional resources would reduce evasion if properly depoyed, but there is a difference between tax avoiders and tax evaders.

Take for example the people who flip their second homes to avoid capital gains tax. If HMRC put additional resources into catching these people, what good would it do? They would say "yes, I flipped my second home to avoid paying capital gains tax. It is perfectly legal, what are you going to do about it?"

It is true that the last government did nothing to stop this particular loophole, possibly because MPs were doing it themselves, but if you look at the small print of any pre-budget review or budget report over the past 13 years, you will see details of lots of tax avoidance schemes that have been shut down.

The tax avoidance industry either finds ways to work round it, finds completely new schemes, or exploits new reliefs given to help certain people, industries, environmental targets etc. Generally when they are selling a particular loophole scheme, they work on the basis that they will have about 3 months to exploit it before it is shut down.

libhom said...

We have the same problem here in the US. The rich are less likely to be audited than the middle class.