Thank you for your enquiry about Labour's position on and proposals to counter tax dodging. My apologies if you have experienced a delay in this reply, but I have had some technical glitches over the last couple of weeks which has put me behind.
I’ve met many people on the doorstep who’ve paid the right tax through PAYE all their life, and people who are self-employed struggling to navigate the tax system and fearful of making a mistake. Like you I am appalled by the extent of ‘tax dodging’ in our country and the reported attitudes towards it. Former Conservative Party Treasurer Lord Fink’s comments that he had taken ‘vanilla’ steps to reduce his tax bill going on to state that everyone was involved in tax avoidance, give us real insights into the culture of this Government. One rule for the rich and another for the rest of us.
Labour have a number of specific policy measures that will be in our first Finance Bill if elected, and most of these measures were first outlined about a year ago. We’ll:
- Introduce penalties for those who are caught by the General Anti-Abuse Rule
- Close loopholes used by hedge funds to avoid stamp duty
- Close loopholes like the Eurobonds loophole which allow some large companies to move profits out of the UK and avoid Corporation Tax
- Stop umbrella companies exploiting tax reliefs
- Scrapping the “Shares for Rights” scheme, which the Office for Budget Responsibility has warned could enable avoidance and cost £1bn and is administered by HMRC, and so ensure HMRC can better focus on tackling tax avoidance
- Tackle disguised self-employment by introducing strict deeming criteria
- Tackle the use of dormant companies to avoid tax by requiring them to report more frequently
Labour’s measures to tackle tax avoidance will also include:
- Ensuring stronger independent scrutiny of the tax system, including reliefs, and the government’s efforts to tackle tax avoidance
- Forcing the UK’s Overseas Territories and Crown Dependencies to produce publicly available registries of beneficial ownership
- Making country-by-country reporting information publicly available
- Ensuring developing countries are properly engaged in the drawing up of global tax rules
Some details are available here http://labourlist.org/2015/02/labour-outline-how-theyd-deal-with-tax-avoidance/ Richard Murphy, a respected tax expert described our proposals as a step in the right direction http://www.taxresearch.org.uk/Blog/2014/03/07/labours-new-tax-policy-welcome-steps-in-he-right-direction/
Reforming the tax system is technical and complex. For me, tax avoidance and evasion has as much to do with morality, justice and equity as with the technicalities of law and accountancy. The present UK tax code runs to 17,000 pages. It urgently requires simplifying and consistent enforcement.
The challenge we face in a global economy is generating international cooperation to ensure that tax legally due is paid; by 'international' citizens and multi-national companies. Oxfam have estimated that worldwide lost tax revenue is enough to eliminate extreme poverty across the globe twice over. The UK should take a leadership position in doing this.
We need consistency in the UK government's position on tax avoidance and evasion and what is today termed 'fraud' of the state benefits system. Both concern what is rightfully public money - due to the state in the first instance, distributed by the state in the latter.
Tellingly, benefit claimants risk prison for misrepresentations, mistakes made in claims and for omissions in notifying changes of their circumstances. Meantime, tax evaders, equally culpable of misrepresentation and deliberate non-disclosure, are allowed negotiated settlements. This approach is wrong and unsustainable. It unfairly privileges those with power, influence, resources and access to expertise and provides no serious deterrent to crime.
You may be aware that civil servants chasing benefit fraud totalling less than £2 billion a year outnumber those dealing with avoidance and evasion - which totals £30 billion - by ten to one. That indicates the skewed priorities of the present Government.
You may also know of the trade in commercially available tax avoidance schemes promoted by major accountancy firms like Price, Waterhouse, Coopers (now PwC). These firms send advisors - without charge - into the UK Treasury to help draft taxation law, then return to design avoidance schemes for their employers, often intended get round that same law. This revolving door that turns poachers into gamekeepers and vice versa needs to be stopped.
Further, tax avoidance and money-laundering facilitated by the financial system of the West is instrumental in denying economic development opportunities to the poorest in the world. Tax havens - which often rely on their historic links to the UK - put a veil of secrecy over serious crime. The 'corruption' we see flagged up to account for the problems of developing nations is, in fact, systematically encouraged by banks and tax havens.
I welcome Labour’s approach and support calls for us to go even further. If elected for example I will also press for us to publically back the Fair Tax Mark, an international independent accreditation scheme. I support the Tax Dodging Bill. I hope you will understand from this that I am committed to effective action – and effectiveness cannot always be easily judged in advance - both internationally and here at home to bring about fundamental change to this situation.
Please do not hesitate to contact me with any further questions and thanks again for getting in touch.
Labour’s Parliamentary Candidate
Mobile: 07811 064522
Promoted by David Plowman of 19 Holly Blue Close, Ipswich, Suffolk, IP8 3TD on behalf of Jane Basham of 1 High Street, Hadleigh, Suffolk, IP7 5AH