Wednesday, 22 February 2012

More action needed on tax avoidance and tax evasion

In my column in the Cornish Guardian this week, I have addressed the failure of the Government to live up to its promise to take action to stop certain wealthy people and corporations not paying thier fair share of tax. It is as follows:

In the United Kingdom, the “tax gap” is currently estimated to stand at £120 billion. This represents the difference between the amount of revenue that would have been collected if all taxpayers paid their correct amount of tax and the total actually received by the Treasury.

It is a disgrace that a range of billionaires, millionaires and large companies can get away with not paying their fair share of tax. Surely it must be a priority for the Government to reduce the tax gap, so that our vital public services are not starved of adequate funding and ordinary people do not suffer as a consequence.

It is to be welcomed that David Cameron and Nick Clegg have both pledged to do more to tackle tax avoidance (reducing payments by legal means) and tax evasion (illegal non-payment).

The Prime Minister has promised a "tougher approach" towards large firms with "fancy corporate lawyers." His Deputy has made a similar comment, saying people were "rightly angered" by a "wealthy elite" who paid "an army of accountants" to avoid tax.

As yet, these fine words do not relate to any meaningful action. The banking giant Goldman Sachs last year brokered a deal with the Government to dodge paying over £10 million in charges, while MPs on the Public Accounts Committee identified a further £25 billion of outstanding tax that has not been paid by a range of big companies.

The PM’s response has been to simply reject the claims of "unduly cosy" relationships between the Government and large corporations.

But perhaps most shocking of all has been the revelation that the Government brokered deals with the head of the Student Loans Company and its own senior staff in the Department of Health, agreeing to pay their salaries direct to limited companies in order to reduce their individual tax bills.

Worryingly, the Government is also failing to properly resource HM Revenue and Customs. It is cutting thousands of jobs and closing offices, and allowing billions in uncollected tax revenues to be written off due to a lack of resources.

It is time that the Prime Minister and his Deputy lived up to their promises to be tough on tax evasion and tax avoidance and to do so much more.

They need to properly fund HM Revenue and Customs, to make tax avoidance illegal, to make the tax and allowance system fairer (for example, ending tax relief on pensions for the mega-rich) and to work with other countries to introduce a “transaction” tax on financial transactions in the City and to abolish tax havens.

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