WILL SNELL outlines Tax Justice UK’s call on the government to put an end the scourge of tax avoidance once and for all
TAX Justice UK, the country’s leading campaigning organisation dedicated to fighting for a fairer tax system, has called on the Prime Minister to take the action needed to tackle tax avoidance in the wake of the release of the “Paradise Papers.”
These revelations are just the latest in a long line of tax scandals. Once again, Britain and its network of offshore tax havens in the crown dependencies and overseas territories are at the centre of the leak.
The system, which is rigged to benefit the privileged few at the expense of everyone else, is broken.
The impact on our public services of these corrupt practices, protected by a veil of secrecy, has been devastating. After seven years of austerity, it is time for irresponsible tax dodging to come to an end.
HMRC, the government body tasked with policing the tax system, has seen its staff numbers and budget halved since it was formed in 2005.
Meanwhile, the British government has failed to take the opportunity to clean up the offshore system, in territories like Bermuda that are under its control, and make it harder for individuals and companies to avoid tax. It is little wonder that tax dodgers are taking advantage.
Tax Justice UK is now calling for the Prime Minister to take decisive action to end the scourge of tax avoidance, once and for all, by tightening up on enforcement and introducing new transparency rules.
We are calling on the Prime Minister to commit to:
• Properly funding HMRC. HMRC’s budget has been cut by 40 per cent since 2000, and its staffing has almost halved since 2005. Every extra £1 invested in enforcing large company taxation rules would yield £97 in additional tax revenues, according to the government’s own figures. It is time to invest again in the enforcement of British tax legislation.
• Stopping the practice of granting amnesties to those who hide their money offshore. The government has done this after previous leaks. This is unnecessary and harmful to the interests of the British population.
• Abolishing “non-dom” status. This antiquated system serves no purpose other than facilitating tax avoidance by wealthy individuals. It is time for it to consigned to the history books.
• Tightening the regulation of accountants, lawyers and bankers. These professions are largely self-regulated. More stringent regulation is needed to prevent the kind of abuse that has been uncovered by the Paradise Papers.
• Introducing public registers of beneficial ownership for trusts as well as companies, and compelling Britain’s crown dependencies and overseas territories to do the same. The Paradise Papers have shown that the abuse of trusts is a major driver of corruption and tax avoidance. This can be dealt with through greater transparency. Meanwhile, the government has consistently failed to put pressure on its offshore territories to introduce its own public registers of companies and trusts. It has the power to mandate them to act. It should use it.
• Mandating public country-by-country reporting for all publicly quoted companies. The government has had the power to do this since last year, but has failed to act on it. Forcing large companies to disclose the size of their operations and the amount of tax paid in each country would significantly reduce the scope for corporate tax avoidance.
• Publicly reviewing tax breaks for corporations and wealthy individuals. Tax reliefs cost billions of pounds every year, yet we still don’t know whether they deliver value for money. We need to know the costs and benefits of them all.
Tax Justice UK and 38 Degrees have launched a petition calling on the Prime Minister to take the steps outlined above to tackle tax avoidance in the wake of the release of the Paradise Papers.
In less than two days, the petition has attracted more than 110,000 signatures from British taxpayers angered at the failure of the government to put an end to the abusive behaviour of multinational companies and wealthy individuals whose efforts to avoid tax have a direct impact on public services.
The government knows what needs to be done to tackle tax avoidance and evasion, but the issue just hasn’t been a priority.
In fact, rather than take on the tax dodgers, successive governments have cut off HMRC at its knees, slashing its funding and the number of tax inspectors by half over the last decade.
When the wealthy engage in the kind of practices seen in the Paradise Papers, they are picking the pockets of nurses, teachers, doctors and other hard-working public servants, and harming the lives of everyone in Britain who uses public services.
The latest leak of information from one of the largest facilitators of the offshore system shows that the tax avoidance industry is still alive and well.
The government must now take swift action to make sure that tax dodgers are brought to heel.
• Will Snell is director of Tax Justice UK.
• You can sign the petition at you.38degrees.org.uk/p/taxavoidance, or read more on the Tax Justice website at taxjustice.uk.