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Top economist tells Ed Balls to tackle tax dodgers before punishing workers

Shadow chancellor's child benefit cash-grab would rake in £400m while £82bn outstanding in tax evasion

Top economist Richard Murphy called on shadow chancellor Ed Balls yesterday to collect billions from tax dodgers before snatching cash from Britain’s poorest families. 

Mr Balls braced parents for two consecutive cuts to child benefit as part of his strict plan to pay off the deficit if Labour takes power next May. 

He said capping child benefit — currently £20.35 for first children and £13.55 thereafter — for two years will save £400 million.

The Child Poverty Action Group calculated the cut would see families go without £190 a year for their first child and £125 for others. 

Mr Balls told Labour conference: “I want to see child benefit rising again in line with inflation in the next Parliament, but we will not spend money we cannot afford.”

But Mr Murphy wrecked his bid to justify more cruel cuts by revealing that tax evasion has soared past £80 billion.

His analysis of official figures shows tax evasion stands at £82bn and could reach £100bn before the end of the next Parliament if unchecked. 

And, speaking after Mr Balls’s speech, Mr Murphy labelled his plan “baffling.”

He told the Morning Star: “Why is the focus of Labour’s attention on cutting spending when there is an enormous amount of money out there in the economy to collect?

“Every pound you take out of the economy will cause hardship. 

“He is imposing austerity and cuts that will harm natural Labour voters at a time when there are alternative strategies available.”

Mr Murphy will launch his report at Labour conference today alongside left MP Katy Clarke and civil servants’ union PCS general secretary Mark Serwotka (pictured).

It shows how tax receipts drying up coincided with the sacking of 43 per cent of Revenue and Customs staff since 2008.

There are just 62,000 tax collectors now compared with 92,000 six years ago.

Just 52,000 will survive by 2016 under government plans to close all 281 walk-in centres and 23 offices.

Reversing the staff cuts could see Britain’s tax intake soar, according to the report for PCS.

Mr Serwotka said: “Collecting even a fraction of these stolen billions would change the debate about public spending overnight and allow much-needed investment in our communities instead of more damaging cuts.”

At least a million companies a year dodge their tax returns and 600,000 are never even asked to pay corporation tax, Mr Murphy said.

Mr Balls promised to “crack down hard on tax avoidance and close tax loopholes” in his conference address.

But Mr Murphy said Labour had been paying lip service to tackling tax avoidance without putting firm policies in place.

Means testing winter fuel allowance and raising the pension age were other plans Mr Balls said showed he was “tough enough to make difficult decisions.”

He insisted that “unlike the Tories we will always ask those who have the most to make the biggest contribution.”

That includes a bank bonuses tax and a mansion tax on properties worth over £2 million.


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