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Don’t be afraid to talk about taxes

BERNIE EVANS argues that with planning and a united approach, taxation could become a key element in a Labour victory

WITH Britain now a big player in the tax-haven game, with £30-40 billion a year in lost tax revenue, Corbyn and his team must realise that bland promises about tackling tax evasion and avoidance will not suffice.

In order to have an impact the Labour manifesto should include precise details which then have to be repeated at every opportunity by every candidate. He or she should have the exact same figures to hand, from how much is lost every year to how many tax inspector jobs in HMRC will be created after the Tory and Lib Dem cull in the coalition years.

McDonnell has already promised “the most comprehensive plan ever seen” to tackle the problem, with legislation necessary to force tax transparency on UK crown dependencies to reveal the owners of companies hiding assets.

More voter-friendly policies can be added. Should we tighten up the distinction between tax avoidance and evasion be ended, with more schemes criminalised? Similarly, should it not be illegal to make financial gain from advising on tax avoidance schemes?

The honours system is clearly in need of reform generally, but ensuring no tax avoiders or people working in companies avoiding tax are included might be useful, and thought can be given, too, to whether tax avoiders should be able to hold any public office.

Most definitely, with the news that almost three-quarters of companies favoured by recent Tory governments have operations based in tax havens, Labour should promise that all such companies will be refused any government contracts.

Finally, a pledge that all Labour cabinet members will make their tax returns public would not go amiss either.

Then there are the proposals on income and corporation tax. Labour’s proposals to increase the rates of income tax on the top 5 per cent of earners will be attacked, with ludicrous claims that the changes will ruin the economy, actually reduce the amount the Treasury collects, and dash the hopes of aspirational young people.

Labour candidates will have to be ready with their prepared responses. For a start, this nonsense centres around the so-called Laffer curve which was dreamt up to justify Reagan’s tax cuts, and which modern economists like Thomas Piketty have been rubbishing for years.

Candidates could do worse than remind voters that under Thatcher, between 1979 and 1988 the top rate of income tax was 60 per cent — did that end aspiration? Worth remembering too is the pledge made by Johnson when campaigning to be Tory leader; he promised to raise the higher-rate income tax threshold to £80,000 from £50,000, meaning those earning £80,000, for example, would save £3,000 in tax.

It would cost £9.6bn a year and lead to more government borrowing just to benefit those earning three times the national average, which is only £26,400 — a figure all candidates should learn by heart.

Hopefully, Labour will have ready for social media responses from nurses, junior doctors and teachers saying how the income tax rises will not affect them, with a few bankers and businessmen saying how much they earn and how much more they will pay — emphasising how little effect the tax increases would have on almost everybody.

Similar publicity about the proposed VAT to be levied on private school fees will do no harm either.

Waiting for the Tory propaganda machine to get its act together is not a wise electoral tactic, so Labour must get its retaliation in first.

Tories will claim a corporation tax increase to 26 per cent on company profits will be disastrous, economic chaos will ensue, causing businesses to leave the country in their hundreds, with thousands of jobs lost.

The Labour response should be quite clear; the Conservatives’ reduction of corporation tax did not attract new businesses from abroad, nor has there been a surge in investment, whilst countries like Germany, Japan and France have far healthier economies even though their rate of corporation tax is around 30 per cent.

Instead of paying CEOs and directors obscene amounts plus bonuses, companies need to be paying their fair share of tax to ensure they continue to benefit from government investment in health, education and transport.

Dealt with sensibly, with all candidates and members of the leadership team well prepared and using the same figures and details, taxation policies can prove a vote-winner in the December election.

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