Friday, 3 April 2015

End the tax dodging scandal!

Tax dodging, whether tax evasion or aggressive tax avoidance, is a scandal - in fact a whole series of scandals. Action is long overdue and ought to be a priority in the next Parliament.
The UK government is particularly well placed to address this due to its sponsorship of tax havens - 'Treasure Islands". There should be an immediate end to their peculiar tax status. 

This probably requires some mixture of direct government action and intervention via regulation of the City.

Tax avoidance thrives because of the excessive complexity of our tax code. If Hong Kong needs only 286 pages why do we need 17,000? There can only be bad reasons for this. Therefore an incoming government should create an independent working group to devise a strategy for radical simplification of the tax code.

The Tax Dodging Campaign is promoting a bill that would:
  • Make it harder for big companies to dodge UK taxes and ensure they're not getting unfair tax breaks through government created loopholes.
  • Ensure UK tax rules don't encourage big companies to avoid tax in developing countries.
  • Make the UK tax regime more transparent and tougher on tax dodging.

I completely support the campaign and, if elected, would press for early action. But legislation is complex and may be delayed so I think the new government should also take immediate executive action. It should:
  1. Hire – or more likely rehire – additional tax inspectors. Since each brings in much more tax than they cost this would REDUCE the deficit.
  2. Immediately block all pending sweetheart deals between HMRC and companies.
  3. Direct HMRC to prioritise inspections of corporations and the rich – not small businesses.

Apart from their direct effects these measures would show would-be evaders and avoiders that the government was seriously committed to collecting all the tax due with useful effects on motivation.

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