If closing ten tax loopholes is not enough for you, here are some more ideas

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I suggested ten tax loopholes to close yesterday.

If that's not enough for you there's plenty more tax reform to think about in a publication I wrote a couple of years ago for the Green New Deal group called The Great Tax Parachute, which summarised a number of suggestions I'd made on this issue over the ear or two preceding that. One or two will have changed now, but only in detail.

So try these suggestions from that publication about how to tackle tax avoidance,  split into three groups. These are:

  1. Implementable straight away with no consultation required, not least because this will prevent tax avoidance taking place;
  2. Implementable after a reasonable consultation period to ensure that the policy is as effective as possible
  3. Implementable after further research is undertaken on the necessary mechanisms to create the tax.

Grouping the possible changes under the above headings results in the recommendations in the following table. In each case a link is provided to the course of further information on the proposal.

Implementable straight away with no consultation required

Recommendation Approximate Impact Source of further information
50 per cent tax on all income over £100,000 £2.3 billion Compass, In Place of Cuts
Taxing all capital gains at a taxpayers highest marginal income tax rate £2 billion Compass, In Place of Cuts
Prevent anyone earning more than £100,000 a year claiming more than £5,000 a year in tax reliefs above their personal allowance £14.9 billion Compass, In Place of Cuts

TUC, A Socially Just Path to Economic Recovery

Green New Deal Group, The Cuts Won’t Work

(variations on the theme available in each)

End tax relief for all salaries and benefits provided in kind  that results in  an employee having total income from related employments exceeding ten times median UK earnings in a year (about £220,000 at present) £2.4 billion TUC et al – Taxing Banks
Limit the time period for the carry forward of bank losses £5 billion TUC et al – Taxing Banks[vii]
Reintroduce 10 per cent tax band to help those on lowest incomes £11.5 billion of refunds Compass, In Place of Cuts
Uncap national insurance contributions and make them payable on investment income £9.1 billion Compass, In Place of Cuts
Additional 10 per cent tax on bank profits £2.2 billion Tax Research LLP[viii]
Limit ISA tax relief to funds invested in new Green projects alone Neutral Green New Deal Group, The Cuts Won’t Work
Total £26.4 billion  

Implementable after a reasonable consultation period

Introduce a General Anti-Avoidance Provision Up to £5 billion pa Association of Accountancy and Business Affairs’ Code of Conduct on Taxation
Change the legislative basis for interpreting UK tax law so any action contrary to the spirit rather than the letter of tax legislation can be challenged in court Included in above estimate AABA Code of Conduct on Taxation
Introduce a mandatory Code of Conduct on Taxation Included in above estimate AABA Code of Conduct on Taxation
Abolish the UK’s domicile rule £3 billion TUC, A Socially Just Path to Economic Recovery
Introduce higher council tax bands £1.7 billion Compass, In place of Cuts
Introduce a ‘Robin Hood Tax’ on all foreign exchange dealing in sterling £3.2 billion in the UK Robin Hood tax campaign Budget Submission 2010
Reform rules on company residence so that companies cannot claim they’ve left the UK simply by holding their board meetings in another country £1 billion at present, maybe more[ix] TUC Pre-Budget report submission
Enhance the rules on controlled foreign companies so that intellectual property rights cannot be easily transferred to tax havens without tax being due £1 billion at present, maybe more TUC Pre-Budget report submission
Restrict the offset of interest against taxable income both for companies to reduce the incentive to overload companies with debt. £1 billion at present, maybe more TUC Pre-Budget report submission
Restrict the tax relief available to those borrowing to finance buy to let properties to create a level playing field between new owner occupiers and new landlords £2 billion, cautious estimate Tax Research LLP[x]
Demand that all tax havens in the world enter into Tax Information Exchange Agreements with the UK; Up to £4 billion Tax Research LLP, The direct tax cost of tax havens to the UK[xi]
Promote the use of new mechanisms for Automatic Information Exchange between all tax jurisdictions except those where human rights abuses are commonplace. Included in above estimate Tax  Research LLP
Possible total , but to be treated with caution as some proposals may overlap £21.9 billion  

Implementable after a period of further research

Reform the basis of tax residence in the UK so that a person with a UK passport is liable for tax on their world wide income unless they live in a state with a tax system broadly equivalent to the UK’s. Not yet clear, but maybe several billion a year  
Radically reform the way in which small companies are taxed to both simplify current arrangements and prevent abuse. This would require the income of such companies to be treated as belonging to their shareholders, unless those shareholders are not resident in the UK, so preventing tax deferral by use of corporate structures.

 

£1.2 billion Tax Research LLP, Small Company Taxation in the UK:A review in the aftermath of the ‘Arctic Systems’ Ruling

 

Green New Deal Group, The Cuts Won’t Work

Introduce a ‘Robin Hood Tax’ on all derivate, swap, bond and over the counter trading in the UK £5bn, maybe much more Robin Hood tax campaign, Budget Submission 2010
Reforming the tax relief for charities to stop abuse, increase the income of charities and to cut their administrative burden;

 

Neutral but significant admin savings

 

TUC, The Missing Billions
A ‘bank debit tax’ charging all payments from a UK bank account to tax at a tiny rate, and in the process replacing VAT, at last in part, with a more progressive tax based on a broader and therefore more progressive tax base £4.2 billion Compass, In place of Cuts
Introduce country-by-country reporting for all multinational corporations based in the UK, and demand it be introduced internationally by the International Accounting Standards Board and European Union so that multinational corporations will be required to account publicly for where they declare their profits and where they pay taxes, including full disclosure with regard to tax havens and secrecy jurisdictions. Not yet known Green New Deal Group, The Cuts Won’t Work
Introduce an empty property tax £5 billion TUC, A Socially Just Path to Economic Recovery

 



[vii] The estimate is made here. UK companies reduced their total deferred tax liabilities in 2008 by £17 billion according to international accountants Deloitte. Not all of this would relate to banks and some losses will have been sued against profits in 2009, but the estimate is considered reasonable in the light of losses sustained by Lloyds, RBS, Northern Rock and others that were covered by tax bail outs and do not need to be relieved again.

[ix] These estimates are provisional

[x] Currently unpublished research

[xi] Based on total estimated loss of £8.5 billion less estimate for that part attributable to non-domiciled people that cannot be double counted 

The Green New Deal Group are: Larry Elliott, Colin Hines, Tony Juniper, Jeremy Leggett, Caroline Lucas, Richard Murphy, Ann Pettifor, Charles Secrett and Andrew Simms