Ed Balls has written in the Huffington Post that we need action on tax reform ion five areas:
We need action in five areas:
1. Integrity of the system. We urgently need to look a how UK tax laws can be made stronger so as to properly deter tax avoidance. For example, in contrast to other OECD countries, the UK does not have specific statutory rules governing what internal documentation should be kept in relation to transfer pricing documentation - only guidance. Why should a company be able to shift profits abroad without being legally required to be able to prove it was done legitimately?
2. Tax administration and enforcement. We need to improve the capacity of HMRC and ask whether it has the resources, expertise and the right specialists in different sectors to adequately police this increasingly complex area. Deep cuts to the HMRC budget of 16.5 per cent, with an extra 10,000 staff being lost by 2015, risk being a false economy if they seriously undermine our ability to enforce the law and tackle tax avoidance.
3. Transparency. Improvements in transparency and reporting could help restore public trust and improve enforcement. Many of the recent examples that have come to light have done so without the companies themselves publishing the information, adding to the sense that there is something to hide. But equally there are many businesses who do pay a great deal of corporation tax, as well as lots of other taxes, and should be recognised for that.
4. Tax havens. We need to revive stalled efforts on an EU and international level to tackle the problems that are caused by the use of tax havens. As Ed Miliband said at the start of 2012, we need to act now and the government should not be waiting until some time next year for progress, as their current plans imply. And our own crown dependencies and overseas territories need to be more transparent - to lead the way to a proper EU regime.
5. International reform. The rules of the game are set globally and so radical reform cannot be achieved here in Britain alone. That is why we need action by members of the EU, OECD and the G20 to deliver to deliver a better, fairer and more robust system that would ensure a sustainable flow of revenues and be less susceptible to manipulation. UK Ministers should be putting tackling tax avoidance at the top of the agenda at these international meetings.
This is a complex and fast-changing area, but urgent action is needed to ensure that, while we maintain vital business investment in our economy, our tax system is fit for purpose. And as families and businesses face the consequences of further tax rises and spending cuts, ensuring that everyone pays and is seen to pay their fair share will be more important than ever.
This is a welcome step forward, and in exactly the right direction.
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Its good to see Labour edging in the right direction – I have no faith that the present government will actually deliver, but as the whole economic system staggers, there will never be a better time for major economies to come together to tackle the tax havens, wherever they are. There is a real window of opportunity over the next two or three years to achieve some real progress.
Didn’t Balls once say words to the effect that we wouldn’t want to live a country that is hard on tax avoidance? Of course this and and the recent proposal for a UK FATCA are just talk at the moment and as ever the devil is in the detail. But, very hopefully, this proves that if you bang on about something hard and long enough to enough people you can start leading the dominant discourse on any given matter, if the mood of our fellow public are behind us. Maybe people who thought I was slightly mad to go all UK Uncut on them might start listening more now?
Richard, have you come across this recent report from the National Audit Office? Here is the summary, plus my own paltry comments:
1. Part of HM Revenue & Customs’ (HMRC’s) vision is to close the tax gap, the difference between the tax that is collected and the tax that should be collected. HMRC estimated the tax gap in 2010-11 to be £32 billion, of which £5 billion was due to avoidance.
[I’m quite sure that this is a massive under-estimation of the actual scale of tax avoidance, but no matter…]
2. HMRC’s working definition of tax avoidance is ‘using the tax law to get a tax advantage that Parliament never intended’. Unlike tax evasion which involves fraud or deliberate concealment, tax avoidance is not illegal. However, it often involves contrived, artificial transactions that serve little or no purpose other than to produce a tax advantage.
[So tax avoidance is not tax evasion because it uses the law, and the loopholes it deliberately creates – to produce an unearned advantage? But surely if Parliament legislates against using different tax avoiding schemes, this means any person who chooses to engage in them will be deliberately evading tax – right? So why not simply nullify the range of tax avoiding schemes that exist and widen the current definition of tax evasion to include tax avoidance?]
3. HMRC has a strategy to prevent, detect and counteract avoidance. An important part of this strategy is a disclosure regime, known as DOTAS (Disclosure of Tax Avoidance Schemes). This regime requires those that design and sell certain types
of tax avoidance scheme (the ‘promoters’) to tell HMRC about each new scheme they introduce. HMRC issues a scheme reference number which taxpayers who have used the scheme must then record on their tax return.
[Why would the same companies that help people to hide money set out to inform government of their activities? Surely they would be losing a substantial profit if they were to tell government about the schemes that were costing the Treasury to lose revenue? Isn’t this simply another example of the same neoliberal self-regulation that caused the financial crisis of 2008? Nothing ever changes, does it?]
Source:
http://www.official-documents.gov.uk/document/hc1213/hc07/0730/0730.pdf
I commented on it on the blog last week
I think it was, not to understate it, a gift to those of us who think it is time HMRC got its act together
The people who could do this exist
Now let’s see it happen
Richard, the problem is that this article is appearing in the Huffington Post and not the mainstream media. Today’s Observer features mentions of yourself in 2 articles and a rather large article referring to the ‘conversion’ of Simon Hughes to the tax justice cause. Even Boris Johnson has spoken out about multinationals and tax , but no fightback from Labour on this. Referring to tax administration, the Labour govt. started to reduce HMRC staff, probably in the interests of cutting bureaucracy and now we face the consequences. Frankly, without contributions from yourself, the Tax Justice Network and UKUncut this whole topic would not be out in the public domain. The current crop of leading politicians at the top of the Labour Party have had a relatively easy ride in politics. They came to prominence when the Labour Party was in the ascendency. If they had been around in the 1980s and early 1990s against the then Tory govt. they would be more experienced in fighting meaningful political campaigns. As I have stated previously, managerial politics has created a generation of technocratic politicians who display no real engagement and understanding, find it difficult to relate to the electorate which seeing little difference between the two main parties is increasingly alienated. This is probably the desired objective of the elites.
Quite easy to see Ed is not serious about the topic:
“That is why we need action by members of the EU, OECD and the G20 to deliver to deliver a better, fairer and more robust system that would ensure a sustainable flow of revenues and be less susceptible to manipulation. UK Ministers should be putting tackling tax avoidance at the top of the agenda at these international meetings.”
International community you say? Give it another 10+ years then……
True enough. Balls has been in the public eye for a long time yet this small praise from him for the subject suggests he’s seeing a bandwagon beginning to roll and trying to get on it in case it ever gathers steam. He’s hedging his bets is all. The reality is he’s as neoliberal as Osborne and will be every bit as destructive if he ever claims power.
All politicians ride waves but do not start them
It’s our job to make sure it’s a big wave
Bill, I agree that Balls is a neoliberal and therefore a liability and that Miliband should replace him. Ordinary people want to know that Labour is on their side and Balls silence until now clearly shows that he was behind the curve on these issues because he is a technocratic politician who believes he can tweak the system and everything will come right. This time however, the situation is so grave that this is unlikely to happen unless an alternative narrative is adopted and I do not see Balls wanting to do this. Frankly he does not ‘sell’ a good political message. Although I personally welcome a more analytical approach from politicians, I realise from a former life as a local politician that you have to be able to translate this to the majority and unfortunately Balls seems incapable of doing this.
Teresa Harding: Unfortunately, the way that the Labour party works in opposition is that the MPs vote for who will be on the front bench team, then the leader has to assign them portfolios – rather like the European Commission. Ed Balls was probably the least worst Shadow Chancellor from the collection of bad eggs that the MPs gave Ed Miliband to choose from.
Mike
Not true these days
The leader can now appoint who s/he likes
Richard
I thought you may like to know this…..
I attended the Eastern Region Labour Party Conference this weekend, held in Norwich. Kelvin Hopkins MP mentioned “Richard Murphy is telling us that £120 bn is lost to tax avoidance and evasion” in a speech about the false choices that the present government are making with regard to the deficit.
Kelvin is a great guy and good friend
He’s making it clear that there will be no unilateral UK action and setting the bar for multilateral action so high it can’t be met. Cynical, manipulative and dishonest. Nothing has changed.