Labour has issued some new policy documents today. I, inevitably, followed up that on the economy and tax. In it Labour says:
The next Labour Government will take action to develop a system which is robust and effective in the modern world, which supports investment and job creation, and deals effectively with the complexities of international business. It must be fair to all and transparent, so that it can be better understood by the public. We will consider how greater transparency around revenues, profits, and taxes paid could be delivered domestically if international agreement takes time to be reached. We will also examine the international lessons on how we can improve transfer pricing rules, so that the way in which companies allocate their profits for tax purposes is fair.
“These are the tax facts Labour should stand by and they have the aim of delivering:
- A progressive tax system that is fair to all
- A level playing field for all business
- Strong support for a stable economy
- Stability in the future” Unite
I welcome the first paragraph: it signals moves that are firmly in the right direction.
I also though I recognised the second paragraph from Unite, and then realised I wrote it (page 11, here).
This statement is also welcome:
Labour supports tough penalties on tax evasion and relentless action to close down loopholes that allow people and businesses to unfairly avoid tax. The current government is failing to tackle tax avoidance and evasion, with the value of the tax gap now £35 billion.
I do not, of course, agree with that last figure, but Labour's tough stance on this issue is welcome, as is there openness to listen to the issues.
They also such a commitment to provide the resources to tackle the tax gap:
We need to ensure that HM Revenue and Customs has the right resources, expertise and specialists in different sectors
Whilst Labour has not succumbed to the prime minster's absurd claim that the UK now has no tax havens, saying:
The next Labour Government will also ensure that action to tackle tax havens and tax avoidance is top of the international agenda. This will require work at a domestic, EU and international level, including looking at Britain's Crown Dependencies and overseas territories. We will prioritise increasing transparency in the Crown Dependencies and overseas territories, including requiring UK tax havens to reveal the identity of British tax evaders. Leading by example is the best way to make the case for a proper EU regime. However, such an approach should not be at the expense of working towards international agreement on those important issues.
It is only fair to note that there has been progress on this issue under the current government: the commitment to maintain it is what is significant. The current government does already appear to have lost that commitment. It is, for example, now a major opponent of country-by-country reporting in Europe.
There is marked contrast between the parties here so I looked up Labour's policy on tax havens which is in a document called “Tax avoidance: tax havens” published by the Stability and Prosperity Policy Commission in 2013. There I found another familiar quote:
“Whilst it's true that no-one loves tax what is becoming clear is that people — not just activists, but ordinary people up and down the UK — do not like tax cheats and realise that the time has come to address the problems that they create in the UK economy. The time for a new approach to tax has arrived.”
That's also by me (page 9) and there are others from me in there too.
But what I really like is quote in there not written by me:
“There could be a ‘Gold Star' system for businesses who pay their full tax.”
Liz Tams
Is Labour backing the Fair Tax Mark?
Having said which, can I make clear I am not a member of any political party and will work with any non-racist politician on tax issues if they ask for reasonable assistance.
I was paid to write the Unite submission.
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The next Labour Government will take action as follows. We have developed a system for growth and thus job creation – which is robust and effective in the modern world. The system will support investment, and deal effectively with the complexities of international business.
It will be fair to all and transparent and thus easily understood by the general public.
Further, the lessons we have learnt re international transfer pricing provide us with all the information needed to encourage companies trading in the UK to allocate their profits for tax purposes in a way that is fair and equitable.
I don’t often say this nowadays, Richard, about anything that comes out of our mainstream political parties, but this is very encouraging stuff. However – and this is a big however – the Labour Party now need to think seriously about the changes they need to make and mechanisms they need to put in place to deliver on these commitments.
The starting point has to be a complete clear out of the Board and senior management of HMRC. I accept that some people who fall into that group may be willing and capable of working to the ethos/principles that underpin the policy outlines you note in this blog, and thus seek to proactively implement the organisational changes (to structures, processes, aims/goals, strategy, culture and so on) necessary for the speedy delivery of these policy commitments. However, all the indications are that the majority are at best, relaxed, and at worst, entirely supportive of the policies of the current government, which, as you know, run in the opposite direction to those now proposed by Labour. Consequently, nobody should have any faith in a group so tainted to proactively pursue an opposing agenda. The first move would be to appoint a person with a proven track record in speaking out against tax avoidance and evasion (perhaps you or Prem Sikka) to Chair the HMRC board.
Incidentally, this doesn’t only apply to HMRC. If anyone takes the time to study the composition of the senior management of Monitor, the NHS “regulator”, they will find it packed with market stalwarts, such that, as Private Eye reported recently, although “coordination” is also part of their regulatory remit, that is forgotten when it comes to carrying out their work. The same would apply to other regulatory bodies, policy advisory groups, and so on.
If the Labour Party is serious about refocusing and rebalancing government and public services (regardless of who the provider is) such that they serve the interests of the citizens of the UK rather than big business and the 1%, they need to recognise that policy commitments and statements are simply not enough. The organisations and people who are fit for that purpose need to exist. And after four year of ConDem government that’s patently not the case.
Ivan
As as you know, I agree
Richard
Don’t hold your breath, Ivan, re Labour-expect neo-liberalism lite- er….scrub ‘lite.’
It is notable that they say “prioritise increasing transparency in the Crown Dependencies and overseas territories, including requiring UK tax havens to reveal the identity of British tax evaders”.
With the reporting requirements of the UK’s FATCA style deal it is difficult to imagine that there will be anything left to find because funds will have gone elsewhere long before then. In fact it would be far easier for a British tax evader to hide assets in the UK because far less will be automatically reported to HMRC.
Probably true, but a belt and braces approach does no harm and this is not just about the Crown Dependencies
Will Labour reverse the ConDem reductions in corporation tax Richard? On past Labour form I think it’s unlikely; they will probably continue the status quo and keep their links with The City sweet. Have Labour said what they’ll do with extra tax revenue from anti-tax avoidance legislation, seeing as they show no sign of reversing the nation’s privatisation of ‘public’ services. As always, I’m taking everything Labour ‘say’ with a big bucket of disbelieving salt.
I will be honest and say that is the best that I think we could hope for: I do not see the Labour reversing this as yet
I think you are perhaps a bit too kind, Richard. If you read the statement closely, the commitments are very carefully worded, to avoid scaring either wealthy people or multinationals. For example, on the British tax havens it commits to requiring them to “reveal the identity of British tax evaders”. So it doesn’t extend to tax avoidance. Nor does it include evaders of other countries’ taxes. You know this is feeble and useless. On international business it only refers vaguely to improved transparency, and strengthening transfer pricing rules, and working with international organisations. I hate to say it, but I think Cameron did more as chair of the G8 last year than Labour would have done or will do. Basically, they don’t want to frighten the people with economic power.
Sol
I think your concerns fair, but it is also fair to say that the policies to which you refer were drafted ( as far as I am aware) in late 2012/early 2013 when the impact of FATCA style agreements was simply not known and certainly at the time Labour was ahead of the pack. It is true that these commitments, which have not been updated since then, leave it looking behind events. This policy does need to change to reflect current realities
Regarding transparency, Labour had a good record of commitment to country by country reporting when it was last in office: I am willing to be more believing in this case.
Richard