Liberal Conspiracy » The government prevented me from stopping tax avoidance.
Michael Meaacher complains he could not promote the general anti- avoidance principle I wrote for him and the Lib Dems:
The need for a general anti-tax avoidance principle (GANTIP) to be enshrined in the British finance system is now overwhelming.
The totality of tax avoided by super-rich individuals and big corporations has been estimated by independent research at some £25bn a year, and even by the Treasury at up to £13bn a year.
At a time when Alistair Darling is seeking to cut the colossal £175bn black hole in the public accounts by £50bn, ending (or very substantially reducing) tax avoidance must feature as one of the most palatable options available. Yet once again as the Finance Bill returns to the floor of the House of Commons at committee stage, the Government has introduced no such GANTIP amendment.
That is all the more surprising since, ironically, the Government has been forced to put down a new clause to block a tax avoidance device which has only come to light since the Finance Bill was published. It simply reveals that however much HMRC attempt to stop up every loophole, it is a sisyphean task since new avoidance devices will rapidly appear to replace it, and it is a never-ending process.
Why then doesn’t the Government stop it at its root?
To push this argument, I put down two months ago with the assistance of Richard Murphy, one of the country’s tax experts and a radical reformer, a new clause to be debated in the Finance Bill committee stage.
It has not however been selected by the Speaker’s office for debate on the grounds that the effect of the new clause would be to increase taxation (of course it would - that’s the whole point of it!), but the Government has taken to itself the prerogative that only itself can increase taxes, so the new clause is ruled out of order!
Absurd, eh?
PS I note this blog also suffers from the libertarians
LC is plagued by the libertarians in fact. The fact that a good chunk of them tend to routinely “do the Aaronovitch” (i.e. I’m not a Tory but on 98% they argue from the right of John redwood, especially on the economy) is particularly irritating. Keep up the good work though, Richard!
“However much HMRC attempt to stop up every loophole, it is a sisyphean task since new avoidance devices will rapidly appear to replace it, and it is a never-ending process.”
Absolutely right.
I was flicking through an old business book yesterday that said that until profits reached £54,000 it was more tax-efficient NOT to trade through a limited company.
That was obviously before the 0% rate came in – which opened the floodgates for the low-salary high-dividend route.
A classic case of the government making a rod for its own back by not thinking through all the implications of a new policy.
Would a GANTIP have stopped this?
M
I’m surprised that Meacher did not realise this from the start. Or then again, perhaps I’m not!!!
M
No – I’m afraid it would not – a GANTIP could not stop government mistake
R
Alastair
Why?
It was news to most MPs – because few try such things
More’s the pity
Richard
Why Richard? Becuase the Government has always taken the monopoly on money bills
Surprised?
Principals and MP’s don’t seem to mix well at the moment.They seem to prefer ambiguous rules set by themselves.
It should itself be required to reduce complexity, reduce cost of compliance, with simple but progressive and fair taxes.
Who knows perhaps the new government in waiting may act.