New report proposes tax-based alternative to spending cuts – and calls for massive investment in job-creation
Green Party leader Caroline Lucas MP will this week tell the coalition government there is “no good reason for any cuts in public expenditure during the life of this parliament.”
On Monday 21 June Britain’s first Green MP is to issue a new report – Cuts: the callous con trick – in which she will make the case that cuts are unnecessary “because the economy could instead be rebalanced using additional tax revenues.”
The report, written jointly with tax expert Richard Murphy and Colin Hines of Finance for the Future, condemns the government “for failing to put to the electorate the option of fair tax instead of cuts,” and accuses ministers of increasing the likelihood of a double-dip recession.
Cuts “are not an economic inevitability but an ideological choice”
Caroline Lucas said today:
“Cuts are not an economic inevitability. They are an ideological choice. Politicians of all parties are now sharpening their axes to slash public spending, forcing those on lower incomes, who depend on public services the most, to pay the highest price for the recent excesses of the bankers.
“There is a choice. We should ask those best able to pay to foot the bill through fairer taxation. That’s the challenge I’m issuing: for that political choice to be made. It must be clearly asserted that we are not all in this together: that some had more responsibility for this crisis than others, and some benefited more from the boom that preceded it. Those who enjoyed the largest benefits must pay up now. For that to happen, fair taxes, not cuts, must become the new big idea to replace today’s callous and uncaring cuts fanaticism.”
Tax avoidance and evasion “truly staggering” – could be as high as £100bn a year
The Brighton Pavilion MP continued:
“The UK is currently one of the most unequal societies in Europe. But the financial crisis offers us an opportunity to rebalance the tax system. We could do it, for example, by applying the 50% tax rate to incomes above £100,000, abolishing the upper limit for national insurance contributions, raising capital gains tax to the recipient’s highest income tax rate, and helping lower earners by reintroducing the 10% tax band.
“Moreover, the huge extent of tax avoidance, tax evasion and unpaid tax in the UK economy is truly staggering. HM Revenue & Customs themselves admit that tax evasion and avoidance together come to at least £40 billion a year, whilst in November 2009 they also admitted there was £28 billion of unpaid tax owing to them. Shocking as these numbers are, some experts have suggested that tax evasion – that’s deliberately breaking the law to not pay tax – might be as high as £70 billion a year, and tax avoidance – in other words, exploiting loopholes in tax law – might be £25 billion a year. That would take the total target for necessary action to collect tax due and owing to more than £100 billion a year”
Cut tax abuse, not tax-collectors’ jobs
Caroline Lucas continued:
“Whilst these appalling losses to the nation’s coffers are occurring, HM Revenue & Customs are pursuing a programme of job cuts which will ultimately reduce their own staff by 20,000 – close to one quarter of the total. This makes absolutely no sense. This programme should be reversed, staff re-employed, and local tax offices re-opened in order to tackle tax abuse. It has been calculated that at least £15 billion of extra tax could be collected each year as a result. That could prevent a massive range of cuts”.
Richard Murphy, tax expert, chartered accountant and co-author of the report said :
“Our report sets out a range of additional options for changing the tax rules for the UK so that more than £40 billion of additional taxes could be raised each year by the end of the life of this parliament. That, together with the tax collecting efficiency savings already noted, would together deliver more than £60 billion of tax revenues for the UK – so preventing the need for any cuts at all.”
Richard Murphy added:
“A government really can spend to save the economy when in a recession. During this one, borrowing has been smaller and unemployment lower than forecast because of the measures taken by the last government to stimulate the economy. This report argues that a Green New Deal involving public and private investment in a massive labour intensive UK wide energy saving programme and a rapid shift to renewables should be the basis for continuing that programme of support for our economy. This would ensure that we come out of the recession better equipped for the future we’re going to face.”
Caroline Lucas concluded:
“Fairer tax not cuts must become the real battleground of this new Parliament. It is the debate the Coalition and Labour alike must embrace. As the full ghastliness and unfairness of the cuts become ever clearer, the public clamour for fairer taxes rather than cuts can only grow.”
The report can be read at: http://www.financeforthefuture.com/TaxBriefing.pdf.