Tackle the tax gap to keep people in work

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I’ve just mentioned I spoke at the TUC this week — twice, actually.

I’ve already posted what I said the first time.

The second was unscripted — but there’s a report of it on the web site of Manchester Business School this morning — for which I am grateful. It begins:

Beyond the headlines of unions gearing up for national strikes, the real story at this week’s TUC conference was how tackling the tax gap is beginning to be seen as a credible alternative to job losses.

Surrounded by supporters in a room at the Novotel Hotel in Manchester, Richard Murphy looks every inch like the cat that got the cream. “It’s been a good day,” he says, beaming. “We knew we had a lot of support before. But now the Governor of the Bank of England agrees with us.”

The founder of the Tax Justice Network’s long-running campaign to tackle the tax gap is rapidly building momentum. Column inches are growing and media attention points to a powerful deficit reduction tool that’s starting to nibble away at the Coalition’s gloomy mantra of ‘there is no alternative’ to massive cuts.

As the report say:

Murphy cuts an unlikely trade union hero. Listed as the 25th most influential person in UK finance in the Accountancy Age Financial Power List, the bespectacled chartered accountant has a packed out audience hanging on his every word.

“Is the tax gap about job cuts?” he asks. “You bet it is. And those who think the tax gap doesn’t matter are in effect saying that it’s better for cheats and crooks to have this money than for it to be spent on health, education, pensions and to keep people in jobs.”

I’m not aware I’m a hero, and I don’t want to be one. I’m only interested in the message. And as the report notes:

There will be many more — particularly in Government — who do not like the fact it provides a narrative that challenges the inevitability of a huge cuts agenda. This is a point he makes on his blog in no uncertain terms.

“First it says there is an alternative to cuts. That’s obvious. I don’t for a moment suggest that £120 billion of tax can be collected and the tax gap closed. I live in the real world. But I do think £26 billion of outstanding debt could be reduced by £5 billion. I do think a General Anti-avoidance Provision, tackling the domicile rule, tackling residence abuse and tackling income shifting plus better rules on corporate residence could dramatically change the loss to tax avoidance and recover £8 billion a year — or one third of the tax avoidance gap. And I do think that tax evasion could be reduced by at least £7 billion a year — and probably somewhat more — if (and it’s an important if) enough resources were dedicated to the job.

“That’s up to £20 billion of additional tax available meaning a whole raft of cuts — real cuts that will impose real pain on real people and leave our economy in the doldrums of recession and massive numbers of people in the despair of poverty and unemployment — can be avoided.”

It’s a powerful message. And one that’s hard to dismiss. If, as Mervyn King suggests, the onus is on critics to come up with a better way to reduce the deficit then Murphy has found more than a credible place to start.

That’s what this is about.

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