I note the Telegraph is reporting that Tories are now doubting HMRC’s tax gap data:
Michael Fallon, a senior member of the Commons’ Treasury Select Committee, questioned how HMRC could be certain of its figures.
He said: “How can we sure ? If they can’t get lawful tax right, how can they measure what they can’t count?
“This shows how HMRC needs to raise its game and casts serious doubt on past ‘efficiency savings’ by HMRC.”
David Gauke, Exchequer Secretary to the Treasury, said: “The tax gap number is staggering.
“This Government is committed to taking the necessary action to bring it down - taking steps to reduce tax avoidance and evasion, including by the richest people in our society, so that everyone pays their fair share and we reduce the tax gap over the coming years.”
Three welcome things.
First the doubt is now real.
Second the demand for better numbers will follow.
Third, action has to follow.
And that’s what I want. So I won’t complain IF it happens.
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1. Is there any evidence that the tax gap in relative terms is bigger than it has been in the past?
2. If it is as easy as you make it sound why has no government been able to close the “gap” in the last hundred years? Or do you seriously think that the tax gap is modern phenomenon?
3. If there was a tax gap in recent years then why didn’t the government clamp down on anti-avoidance instead of putting up taxes?
4. If the tax gap has increased in recent years then presumably you are admitting there is a Laffer curve effect here since taxes have gone up in the same period.
5. Do you seriously think that governments expect to collect every last penny of the official tax rate multiplied by gross income, or do you think the authorities set the rates of tax slightly higher in the knowledge there’s always going to be some tax which is irrecoverable?
Interestingly, Danny Alexander is making noises about tackling tax evasion in The Guardian today. It looks like this might feature heavily at the Lib Dems conference.
See these two paragraphs from Patrick Wintour’s piece. Will this put the Lib Dems on a collision course with the Tories I wonder? The full article is here: http://www.guardian.co.uk/politics/2010/sep/17/danny-alexander-public-finances-interview
To get on the front foot Lib Dems are likely to announce action on tax avoidance. “It’s very important that we identify [ways] to lower that tax gap to make sure that everyone meets their obligation to pay tax. That has to be part of the equation. I’m not going to comment on this, but all I will say is that I agree with you it is essential everyone pays taxes.”
But is it a lifestyle choice, just as benefit scrounging has been retitled a lifestyle choice? “I go back to what I said, people should pay their fair share of taxation.”
Oops I missed this.
http://www.guardian.co.uk/society/2010/sep/17/liberal-democrats-clampdown-tax-avoidance
What do you think Richard? Is Vince forgiven?
@Matt
Sounds like Vince has forgotten what I told him!
@Andrew Ward
a) Yes – it is growing – although I have not inflation adjusted their data – largely as I think it wrong. But the VAT gap is very high this year in % terms
b) They did not issue comprehensive data until 2009, and then only because I was – so they weren’t trying
c) Which taxes have gone up, bar NIC?
d) No of course I don’t think all tax is recoverable – but nor do I think your question in any way logical – and I have dealt with this already on this site
c)