I have already noted Labour's press release, issued overnight, that might best be seen as the opening salvo in the tax debate that is going to run from now until the next election - and which is bound to be a key element in who might, or might not, form the next government of this country.
There is a lot to welcome in Labour's announcement. First, and perhaps foremost, the fact that there has been an announcement is in itself significant. It is the clearest indication that Labour is moving on from what, for many, has been a frustrating period when saying precisely what it might be about on such key issues has been hard for many. There are commitments in this announcement, and that is welcome.
Secondly, and many will be disappointed by this, there is no indication as yet (although there might be on Monday when Ed Balls makes the speech that this announcement precedes) on such key issues as tax rates, the approach to redistribution, how fairness will be hardwired into the system, and, perhaps, how tax and benefits will interface. But if none of those things happen yet, then I have sympathy for Labour. If I was in office I would not want to say them either: announcing budget decisions in advance simply encourages tax evasion, as was seen when the 50p tax rate was announced to early. Caution on these issues is required. If that is frustrating, so be it: politics is all about the art of timing, and the 2015 budget cannot be announced now.
What we have got today is, however, something which may be at least as significant, which are statements that give a clear indication of how Labour is thinking on tax. As a tax campaigner I welcome this list. I should also be candid: in one or two respects, I think I recognise my influence on this list: it is hard for me to complain about that.
The devil, though, is always in the detail in such announcements but on this occasion I see more to celebrate, than to worry about. Let me give some examples.
The announcement on Eurobonds looks technical, but its more than that. It is aimed at City shenanigans where this abuse is popular and widely used to shift profits offshore. The message has more in it than the apparent simple desire to close a loophole: it says financial engineering is now considered fair game to be controlled. This has much wider implications.
The commitment on tax transparency is also much deeper than it might appear to be from the announcement made. There is a commitment to a register of beneficial ownership of companies, and a threat to impose this on our tax havens if they do not willingly comply. That's the language many have been looking for. There's a also a demand that company's publish details of what tax they pay. This looks very like a commitment to country-by-country reporting whether other countries demand it or not. That is , something I have long advocated.
The announcement of better regulation of dormant companies is for me particularly welcome. It adopts a proposal I have made most recently in my report 'In the Shade', published last month. It also lifts the idea almost straight from the Private Member's Bill I wrote for Michael Meacher in 2013. I believe that the ease with which these companies can be abused is giving rise to substantial tax losses. This proposal says that Labour is not just willing to talk about tax avoidance, but tax evasion as well. For too long politicians have ducked that issue.
As they have also ducked the Tax Gap until now. Margaret Hodge has done great work picking this issue up, again, I admit, building at least in part on my work. Labour has now said this will become a key issue at the heart of its policy. That's very welcome indeed, as its commitment, also following Margaret Hodge's lead, to look at how tax allowances are being used to help tax avoidance. This is neat thinking: tax abuse is not just offshore, it can happen at home too. This policy is saying that's fair game for review too. When Labour is opposing a government who seems to think tax giveaways for big business are core to its thinking that is a key differentiator.
The commentary on international tax developments is good too. The OECD has to deliver on its Base Erosion and Profits Shifting project. Labour offers clear support for that process but at the same time says it is not going far enough by highlighting the fact that this is no time to backtrack on any commitment and is instead the time to redouble and extend efforts to create a level playing field on which the multinational corporations of the world can play, with fair competition the goal. The nuance in the announcement is subtle, but important and essential, especially when it comes to developing countries who have always been at the forefront of the tax justice concern.
So why then pick on abuse in the construction industry? I think that here the message is threefold. First, this is joined up thinking. Labour intends to build houses: it does not want the money spent lost on tax abuse. Second, it says it is not just big company abuse that is in the sight lines; so too is common spread mispractice. And lastly, the message is that Labour is aware of such detail. That in itself sends out important messages relating to competence.
So, I welcome the announcement, and the detail, but the question to always be asked on such occasions is what is missing. I have a list, because I'm never going to be entirely happy with all any politician will give me. This was an initial reaction:
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Richard-I see a grave problem with number 8 on your list which carries a civil liberties issue and could affect some of the poorest in our communities. There will be many people on, say, JSA who , now and again, might earn a little money ‘on the side’ in order to make ends meet. You are talking about food on the table here. Yes, this is strictly illegal but in the context of benefits that are nigh impossible to live off and where, for many, jobs are impossible to find. I can foresee that your suggestion might impact on these people FIRST.
I am sorry
I do not condone law breaking
I personally don’t think 8 would have any effect on those unemployed getting a bit of cash in hand work as they’d be mad to put it through the bank anyway (with DWP having power to view bank accounts). But it would flag up those on ZHC/MHC and the cyclical unemployed (seasonal workers/temps). But even then if it’s just for investigative means, then even that shouldn’t be a problem apart from the inevstigation itself and some aggro for the person involved
You might know your stuff when it comes to taxation and accounting – but you’d be well advised to get someone who was actually literate to check your writing before you post …
I am aware I am not the best proof reader
But if I followed up on your suggestion a) who would pay and b) what loss of immediacy would there be?
The trade offs are significant
This is not meant to be high literature – it’s a Maeve stream of consciousness. Literary merit is for other work. Sometimes I approach it. But not often
It’s not that you’re not the best proofreader: it’s that you’re an appalling writer. As I intimated: you have great ideas on progressive taxation issues, but you can’t translate them into policy if you can’t write above high school level.
Here’s an offer: I’ll edit a few of your posts *gratis* (on an ad hoc basis) if you send them to me. Can’t guarantee a turnaround time: but days, not weeks – if you’re dealing with the glacial pace of taxation policy I highly doubt you need your blog posts to be edited instantly.
I find your observation amusing for three reasons,
Firstly, if I am, as you say, an appalling writer it is odd that I have a major literary agent now wanting to work with me.
Second, it is even stranger that I have four major publishers bidding for my next book, all of whom are adamant that I must write it in the style that I use here. I tried to use a more edited and formal approach and they did not want it.
And third, it is very apparent that you entirely miss the point with regard to blogs: the turn round time for the average blog is, maybe, 15 minutes. Many are less. That is precisely why this blog works as it does and is read by about 5,000 people a day, at present, on average.
So thanks for the offer, I appreciate it, but won’t be taking it up.
Unfortuantely no mention of Land Value Taxation either by your good self or Labour, clearly the fairest way to increase taxes on wealthy with no downsides at all. When will someone be brave enough to do this?
Labour is sticking to the mansion tax
I only offer ideas
I do not influence choices
When Labour were in government we (Labour Land Campaign officers) had meetings with many treasury officers, including the number 2 chief secretaries and Ed Miliband when he was chair of the Treasury Advisers. Since they have been in opposition they have kept us at arm’s length. My latest attempt to get a meeting with Chris Leslie (when he was still no. 3 last year) eventually led to the offer of a talk with the SPAD of the lowest member of the Shadow Treasury team. I have declined to accept. I have a well research paper which would show them how to introduce LVT without adversely affecting ordinary folks which I would like to share with them.
My fear is that whoever is elected in 2005 will have to deal with Council Tax and all they will do is tinker with further bands and spend so much on a complete revaluation that the whole subject will then be kicked into the long grass for another 25 years. Council Tax was cobbled together with no intelligent thought when riots forced the abolition of the Poll Tax. If they had reverted to the far superior old domestic rating system we wouldn’t be in the mess we are today with housing.
Oh, and Richard does support the replacement of Council Tax with LVT, as he showed in his CLASS thinkpiece on the subject a couple of years ago.
Earning money while receiving JSA is legal, as long as the amount is declared.
That last bit is the vital element