Labour to SPEND £5 Billion to Combat Tax Evasion

Labour has unveiled a comprehensive tax reform agenda, led by an expert panel. The agenda aims to recover £5 billion annually through a crackdown on avoidance while modernising HMRC. Here’s the full story.

Perilous Financial Situation

The UK is currently in a dangerous financial state. A cost-of-living crisis is affecting families up and down the country, inflation remains stubbornly high, and the country is officially back in a recession. 

Gaping Hole

The difficult financial situation has squeezed living standards, but the last decade of Conservative tax cuts, usually for the wealthy, has also left a gaping hole in the public finances. 

Funding Shortfall

Thanks to this shortfall, public services are now at breaking point, with many people unable to see a GP or a dentist or receive help from the state they are both entitled to and desperately need. 

Repair Plan

With their gaze firmly locked on the election, widely expected to be in the autumn, Labour has recently announced its plan to try to repair the public finances without putting too much stress on households already feeling the pinch. 

Panel of Experts

Labour has assembled a panel of experts to combat tax avoidance and modernise the tax system. The party, which is widely expected to win the upcoming election, hopes that this plan will generate over £5 billion annually from a crackdown on tax dodgers. 

Tax Dodgers

The vast majority of them are wealthy multinational companies and ultra-high-wealth individuals with access to expensive accountants and tax lawyers. 

“Eye-Watering” Sums

Labour’s Shadow Financial Secretary, James Murray, stressed the necessity of addressing tax avoidance, as the current government has failed to pursue an “eye-watering” amount of tax that it is owed. 

Tax Giveaways

With the current government giving out tax cuts to try to stem the rapid loss of its vote share as the election approaches, there has been a sizeable hole left in the public coffers, which Labour was relying on to support vital public services like the NHS and schools, should they be elected. 

Tax Experts

Labour’s new panel of experts consists of seasoned professionals with diverse tax policy and administration expertise. 

Tax Simplification

Sir Edward Troup, formerly a Treasury special adviser on tax and head of HMRC, will join the panel alongside Bill Dodwell, previously the tax director of the Office for Tax Simplification and a retired senior accountant at Deloitte.

Public Accounts Committee Chair

The four-person group comprises Labour MP Dame Margaret Hodge, former chair of parliament’s public accounts committee, and Mike Bracken, founding partner at the consultancy Public Digital and founder and former executive director of the UK Government Digital Service.

Progressive Tax Reform

Their collective experience is hoped to provide Labour with progressive tax reforms and ideas for modernising HMRC, which could help ensure adequate funding for Labour’s ambitious spending plans. 

Important Work

Murray stated, “I am grateful to the panel for agreeing to support us with this incredibly important piece of work.”

Tighter Regulations

Shadow Chancellor Rachel Reeves outlined Labour’s strategy, which would involve tighter regulations on non-domiciled taxpayers and significant investments in HMRC to bolster its capacity to recover unpaid taxes.

“Disappointing”

However, the lawyers and accountants who represent these incredibly wealthy non-doms, who can exploit their status as non-residents of the country to avoid paying any tax on foreign sources of income, were up in arms following the move, which they described as “disappointing.”

“Squeeze Out Every Last Drop”

One such lawyer, Sophie Dworetzsky, told the Guardian, “These measures feel like trying to squeeze out every last drop until there’s nothing left. The UK operates in an environment of tax competition, and if the UK makes itself yet more unattractive from a tax point of view, we could lose out to other countries, such as Italy, which have more favourable tax regimes.”

Faint Hope

She added, “One can but hope this is realised before any legislation is implemented.”

£3.2 Billion

Despite the crocodile tears being shed for some of the country’s richest people, a recent study by the University of Warwick and the London School of Economics and Political Science (LSE) found that getting rid of the non-dom scheme could raise over £3.2bn in annual tax revenue each year.

0.3% Affected

Despite Dworetzsky’s claims that the UK would lose these ultra-high-wealth individuals to other countries, the same research, which relies on HMRC filings, found that “only 0.3% of those affected would leave the country (fewer than 100 people), most of whom are paying hardly any tax under the current regime.”

“Same Old Labour”

Despite this, Conservatives like Nigel Huddleston were quick to lambast the tax plans as “the same old Labour policies of higher spending, higher borrowing and higher taxes.”

Rapid Decline

Though the parties may disagree on the best way to address the public finances crisis, it is clear that, without sufficient funding, the services vital to a functioning society are unravelling. 

Loophole Hunt

It makes sense that those with the broadest shoulders should take on the greatest burden instead of letting ordinary citizens pay their taxes, while those rich enough to employ people to find loopholes avoid them.

More Articles Like This…

Broken Britain: 12 Reasons Behind the UK’s Decline

Say the Unsayable: 10 Occasions When Farage Spoke His Mind About Britain

The post Labour to SPEND £5 Billion to Combat Tax Dodging first appeared on Edge Media.

Featured Image Credit: Shutterstock / Claudio Divizia.