Tax Dodging – actions taken in government

JB with VC 241112

I’ve had a lot of correspondence about Tax Dodging and thought it might be helpful to share my response more widely.

Letter to constituents:

The vast majority of people and businesses in the UK pay their taxes on time and in full, but there are always some who try to get away without paying their fair share. This is morally wrong and damages our economy and public finances. I have voiced my feelings on these matters on my website, here: https://judithbunting.co.uk/2015/02/13/taxation-is-payment-for-services-rendered and here: https://judithbunting.co.uk/2014/12/03/its-paying-tax-that-is-the-moral-duty/.
In government, the Liberal Democrat Chief Secretary to the Treasury, Danny Alexander, and Vince Cable in BIS have been tackling tax avoidance as a top priority. They have made progress on many of the issues you raise. Since coming into Government in 2010 he has led a crackdown on tax avoidance and evasion that is closing loopholes and making more people pay up. I remember hearing Vince Cable talking about his determination to close loop holes in 2010 and am really pleased that he’s been able to follow through on many levels. The changes made include: 
  • the introduction of a General Anti-Abuse Rule (GAAR), which goes much further than the current anti-abuse rule and is well on the way to being the kind of Tax Dodging Bill you are after;
  • strengthening the Disclosure of Tax Avoidance Schemes (DOTAS) regime; 
  • introducing a tougher monitoring regime and penalties for high-risk promoters of tax avoidance schemes; 
  • investing almost £1bn in HMRC to tackle tax avoidance and giving them the power to collect disputed tax bills up front (thus removing the incentive for tax avoiders to delay and frustrate HMRC’s efforts to settle disputes) 
  • recruiting 2,500 extra members of staff to work on tackling tax avoidance 
  • opening a new Large Business Directorate last year to deal specifically with the tax affairs of the 2,100 largest firms in the UK. 
  • There is clearly much more to do at home and abroad, but I am proud of the work that Liberal Democrats have done in Government to close loopholes and force tax cheats to pay more of their fair share. Thanks to the steps we have taken, the tax yield for this year, alone, will be around £9bn more than when we came into Government in 2010. 
Our party is determined not to let up in the fight against tax cheats. If we are in Government again our aim is to make progress on this agenda in every Budget and every Autumn Statement of the next Parliament.
We will continue to invest in HMRC, as we have done in Government, to enable them to do more to tackle tax evasion and avoidance. We will also introduce a range of other measures, including a General Anti-Avoidance Rule, which goes even further than the current anti-abuse rule. 
 
I understand the Government has also taken specific action to get back money lost in Swiss bank accounts. HMRC is working systematically worked through all the HSBC data that it has received and has so far brought in more than £135m in tax, interest and penalties from tax evaders who hid assets in Swiss HSBC accounts. 
It’s not enough, though. We need a shift in society to see taxes as payment for services rendered, rather than some kind of penalty. Do please pass that message on to your friends and neighbours. 

 

Britain is a Better Place

IMG_0801

 Sharing a drink with Albert Tillen, at The Red House in Newbury 

 

This seems like the ideal time to share my favourite list – Liberal Democrat policies included in our 2010 Manifesto, which have been delivered by our team in Government.

The list includes some of the most socially democratic policies this country has seen for a generation – achievements which, for all the obvious reasons, do not get the press they deserve.

Please share this list with your family and friends. Let them know that while the Tories and Labour have been bickering away in PMQs, our team has been calmly getting on with the job. Britain is a better place for having Lib Dems in government:

  • Investing nearly £1 billion to crack down on tax avoidance, raising an extra £9 billion per year by 2015
  • Providing £400 million to give respite breaks to carers who work over 50 hours a week
  • Delivered on the key Lib Dem pledge of a £2.5bn Pupil Premium to bring extra funding to disadvantaged students. Its rate has now been increased further and is £1,300 per eligible pupil in primary schools and £935 per eligible pupil in secondary schools in 2014-15
  • Increase Capital Gains Tax to 28% for higher rate taxpayers whilst keeping it at 18% for basic rate taxpayers
  • Delivering an £800 tax cut to 25.4 million people by raising the income tax threshold to £10,500 in 2015, with 3.2 million low paid people being taken out of having to pay income tax at all
  • Creating a new, simple single state pension – a Citizen’s Pension – set above the basic means test level
  • Restored the link between pensions and earnings, which had been scrapped by Margaret Thatcher
  • Reinvigorating Britain’s Apprenticeship programme
  • Phased out the compulsory retirement age
  • Investing around £400 million to make psychological therapies available for those who need them, including for the first time children and adolescents (England)
  • Increased funding for dementia research by 150%, reaching £66.3 million by 2014-15 (England & Wales)
  • Ensured the Government maintained the commitment to end child poverty by 2020
  • Banned private sector wheel-clamping to put an end to rogue clampers (England & Wales)
  • Scrapped the expensive and impractical ID cards programme
  • Mapped out the Government’s path to renewable energy to 2050, including massive investment in low carbon electricity
  • Banned new coal-fired power stations that don’t have Carbon Capture and Storage technology
  • Ensured the overseas aid budget was protected from cuts – and hit the international 0.7% of GDP target from 2013
  • Planted 1 million trees in England, the first government tree planting programme since the 1970s
  • Doubled Britain’s production of renewable energy
  • Created a Green Investment Bank, triggering an extra £15 billion of investment in green infrastructure by 2014-15
  • Introduced the Green Deal, letting people pay for energy efficient home improvements with the savings on their energy bills
  • Scrapped burdensome Home Information Packs and improved energy performance certificates to make them more user-friendly (England & Wales)
  • Improved our libel laws, including making it harder for companies to silence their critics and improving freedom for academics to publish their research (England & Wales)
  • Strengthened freedom of speech by removing the offence for using ‘insulting’ language from Section 5 of the Public Order Act
  • Secured a judicial inquiry into Britain’s role in torture and rendition
  • End the routine detention of children for immigration purposes
  • Removed innocent people’s DNA from the police database (England & Wales)
  • Vetoed the Snooper’s Charter plans to monitor everyone’s online activity
  • Ensured there is no replacement of the costly Trident nuclear weapons system this Parliament
  • Ended the rule forcing people to buy a pension annuity at 75
  • Taking 3.2 million low earners out of income tax altogether through the key Lib Dem policy of raising the basic income tax threshold
  • Established the Equitable Life Payment Scheme and begun payments to people who lost their money, ending years of stalling under Labour
  • Agreed to the Vickers Report recommendation to separate retail and investment banking
  • Introduced a banking levy so the banks pay a their fair share of tax

 

If you would like to join my campaign to represent Newbury and West Berkshire, please do contact me on judith.bunting@wbld.org.uk.  

 

 

 

Taxation is payment for services rendered

Screen Shot 2015-02-13 at 17.23.57

The government’s own estimate for the tax gap in 2012/13 was £34bn. At an est £21m per school, that could pay for 1,619 schools. In the past year or so, the government has cut the money allocated to each new school-build by 1/3 to £14m. There is not enough money to go round.

Listening to the debates around the recent HSBC revelations, I find myself wondering whether HSBC and their clients, financially switched on though they undoubtedly are, actually understand tax. Using tax-free savings accounts for yourself and your children, no problem. Claiming tax relief for business costs and expenses, absolutely fine. Gift aid for charitable donations, great stuff. Exploiting the system with the sole aim of ‘beating the tax man’, however, as advertised by multiple pages in the Telegraph and Times (just try searching on Google), is fundamentally to miss the point.

Taxation is payment for services rendered by the state.

Stanley Fink (he of the HSBC ‘vanilla’ debate) is a director of the events company Key-2 Luxury Ltd. On their website, Key-2’s stated business is to promote ‘partner brands’ to ‘high-net-worth clients’: “Key-2 Luxury partners include acclaimed hotels, restaurants, bars, clubs and the purveyors of the finest goods, services, entertainment and travel“. I respectfully suggest that the staff and patrons of the partner hotels, bars and clubs that Key-2 charge richly, I am sure, for their services, arrive on roads built by the state. Many staff and customers will have been educated in state schools and probably also stay healthy with the aid of a fine state-funded health service. Fink is another son of a grocer, for goodness sake. Does he not understand the importance of settling bills, vanilla or otherwise?

If you happen to be h-n-w, by the way, well done you. Us Lib Dems are the party of aspiration and opportunity for all and I will always stick up for people being able to enjoy the fruits of their labour and personal inspiration. If the UK were not blessed with a healthy, educated, curious, employable, mobile population, to provide customers and staff to Google, Key-2 Luxury, Amazon, Starbucks, Tate and Lyle and the rest, these businesses would collapse on the spot.

Eric Schmidt said he has ‘a fiduciary responsibility to our shareholders’ that prevents Google from paying more tax than the barest legal minimum. He is wrong. Shareholders and directors have a fiduciary responsibility to ensure any company pays its share of services which are rendered by the state. As do they themselves. And the clients of HSBC. And the rest of us. 

Tax is a good, fine and reasonable business expense.

According to Tax Research UK, the UK tax gap for 2013/14 stands at £119billion. That’s an awful lot of schools and hospitals.

References:

It’s paying tax that is the moral duty

IMG_1827

Today’s build up to the Autumn statement reminded me of David Cameron saying earlier this year that “cutting taxes is a moral duty”. When I think about that my blood runs ever so slightly cold.

How can this be right when every individual and business in the UK benefits from our state system? Should every individual and company not pay their bit towards the state education, NHS, good roads, infrastructure and social care that underpins the system in which they operate?

If you’re reading this thinking about school fees and BUPA payments, well, I’m genuinely pleased things are working out for you. Whether you are an employee or boss, however, your business would not have grown and will not survive without a well-educated, healthy, employable, mobile British society.

How does the barista get to work? Where did the coder learn his stuff? How does the latte drinker afford that extra shot? How would Google operate in the UK if we weren’t blessed with a generally educated, curious, social population, that can afford to buy computers? The common good really does benefit everyone. Paying for it, through taxation, is a good, sound and reasonable business expense.

According to government figures, the tax gap in the UK for 2012/13 is £34billion. For 2011/12 it was £35bn. For 2010/11 it was £32bn (see links below). That’s a lot of schools and roads.

I don’t call for crazy levels of taxation. Legitimate business expenses should be tax deductible. I’m glad the Liberal Democrats raised tax thresholds at the lower end of the scale. I have nothing against profit, per se. Tax avoidance however, whether it’s VAT, excise, income or corporation tax, will bring the whole tower down.

Eric Schmidt said last year that he has ‘a fiduciary responsibility to our shareholders’ that prevents the company from paying more tax abroad. I respectfully suggest Google shareholders – and others also – have a fiduciary responsibility to ensure their company pays for services rendered by the state, in any country in which it operates. 

Let’s have a shift in perspective. Forget Cameron. Paying taxes is the moral thing to do.

And if you pay yours already – good on you. You are doing the right thing.

References: