Ideas for electability: A hard-line on tax avoidance and evasion

By Darrell Goodliffe

This is one of those things that politicians of all shades talk tough on without much meaningful action. Charitably you could say that’s partly due to the complexities of doing it and the fact that actually doing something to combat both requires a strong multi-layered and internationalist approach. Less than charitably you might argue it’s because politicians of all parties find it easier to hammer people on benefits than people who have lots of money. I know which one my money is on but will let the reader decide for themselves how cynical or optimistic about the ‘fairness’ of our politicians they want to be.

Vodaphone’s adventures in the tax haven of Luxembourg have put this issue back on the agenda as have the subsequent protests against the mobile phone giant. In addition to the direct action protests, customers seem to be protesting in one of the most effective ways you can as a consumer – by moving their money elsewhere and cancelling their contracts. Incidentally, those who think this is ‘Private Eye tittle-tattle’ should read this piece on This is Money; a website I believe unlikely to have much truck with ‘urban myths’. Combating the likes of Vodaphone is something that is definately worth doing when you consider the cost of avoidance and evasion together is estimated to be as high as £40 billion (see here for avoidance and here for evasion).

We need to challenge the argument that avoidance is acceptable because it happens to be legal. I wonder if somebody happened to escape conviction for a serious crime through a legal loophole the right-wing press and MPs of any stripe would shrug their shoulders and publicly say ‘you played the system and got away with it, well done’? In legitimising and ignoring avoidance that is exactly what is being done. Plenty of options exist that are immediately actionable by a domestic government. For example, one sensible and immediate measure to combat the twin evils of avoidance and evasion would be to reverse the cuts made to staff at HM Revenue & Customs which beggar belief from a government that is supposedly so serious about this issue. Another cheap, cheerful and simple measure would be the abolition of the domicile rule. Various proposals exist for the reform of the domestic tax system which would bring those missing tax billions back into the public purse, all of which are totally actionable.

However, this is about more than a sterile debate over how to maximise the efficiency of our tax system. For us, it should be about our values and ending a situation where those at the top of society simply get away with not paying their fair share by the very virtue of that position. Electorally, if we could show we were serious about doing this I have no doubt that it would be popular with the voters as well. So, that’s a win-win situation then? What are you waiting for Ed?