Balls announces 10 point plan to tackle £7.5 billion of tax avoidance

Tax avoidance has always ranked amongst the most important issues for LabourList readers – and Ed Balls has just announced that a Labour government would launch a massive and immediate crackdown on tax avoidance, aimed at cutting it by at least £7.5 billion by the middle of the next parliament. Speaking to the Observer, Ed Balls said:

“We will close loopholes the Tories won’t act on, increase transparency, toughen penalties and abolish the non-dom rules. And our first budget will make sure that following an immediate review of HMRC, it has the powers and resources it needs to come down hard on tax avoidance and evasion.”

“The Tories have spent the last week explaining why they won’t tackle tax avoidance and defending the non-dom loophole. They just don’t understand that when working people are paying more in tax it’s a scandal that some people can get away with not paying their fair share.”

Balls has given the HMRC and the Treasury warning that on the first day of a Labour government there must be:

• A draft Finance Bill – specifically an Anti-Tax Avoidance Bill – delivering the legislation needed for the measures set out in Labour’s ten point plan to tackle tax avoidance and evasion;
• An HMRC on all current measures and processes for tackling tax avoidance and evasion – allowing for an immediate start on the crackdown
• Balls will also ask the Bank of England to focus on “risks from the informal economy, including avoidance, evasion and the tax gap”

Both the Chancellor and Chief Executive of HMRC will also have to present an annual report to Parliament, and give evidence to the Treasury Select Committee, on the government’s progress in tackling tax avoidance and evasion. The money raised will be spent on eliminating the bedroom tax, the NHS and cutting tuition fees – with any additional funds spent on deficit reduction.

Here’s Labour’s Ten Point Plan to Tackle Tax Avoidance in full:

1. Abolish the non-dom rules so that wealthy people are not able to use loopholes to avoid paying tax like the rest of us, while introducing a temporary residence rule for those genuinely in the UK for a short period of time, such as university students.
2. Re-write the rules which allow private equity managers to get away with paying less tax than ordinary working people even when they have not been investing their own money
3. Close loopholes used by hedge funds to avoid stamp duty
4. Force the UK’s Overseas Territories and Crown Dependencies to produce publicly available registries of beneficial ownership
5. Increase penalties for tax avoidance including new penalties for those who are caught by the General Anti-Abuse Rule
6. Close loopholes like the Eurobonds loophole which allow some large companies to move profits out of the UK and avoid Corporation Tax
7. Scrap the “Shares for Rights” scheme, which the OBR has warned could enable avoidance and cost £1bn
8. Tackle disguised self-employment by introducing strict deeming criteria
9. Tackle the use of dormant companies to avoid tax by requiring them to report more frequently
10. Make country-by-country reporting information publicly available