Monday, 23 August 2010

Tax Justice not cuts injustice

There was an excellent article on Comment is Free over the weekend by LEAP contributor Richard Murphy 'Let's tackle the tax gap once and for all'.

In the article, Richard writes:

The tax gap has three parts. The first is tax avoidance, which I estimate to be about £25bn a year. This arises from the exploitation of loopholes in UK tax law and between UK tax law and that of other states – especially tax havens. The second part is tax evasion – that is breaking the law. I estimate this to be £70bn a year. HM Revenue & Customs claims it is much less, but their methodology for estimating anything but VAT evasion is very weak. Last, there is unpaid and late-paid tax – currently evaluated by HMRC to be at least £26bn.

Put these figures together and they come to more than £120bn. Enough, at least in principle, to close the whole current government deficit. Of course, no one will ever collect all tax theoretically owed – that's just not possible. Serious measures could be taken to tackle the tax gap, and yet there is no evidence that the coalition government is adopting any.

And the news has just got worse. Within 48 hours of that article being penned, it was revealed in the Mail on Sunday that the coalition government was cutting 20% of of the staff from the High Net Worth Unit – created in 2009 to achieve greater tax enforcement from the wealthy.

Tax avoidance and evasion are mostly carried out by the super-rich and big business. The appointment of billionaire tax dodger Philip Green to investigate public spending last week probably means the deficit crisis will continue to be plugged by the poorest rather than those who can afford to pay.

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