Tax justice undermined by cuts

As Margaret Hodge MP, chair of the Commons Public Accounts Committee, recently pointed out, the UK is at bottom of OECD league table when it comes to tax take.

Hodge specifically took aim at the government: describing the tax system for corporations and the super-rich as "increasingly voluntary".

She said there was a "growing gap between rhetoric and reality" from this government (we've pointed out there are several reasons why you shouldn't take this government seriously on tax justice).

And the HMRC's own half-year report should give further cause for concern - highlighting the impact of staff cuts. Their target is to 'clear' 80% of post within 15 working days. They achieved only 77%. This may not seem like much of a failure until you find the reason: "the deployment of teams from post to phone lines during peak periods of customer demand".

So how did call handling get on? They answered only 72.7% of calls, far short of their 90% target. If self-employed people, small and medium sized businesses don't get their inquiries, requests and queries answered - and answered satisfactorily - are they more or less likely to comply correctly with their tax obligations? And if the message is sent that the department is under-resourced, will wealthy individuals and big business be more or less likely to attempt to dodge their taxes?

It's not just the HMRC's call and post handling that is struggling. Last week it was announced that 1,500 staff in personal taxes and compliance and 480 in debt management are being targeted for a voluntary exit scheme to cut staff costs. These are the staff who collectively bring in billions of pounds of taxes - which fund public services.

As the PCS graphic shows, HMRC is suffering massive staffing cuts - with the latest tranche announced just this week with 3,000 staff brought in to cover short-staffing in the firing line. Since 2005, 34,000 jobs have gone from HMRC and another 10,000 are planned by 2015 under the government's spending cuts.

What's clear is that if we are serious about tax justice, then a big part of that campaign must be to ensure that HMRC has the staff required to take on the £75 billion of tax evasion, £25 billion of tax avoidance and over £20 billion in uncollected taxes.

The tax dodging of Amazon, Starbucks, Google, Boots and others has rightly come unders scrutiny. But there also needs to be rigorous scrutiny about the political undermining of our tax revenue collection system.

Tax Justice - Are you serious?

An event jointly organised by Action Aid, Christian Aid, Oxfam, Tax Justice Network, War on Want. 

Monday, 25 November 2013 from 10:30 to 17:00 
London, United Kingdom
Get tickets / register online

With a great line up of speakers and panellists this promises to be a day that will make you think seriously about tax justice.

Speakers and panellists include:

Margaret Hodge MP - Chair of the UK Public Accounts Committee
Richard Brooks - Private Eye,
Andrew Masiye - Activista Zambia,
John Christensen - Tax Justice Network,
Alex Cobham - Centre for Global Development,
Rosa Curling - Leigh Day,
Tim Dixon - Purpose,
Martin Drewry - Health Poverty Action,
Rich Hawkins - PIRC,
John Hilary - War on Want,
David Hillman - Robin Hood Tax Campaign,
Polly Jones - World Development Movement,
Government of Jersey representative,
David McNair - Save the Children,
Richard Murphy - Tax Research UK,
Louise Rouse - Share Action,
Professor Prem Sikka - University of Essex,
Michelle Stanistreet - National Union of Journalists


This past year has seen a momentous shift in public and political perception of the issue of tax fairness.

Tax, who pays it and who doesn’t, has come to be the social and economic issue of the moment. And with good reason. Tax dodging is now a scandal in the minds of the public and politicians alike:

"Individuals and businesses must pay their fair share" David Cameron in his speech to the World Economic Forum in Davos in January this year.

Having already had huge tranches of public money shifted from public goods and services to bail out banks guilty of reckless lending; people have witnessed exposé after exposé of large multinationals and wealthy individuals refusing to pay back into the common weal and scorning their basic civic duty to pay a fair share of tax. People across the globe find themselves trapped in poverty while rich multinationals and individuals get away with not paying what they owe.

People are angry - it’s time to build on this anger. 

In the past month a number of organisations and individuals have been discussing how we can convert the peaks of media and public outrage at tax avoidance into a strong, grassroots and citizen-led movement call for tax justice that this and future Governments cannot ignore.

This event is an opportunity to join with other organisations, activists and thinkers, to hear from tax justice pioneers and critics, and to ask the hard questions and debate the tough issues.
Join us for the Tax dodging ‘Tax Justice – Are you serious?’ forum.

If you intend to join us for the UK Gold screening & panel discussion at 6.30 please do confirm your tickets for the film here.


See also:

• Tax justice - exposing the multi-billion fraud 
• Tax justice becomes a movement
• Mervyn King backs the tax justice campaign?
• 5 reasons why you can't take the government seriously on tax justice 

Read a report of the conference here (via In particular order)

MPs expose tax firms' 'inside track' on loopholes

MPs and unions today fiercely criticised an "unhealthily cosy relationship" between the Treasury and big accountancy firms that enables wealthy people and companies to avoid paying tax.

The public accounts committee said that it was "very concerned" at the way the "big four" accountancy firms - Deloitte, Ernst & Young, KPMG and PwC - were able to exploit loopholes in the tax laws.

It noted that staff were regularly seconded from these accountancy firms to advise the Treasury on technical issues when drafting legislation, only to return to advise clients on how to use those laws to avoid tax.

This "insider knowledge" on changes to Britain's tax laws enables them to identify loopholes in legislation quickly, the committee said.

Committee chairwoman Margaret Hodge said the practice represented a "ridiculous conflict of interest" which should be banned.

"The large accountancy firms are in a powerful position in the tax world and have an unhealthily cosy relationship with government," she said.

She warned that HM Revenue & Customs was engaged in a "battle it cannot win" in seeking to stem the losses to the exchequer from tax avoidance.

It had far fewer resources than the big four firms which employ almost 9,000 staff and earn over £2 billion a year from their tax work in Britain.

Left Economics Advisory Panel co-ordinator Andrew Fisher called for an end to the "revolving door between HM Treasury and the tax avoidance industry.

"At a time when cuts are forcing millions into poverty and thousands into homelessness, the continued existence of the tax avoidance industry should shame any civilised nation.

"Trade unions like PCS and Unite and campaigners like the Tax Justice Network and UK Uncut should feel proud that they have forced this injustice into the public glare."

PCS general secretary Mark Serwotka said: "This cosy network around the Treasury and the big accountancy firms helps wealthy individuals and companies to deprive our exchequer of tens of billions of pounds a year.

"This then helps the government to peddle the myth that there's no money for our public services."

This article first appeared in the Morning Star