The most serious estimates are that around £120 billion in tax is evaded, avoided and goes uncollected - mostly from those most able to pay; big business and wealthy individuals. This is consistent with leaked Treasury papers in 2006, which estimated the tax gap between £97-150 billion.
When the country has an annual deficit of an admittedly high £155 billion, then missing around £120 billion of tax (before we even start collecting increasing some rates) every year is substantial.
There is also a certain hypocrisy at a time of unprecedented cuts that the rich are evading and avoiding tax while the poor are getting pay freezes, benefit cuts and losing their jobs. This hypocrisy is even greater when a Cabinet of millionaires is using tax havens to avoid paying their way - as opposed in the recent Channel 4 Dispatches programme, How the Rich Beat the Taxman.
Such is the success of this campaign that every Party now at least pays lip service to tax justice - yes even the Liberal Democrats and Tories.
However, the Labour Party (well it's conference rather than shadow Cabinet so far) has gone a bit further: passing the resolution below at the 2010 conference in Manchester.
The resolution passed was a composite, but based on the draft motion circulated by the LRC, and passed by Streatham CLP, and others, much of which still remains. Sadly though, some unions were influenced by former Treasury ministers who repeated the ridiculous (HM Treasury) line that the tax gap is only £50 billion.
Nevertheless, this is a victory that we must build upon - and ensure the Labour Party starts speaking up on tax justice.
(Perhaps someone should pass them this though too - Richard Murphy's 'Why HMRC has got the tax gap wrong').
Composite 8 – Tax avoidance
Conference notes that in his speech of 17 August George Osborne, Chancellor of the Exchequer, said “anyone who is serious about tackling the nation’s debts needs to come forward with an alternative plan”.
Conference believes strongly there is a credible alternative to the Chancellor’s Budget which many economists predict will hit poorest families hardest and increase the risk of economic slowdown, higher unemployment and a potentially disastrous ‘double dip’ recession.
Conference notes the HMRC high net worth unit tasked with investigating the tax affairs of the super rich has been cut by 20% - showing this isn’t a priority for government.
Conference notes tax avoidance, tax evasion and uncollected taxes are depriving the Exchequer of up to £50 billion a year when the national deficit is £160 billion while we are faced with cuts.
Conference believes that action against tax avoidance is a crucial part of tackling the fiscal deficit and if carried out effectively would reduce the level of cuts to public spending needed to meet the government economic plans.
Conference believes that an increased commitment to public investment coupled with a focused attack on tax avoidance will do much to keep unemployment down and to tackle the deficit.
Conference notes the vigorous campaign on PubCos and Tax avoidance schemes.
Conference opposes the rise of VAT to 20% announced in June’s Budget.
Conference notes the statement in the Labour Party manifesto highlighting the importance of tackling tax avoidance.
Conference urges Labour to commit to addressing the tax gap as part of its deficit reduction strategy.
Conference calls on the Labour Party:
Conference calls on the Labour movement to work to ensure that the coalition Government takes action to reduce as far as possible the level of tax avoidance by individuals and businesses in the UK as a means of ensuring that all members of society play a part in helping to reduce the deficit.
- Mount a campaign to highlight tax avoidance
- Campaign to end the proposed VAT rise
- Campaign for fairness and justice in the tax system as part of the alternative to the government’s cuts
- Properly pursue a global Robin Hood TaxMover: GMB
Seconder: Streatham CLP