Tuesday, 18 January 2011

Top Tax shirkers - HMRC makes its case

The Guardian today reports an amazing story today. The much debated 50% top tax rate, which came into effect in April 2010, has raised precisely £0 so far.

Why's that (i hear you ask)? Has Will Hutton's Pay Commission enforced that no one should earn over £150,000? Don't be silly. Has the right-wing media prediction that all talent (aka overpaid people) will leave the country come true? No.

In fact, the reason the new 50p tax band has raised not a penny is because HM Revenue & Customs only had one year to adapt its computer system to collect the tax. Apparently that is insufficient time. Seriously.

HMRC has written out to 24,000 people affected by the new tax rate. The letter reads:

"Although the new rate started in April 2010, you may be aware that you are only being taxed through the Pay As You Earn (PAYE) system at 40% on some of your jobs or pensions, rather than at 50%. We were unable to introduce the changes needed to PAYE to collect the 50% rate from people who had more than one job or pension for the tax year 2010/11. This is because the start date was brought forward a year to April 2010 by budget 2009."

Corporation Tax is being reduced to 27% within a year, then 26% then next year, 25% the year after that and 24% the following year. I'm not a gambling man, but I'm willing to bet there's no delay in adapting systems to reduce tax for big business.

Mark Serwotka, the general secretary of the Public and Commercial Services union, which represents workers at HMRC, said:

"It defies belief that HMRC wasn't able to get its computer system geared up for this and it now means high earners will be getting away without paying their dues while ordinary taxpayers face a VAT rise and cuts in public services.

"It also effectively gives the wealthiest taxpayers time to limit their tax liability, which would just add to the tens of billions of pounds that is avoided, evaded or uncollected every year. After a succession of embarrassing episodes, senior management need to get a grip and the government must see there is an alternative to cuts that have been so damaging to the department."

The PCS website also puts the case for Barclays and KPMG today - and there's every reason to vote for either of these facilitators of 'tax shirking'.

You can also vote for HMRC at: http://falseeconomy.org.uk/tax/hmrc. I just have - because the cuts in HMRC are the biggest gift to corporate and super-rich tax avoiders.

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