Thursday, 9 April 2015

5 reasons to now take Labour seriously on tax justice


Andrew Fisher notes 5 ways in which tax justice is now central to Labour Party policy

1) Ending non-domicile status

After years of largely impotent sabre-rattling under Gordon Brown, Ed Miliband has committed Labour to abolishing non-domicile status by April 2016.

As well as the policy change itself, there is significance to what Miliband said in annoucing it - which reflects a shift in Labour: he said the non-dom policy was symbolic of "an idea that says ‘anything goes’ for those at the top, that what is good for the very rich is always good for Britain"

That Labour is moving away from that philosophy - that lauds the rich as entrepreneurs and 'wealth creators' (when few are any such thing) - is very good news.

2) Sanctioning UK tax havens

Ed Miliband is now talking about sanctioning tax havens, that's progress. The UK's overseas territories (including notorious tax havens like the Cayman Islands and Bermuda) and crown dependencies (e.g. Jersey and the Isle of Man) have been warned that they would have six months to compile a public register of offshore companies registered in their domain or face sanctions.

In February, Labour leader Ed Miliband said:
"Billions of pounds is being siphoned off into tax havens where our authorities cannot discover even the true ownership of firms registered there, let alone the scale of wealth hidden away.

"Today, I am putting these tax havens on notice that they will have just six months to open up their books or face international sanction."
This again is a welcome toughening from the New Labour years.

3) Tackling umbrella companies

Labour's 'work manifesto' (reviewed here) states that a Labour government would "tackle bogus self-employment in construction". This is an attack on the umbrella companies which have been set-up by large construction companies to dodge employment rights and tax obligations.

The construction workers' union UCATT has more detail in this document 'The Umbrella Company Con-Trick'. Labour's shadow Exchequer secretary Shabana Mahmood has also taken the issue up in Parliament, alongside many backbench Labour MPs.

4) Restoring the 50% tax rate on the richest 1%

One of the key issues of tax justice is that the taxation system should be progressive - meaning that the rich should pay more not just in cash terms, but as a proportion of their incomes too.

The 50% tax rate on income over £150,000, means those earning wages that put them in the top 1% or so of earners pay a higher tax rate than the rest of us. Combined with the bank bonus tax and the mansion tax - as well as ruling out any VAT rises - it is clear that Labour is keen to make overall taxation more progressive.

5) Setup an independent review into HMRC

A future Labour government is committed to an "immediate independent review into the culture and practices of HMRC with regard to tax avoidance". 

HMRC has a very problematic culture that seems to allow the super-rich and big business to do sweetheart deals rather than to be forced to pay what they owe.

Although announced in the context of the government's handling of the Swiss HSBC data leak, this is about the tax authority being tough with the powerful. In launching this proposed review, Miliband spoke on the theme used announcing the non-dom changes (above):

"Any civilised country is built on the idea of the common good must have common rules, shared and respected by all its citizens. But in Britain today we risk having one rule for the rich and powerful and another for everybody else. What we are seeing is the growth of hugely complex and aggressive tax avoidance schemes, often based offshore."
The fact that a Labour leader is saying this - and acting on all of the issues above - is due to the campaigning efforts of thousands of activists who have made tax justice an unavoidable issue at this election. So well done to the Tax Justice Network, UK Uncut, trade unions (notably PCS) and many more. Let's keep fighting!

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