Thursday, 31 December 2009

Union Backs Lib Dem Tax Policy

The Public and Commercial Services Union has said that to beat the recession the concentrating on tax avoidance, evasion and non-collection instead of making merely "savage" heavy cuts. They reckon that £70 billion was lost through tax evasion and £25 billion through avoidance, while uncollected tax increased by £2.7 billion to £27.7 billion this year.

Now where I have heard that message before?

Alistair Darling?


George Osbourne?


Vince Cable?

Absolutely and not just a random statement but an ongoing statement of intent.

Yes he did mention it in his conference speech in Bournemouth:

"Spending first. If public spending is cut in the usual way – slash and burn – there will be great damage to local and national services. Good will be cut with bad. Front line services will be butchered and lower paid workers will bear the brunt of cuts.....

"The Liberal Democrat approach to tax is also fundamentally different from the Tories. The Tories top priority is to cut taxes on millionaires. Our top priority is fairer taxes for those on lower and middle incomes.....

"So, my priority would be to cut income tax for those on low and middle incomes. Any such tax cut would be paid for by closing tax loopholes and privileges enjoyed by the relatively wealthy: the big differential between top rate income and capital gains tax; the exceptionally generous tax relief on large pension pots; and the blatant abuse of tax haven status including businesses paying stamp duty offshore. A programme due to be screened this evening will expose complicity on a large scale in tax dodging by Lloyds: a bank part owned by the tax payer. This must be stopped, now."

Oh yeah, Vince yet again looks at the big picture and sees a flaw in the perception of the other two parties in what to do. As I said this was far from an isolated statement. In June writing in the Independent he noted:

"The danger of allowing big differentials to arise between taxes on earnings and capital was clearly understood by Nigel Lawson and the last Conservative government, which taxed them at the same rate. This Government's enthusiasm for incentivising entrepreneurs led to a tapered rate, then widely abused and now abolished, leaving a gaping hole in the defences against tax avoidance.

"Another tax boost to bankers' bonuses is continuing higher rate relief on pension contributions. The Government has removed relief for earnings over £150,000 but that still leaves over £100,000 which enjoys the relief.

"And those with entitlement to non-dom status will also have calculated that it is worth paying the Government's poll tax of £30,000 if they can continue to channel income or capital gains offshore, outside UK tax.

"I am not a tax accountant and I am almost certainly underestimating the scale and scope of tax avoidance under the highly abusive, complex, structured arrangements designed by specialists for the banks' clients and staff. The Government has, in recent years, moved towards an Australian-style general anti-avoidance rule in order to help HMRC combat abuses and it is unclear whether these new bonus-related schemes have cleared that hurdle. If they have, someone in HMRC is being taken for a ride"

You see he is a man who has even noticed that current Government policy has made it easier to avoid paying full taxation, for those with the nous and resources to be able to take advantage of the system. Gordon is telling voters not to wreck the recovery but he and Darling have already wrecked the system in ways that has led to the tax gaps mentioned.

Back in February writing in the Guardian he also said:

"The evidence of systematic tax avoidance by rich individuals and UK-based companies strikes a particularly ugly note in these straitened times. There is an all-party consensus that non-domiciles should pay more (though the Conservative-backed government scheme makes no distinction between the super-rich and non-doms of more modest means). My own party wants to tackle more systematically the anomalies that make it possible to avoid paying even the top 40% rate, let alone 45% or more.

"The tax avoidance by corporations is, however, much greater and more difficult to identify. The simple point is that companies should be paying 28% of their UK profits in tax, while the evidence suggests that many high-profile British companies pay much less.

"Companies are, of course, not individuals but legal entities. Any corporate tax is ultimately passed on somewhere else - in reduced dividends or wages or in higher prices. Corporate profits may not be an ideal tax base. But there is surely some basic justice in the proposition that companies should pay the government of their host country for the infrastructure and other tax-financed services they receive: education, health, transport systems, policing"

Here is a man who has been talking about this all through 2009. Sure Darling and Osbourne may well take action based on the Public and Commercial Services Union's New Year Press release. But who do you want leading the economy as we run into the next general elections? The parties taking a knee jerk decision to follow last minute advise from the experts, or the party that has been talking the talk and making the decisions that have pre-empted that call?

The Lib Dems believe in fairness and getting the balance right between spending, tax rises and getting hold of what is rightfully HMRCs but has been overlooked or neglected.

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