UK: When it comes to tax avoidance this Tory government is living on Mars

(The Times) -- As parliament debated the finance bill over the past few weeks, it became increasingly clear that this Conservative government is living on another planet.

Rather than putting forward sensible proposals on investment, fairer taxation and measures to raise the UK’s woeful productivity rate, all of which would help people in their daily lives, the chancellor has instead pushed forward with a finance bill which would water down workers’ rights, bring added financial burdens to small and medium-sized businesses and ensure offshore trusts are exempt from any reforms to non-dom status.

In essence it is a finance bill that will benefit a few wealthy individuals at the expense of the many, and it is indicative of a government that as each day passes appears more and more out of touch.

Theresa May and Philip Hammond, as self-assured as ever, act as if their party has a parliamentary majority of hundreds when the reality is that they are kept in government by the good graces of the DUP, in return for a fat £1 billion fee.

The Conservatives continue to proclaim that they are the party that is cracking down on tax avoiders. It was considered such a priority in the general election that Theresa May gave the subject a grand total of eight lines in the Conservative manifesto.

In the past month alone, we have seen the government face a barrage of criticism from the European Union for its poor record on tackling tax avoidance.

The European parliament’s report into money laundering, tax avoidance and tax evasion has accused the government of directly obstructing the fight against tax avoidance.

The European Commission has also opened an investigation into changes to the UK’s “controlled foreign company” rules announced by George Osborne in 2011, which reduced the tax take last year by £805 million.

These changes have made it easier for multinational companies to shift their taxable income offshore and the commission believes that they breach EU competition rules.

And to add insult to injury the Treasury is said to have failed to collect billions from various multinational corporations that have avoided paying their fair share of tax on UK profits.

Tory denial on tax avoidance is not something new, despite the fact that it is growing by the day. In 2013, when G8 leaders attempted to push forward with new tax evasion measures, David Cameron was busy undermining them by writing personal letters to the European Council’s president at the time, Herman van Rompuy, begging him to stop offshore trusts from being included.

In contrast, the last Labour prime minister, Gordon Brown, actively spent 2009-10 attempting to get world leaders to agree to strict measures on offshore tax havens.

While at the election, Labour rolled out our tax transparency and enforcement programme, which will tackle tax avoidance at its core. Under our proposals no controlled foreign corporations will be able to bid for public contracts without first making a public declaration of their profits from UK sources and corporation tax paid in each of the last five years.

We will also introduce a publicly available register of offshore trusts, which will require any non-dom to declare the source of any money being brought into the UK.

The chancellor cannot continue to stick his head in the sand when it comes to tackling tax avoidance and the money lost to the exchequer, especially given the new analysis from the Institute for Fiscal Studies, which confirms that seven years of Tory austerity policies have failed to drive up investment and productivity, and could potentially see the deficit be £20 billion higher by 2021-22.

While Britain cries out for a government that will address the deep problems society faces and effectively manage the public finances, the Conservatives are only interested in feathering the nests of those at the top.

It is a scandal that we have a government determined not to meet our needs and instead spends its time finding new ways to protect tax avoiders. The country cannot wait much longer for the scandal to end.


Peter Dowd is shadow chief secretary to the Treasury

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