This weekend Labour has announced a Ten Point Plan to Tackle Tax Avoidance and a £7.5 billion target to reduce avoidance and evasion. We will do this because we know that Britain will only succeed when working people succeed, which means everyone playing by the same rules.
This week we have seen that the Tories refuse to act on tax avoidance.
* They have been defending the 200 year-old non-dom rules which allow some wealthy people to avoid paying UK tax.
* They have been refusing the close the loopholes which allow hedge funds to avoid tax.
Labour is giving warning to the Treasury and HMRC that on the first day of a Labour government there must be:
* A draft Finance Bill which is an Anti-Tax Avoidance Bill and delivers the legislation needed for the measures set out in Labour’s ten point plan to tackle tax avoidance and evasion.
* A report from HMRC on all current measures and processes for tackling tax avoidance and evasion, so that Labour’s review of culture and practices at HMRC can make an immediate start.
Labour will also ask the Bank of England to focus on risks from the informal economy, including avoidance, evasion and the tax gap, in delivering its financial stability objective.
At a time when our NHS is in crisis and most working people are paying more under the Tories, it cannot be a priority to spend £1 billion on an inheritance tax policy which the Treasury says would not apply to 90 per cent of estates. The Tories would choose to give a £140,000 tax cut for a house worth £2m while they have increased VAT on families and pensioners.
Labour has made a different, fairer choice. We will go further on restricting pension tax relief for the very highest earners in order to cut tuition fees and increase grants for the next generation.
The big question for the Tories this weekend is how they will pay for the billions of pounds of promises they are racking up. Alongside their extreme plan to double the pace of spending cuts next year, their unfunded promises mean the Tories will end up putting our NHS at risk and raising VAT again.
Labour’s full Ten Point Plan to Tackle Tax Avoidance will:
1. Abolish the non-dom rules so that wealthy people are not able to use loopholes to avoid paying tax like the rest of us, while introducing a temporary residence rule for those genuinely in the UK for a short period of time, such as university students.
2. Re-write the rules which allow private equity managers to get away with paying less tax than ordinary working people even when they have not been investing their own money
3. Close loopholes used by hedge funds to avoid stamp duty
4. Force the UK’s Overseas Territories and Crown Dependencies to produce publicly available registries of beneficial ownership
5. Increase penalties for tax avoidance including new penalties for those who are caught by the General Anti-Abuse Rule
6. Close loopholes like the Eurobonds loophole which allow some large companies to move profits out of the UK and avoid Corporation Tax
7. Scrap the “Shares for Rights” scheme, which the OBR has warned could enable avoidance and cost £1bn
8. Tackle disguised self-employment by introducing strict deeming criteria
9. Tackle the use of dormant companies to avoid tax by requiring them to report more frequently
10. Make country-by-country reporting information publicly available
The tax avoidance measures we have set out will mean Labour can fully fund our NHS Time to Care Fund, abolish the bedroom tax and cut tuition fees to £6,000. Additional revenues raised over and above this will be used to help get the deficit down.