Labour’s Plan to Tackle Tax Avoidance

Labour today set out measures that will help to tackle tax avoidance today but the Conservatives decided to vote them down. Following on from how their MEPs have voted down similar measures at an EU level.

Labour set out the measures in an Opposition Day Debate today (Wednesday); the motion noted the revelations contained within the Panama Papers had led to  widespread public concern that individuals and companies should pay their fair share of tax.

With tax justice campaigners and NGOs all backing calls for greater transparency, Labour’s Tax Transparency Enforcement Programme will help act to tackle tax avoidance.

Labour’s measures to tackle tax avoidance will also include:

·         An immediate public inquiry “to establish the harm done to the UK’s tax revenue and consider detailed proposals for reform”. These could include forcing firms and trusts to publish more information.

·         Change the register of MPs’ interests forcing members to publish all offshore holdings, no matter how small.

·         Create a ‘Specialised Tax Enforcement unit’ in HMRC, doubling the number of staff who scrutinise the affairs of the wealthiest individuals and firms.

·         Force foreign firms to list their owners and beneficiaries if they are bidding for public sector contracts.

·         Negotiate an EU deal forcing to multinational firms to file public reports on their dealings, country by country, and protecting whistleblowers.

·         Introduce a “General Anti-Avoidance Principle” and extend current rules to cover offshore abuses.

·         Crack down on accounting tricks, including telling courts to ignore “artificial steps” inserted in transactions to try and reduce tax.

·         Work with banks to find out more about who owns the companies and trusts they work with.

·         Introduce 'strict minimum standards’ on transparency for crown dependencies and overseas territories like the British Virgin Islands - where more than 100,000 Panama Papers firms were based. That includes a public register of owners, directors, major shareholders and beneficial owners.

·         Draw up plans for a register of trusts which transfer trustees’ residence offshore and tax avoidance schemes involving trusts which are disclosed to the HMRC under the current law.

John McDonnell MP, Labour’s Shadow Chancellor, said in his speech:

“I urge the Government and all members of this House to join us in a serious programme of work to tackle the abuse of our tax system.

“The Government can make a start by supporting our motion today and adopting Labour’s Tax Transparency Enforcement Programme.”

—

“In public view, here in London, its leadership have made loud and repeated noises about tax avoidance.

“Yet its MEPs in Brussels have voted six times, on instructions from the Treasury, to block EU-wide measures against tax avoidance.

“The Prime Minister lobbied the EU Commission in 2013 to remove offshore trusts from new, tighter EU regulations on avoidance.

“The Conservatives’ own record reveals they cannot be trusted on this issue.

“Not only have they impeded efforts to clamp down on tax avoidance, these schemes directly implicate senior figures in the Conservative Party.

“Several Conservative Party donors, three former Conservative MPs and six members of the House of Lords are among those with connections to companies on the books of the offshore law firm Mossack Fonseca.”

—

“This is a test of leadership.

“The leadership of the Party opposite could take this opportunity to correct the series of errors it has made.

“It can take the first steps towards dealing seriously with avoidance.

“People want to see the Party opposite take these steps.

“Otherwise they will rightfully stand accused of siding with the wrong people.

“They will rightfully stand accused of being party of the tax avoiders.

“Incidentally it’s not that long ago the Chancellor of the Exchequer appeared on television to give advice on the “pretty clever financial products” that would allow the wealthy to dodge inheritance tax.

“Some of the Conservative Party’s backbench MPs believe tax avoidance is a sign of success.

“Its donors are named in the Panama Papers.

“And the Prime Minister himself is a direct beneficiary of a tax avoidance scheme through his prior ownership of Blairmore Holdings shares.

“So the Panama leaks have presented a stark political choice.

“Do we continue to support, as the Party opposite will continue to support, a system of corruption and avoidance?

“Or do we now take the action necessary to restore fairness to our tax system, and correct the abuse of democracy?

“That is the challenge, and the choice, ahead of us.”