I am taking part in a debate on tax justice at the Class conference this coming Saturday at TUC Congress House in London.
This session will have a pretty lively panel made up of Margaret Hodge, Ann Pettifor, Prem Sikka and me, with Stefan Stern giving the unenviable task if chairing us. The debate is scheduled to cover these issues:
· What concrete policies are needed at national and international level to ensure corporations and the 1% pay their dues?
· What would a new and more redistributive tax system look like and is it realistic?
· How much can be achieved quickly?
I have no idea what my friends and colleagues on the panel will say but I can give some indication of what I will suggest, given I will only have a few minutes.
Three concrete policies first of all:
1) The UK needs to abolish the domicile rule - a rule designed solely to benefit the 1% living in the UK. There is no excuse for continuing this policy which increases inequality in this country. Tax should never be based on an accident of birth.
2) Invest heavily in HMRC. We cannot beat tax abuse without having some of the best brains on the government's side, and like it or not that does not happen right now.
3) Create a proper General Anti-Tax Avoidance Principle instead of pale apology of an anti-abuse rule we now have that we have to get the permission of the tax profession to use, and make it applicable to tax treaty abuse.
Having dealt with my opener, what would a more redistributive system look like?
1) First, the bias against labour income that provides consistently lower tax rates on capital would be removed. That means either merging income tax and NIC — which would create enormous problems, especially relating to pensions — or instead creating an investment income surcharge of 15% to replicate the NIC charge paid by labour on income such as rents, dividends and interest. And yes we would have to give an extra allowance to pensioners but this could still raise billions and level a playground field.
2) Second, we have to charge capital gains to tax at the same rate as income and reduce the absurd allowances for so called entrepreneurs — none of whom need this incentive because entrepreneurs are born and are not created by the tax system.
3) We need wealth taxes, on land via LVT, on dealing via a financial transactions tax, and in wealth itself by a proper gifts tax — that would also eliminate for ever the abuse created by trusts and corporate tax shelters beloved of the wealthy and their advisers.
When could this be done?
That's the easy but: I have concentrated on tax changes deliverable in the first two years of a parliament.
I assure you, these things could easily be done. The only thing needed is political will, clear thinking and robust arguments. Saturday's panel can provide the second and third attributes by the bucket load. It is political leaders who must deliver the first.
Do they gave the willingness to make this happen?
That is the question. Those debating the issue at Class Conference on 1 November may want to suggest answers.
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I wholeheartedly support the policies above. I have noted though just how ingrained avoiding tax has become in this country particularly amongst the middle class. I know of people who have made a killing on the property market and use public services (NHS etc.,) and then disappear from the country for however long to qualify for the domicile rule.
I have to laugh when I then find out they can afford to go to the last night of the proms and wave the union jack and sing ‘Land of Hope and Glory’ totally ignorant of the effect their tax avoidance scheme has on dear older Blighty.
A final tax related point: one of the saddest things I see is little boxes of lapel badges and wrist bands for ‘Help for Heroes’ (those returning from Afghanistan/Iraq). It makes feel ashamed that these charities exist when I as a tax payer don’t mind supporting these brave men and women (many younger than I)upon their return through my taxes. What a way to treat a hero – to get them to rely on charity to supplement their lives. There is something profoundly wrong with that in my opinion that is related to reductions in taxation that erode the state’s ability to protect its citizens – even those who lay down their lives to protect us – no matter how misguided the politicians who send them to fight are.
“I know of people who have made a killing on the property market and use public services (NHS etc.,) and then disappear from the country for however long to qualify for the domicile rule.”
Clearly you don’t understand the rules surrounding domicile. You do not need to leave the UK to be non-UK domiciled.
“A final tax related point: one of the saddest things I see is little boxes of lapel badges and wrist bands for ‘Help for Heroes’ (those returning from Afghanistan/Iraq). It makes feel ashamed that these charities exist”
Governemnts do not have an inexhaustible supply of money, nor will their priorities ever be as an aligned with every individual. Specific charities enable people with particular feelings about a particular subject to give directly to that cause. Rather than feel “ashamed” and expecting ‘the government to do something about it’ I just put a couple of quid in the tin.
Governments do have inexhaustible supplies of money for what they want to do