Shadow chancellor Rachel Reeves says plans to invest in more tax officials would help raise £5bn a year for the public purse. This money would be used to help fund the NHS and school breakfast clubs.
Announcement Comes After Spending Commitments Questioned
The government has announced plans to scrap the non-dom status currently enjoyed by many. Some commentators say this is a policy stolen straight from the Labour party.
Extra Investment Into HMRC
Labour promised to spend an extra £555m per on HMRC, giving them the additional resources needed to boost further investigations. The move is designed to close the ‘tax gap’ – the gap between the money owed and the money received by HMRC.
Tax Gap Getting Bigger
According to figures from the Labour party, the tax gap had widened to £36bn last year – an increase of £5bn from the year before.
Fighting Talk on Taxes From Reeves
The shadow chancellor said “if you make your home and do your business in Britain, then you should pay your taxes here too”.
Plans Extend Beyond Boosting HMRC
Labour have also committed to closing all of the ‘loopholes’ that the Tories have left in their plans to scrap the non-dom tax status.
What is ‘Non-Dom’ Status?
This is where a UK resident is allowed to not pay tax on any income earned overseas, because they list their primary residence as another country. Rishi Sunak’s wife, Akshata Murty previously claimed non-dom status, helping her to avoid huge tax bills in the UK.
Public Humiliation for Then Chancellor
When the news broke, it was a huge PR disaster for the then-chancellor of the exchequer. Essentially the head tax collector for the country was allowing his wife to (legally) not pay much tax in the UK.
Labour Criticizes Loopholes in Tory Plans
When Labour announced plans to stop non-dom status, the Tories hastily followed suit. Having analyzed their plans however, Labour say the Tories proposal is full of loopholes.
Extra £2.6bn Can be Raised
According to Labour analysts, by closing the loopholes an extra £2.6bn per year could be raised in additional taxes on the super rich.
Two Big Loopholes Closed
Should Labour win the next election, they said they would scrap a proposed 50% discount on the tax non-doms would have to pay in the first year of the new rules. They also said all foreign assets held in offshore trusts would also be subject to UK inheritance tax.
Tories Criticizing Labour Plans
Treasury Minister Laura Trott said: “After a month of searching for a plan to pay for Labour’s unfunded spending, the shadow chancellor still cannot say how she will fill the enormous black hole in their promises. And that means one thing – more taxes.”
Reeves Promises Accuracy
Reeves said “I have been clear that everything in our manifesto will be fully costed and fully funded. There will be no exceptions. That is why last month I promised to go through all the government documents in an orderly way to identify the funding streams to honor our commitments to the NHS and schools.”
Reeves Takes Aim At Super Rich
She added: “At a time when working people in Britain are being asked to pay more in tax because of the Conservatives’ economic failures, it is wrong that a minority continue to avoid paying what they owe. After fourteen years in power, the Conservatives have failed to tackle this issue and the tax gap remains unacceptable high.”
Public Frustration at Tax Breaks
For years now, the public have voiced concerns at how wealthy corporations such as Amazon get away with comparatively tiny tax bills, given their UK-earned income. Loopholes have allowed creative accountancy practices to reduce tax burdens for big businesses.
Industry Bosses Pleased With the Plans
Rachael Henry, Head of Advocacy at Tax Justice UK also said: “Labour’s plans to crack down on tax abuse is sensible and hopefully signals their ambition to take a tough stance on tax dodging. A better equipped tax authority is essential to recover the billions in uncollected tax lost each year, which should go to public services.
Henry Wants Plans to go Further
“At the moment HMRC doesn’t have the resources to act as a deterrent to sophisticated tax dodgers. The plans to ensure the backdoors in the government’s new system for non-doms are closed are essential. This is however the tip of the iceberg – there are still hundreds of loopholes and ways in which the very wealthiest people and companies get away without paying their fair share of tax.”
Labour Promises No Extra Borrowing to Fund Day to Day Spending
A self-imposed rule by Labour says it won’t borrow more money to fund general spending in the country. Instead, it will seek to fund additional spending by reducing the tax gap, raising more from tax dodgers.
Industry Concerns Over Feasibility of Plans
Helen Miller, deputy director of the Institute of Fiscal Studies think tank, said it was “common for governments to announce plans to try to raise revenue by reducing avoidance or evasion”. She did also say however, there was uncertainty over how much this could raise and how quickly.
Forcing Wealthy to Pay Their Share a Vote Winner
Whilst these benefits are likely to take time to realize, any plans that force the wealthiest in society to pay their fair share will be welcomed with open arms. For too long the elite have been able to take advantage of tax loopholes that the rest of us just can’t.
The post Labour’s Pledge: Crack Down on Wealthy Tax Dodgers first appeared on Swift Feed.
Featured Image Credit: Shutterstock / Martin Suker.