In replying to the budget statement in the Chamber on 20th March John criticised the target set by the Government of recovering just 3% of the tax gap and the implementation of this legislation.
The Budget sets a target of raising £3.1 billion through tackling tax evasion and avoidance. The Government have identified a tax gap of £35 billion, which has remained almost static for the past few years. However, an auditor from the World Bank auditors has said it is nearer £100 billion. The tax justice campaign and the Public and Commercial Services union, which represents the tax collectors themselves, has put it at £120 billion. Therefore on the Government’s own figures at best, we are simply going to tackle, if successful, less than 10% of the tax gap, but more realistically less than 3% which is a dismally low target.
John expressed his concerns about the regulatory bodies who police the professional standards. He points out that if they are given greater responsibilities in setting and enforcing professional standards, they will in fact be policing themselves because these committees are populated with representatives of firms promoting tax avoidance schemes.
He went on to question who is going to prosecute these firms. The Serious Fraud office is not equipped to take on these giant corporations. The Crown Prosecution Service is hardly visible with regard to prosecution of big corporations, and HMRC staffing cuts have denied it the professional expertise needed. The real issue is that no matter how many policy statements, reports and legislation we have, it is all rendered pointless if HMRC does not have the staff and resources to implement them.
John said MPs on a cross-party basis supported the idea that if a company is prosecuted for tax avoidance, it should not then get a public contract. However, two years since it was introduced, not a single tax dodging entity, despite judgments by tax tribunals, has been barred from securing public contracts. Most frustrating of all is precisely this non-implementation of legislation which we think could be effective and which we have all supported.
John concluded saying “If we are really going to tackle tax avoidance and evasion and have any hope of closing the tax gap, we need a more effective, better staffed and better resourced HMRC. We need greater parliamentary accountability, which means: a specific Minister responsible for HMRC; and a separately established Select Committee to which it is accountable. We also need resources for organisations outside Government that can monitor it and respond to the detailed, complex Government consultations. Above all else, HMRC needs staff resourcing and the reversal of the staffing cuts on this scale that have neutered its operations. If we really want to tackle the tax gap, we need to ensure that it is properly staffed, that Parliament is in control and that there is proper accountability and monitoring throughout. In that way, we can tackle the tax gap, and we can start talking about the fairness of the wealth tax, the financial transaction tax and corporate tax reform. We need not so much a long-term economic plan as a long-term fair tax plan.”
To view the full debate as set out in the Handsard please click below http://www.publications.parliament.uk/pa/cm201415/cmhansrd/cm150320/debtext/150320-0002.htm#15032054000740