Monday, 31 October 2011

Plugging the Tax Gap

Today in the Daily Telegraph representatives from our three churches along with several other organisations are calling on the government to tackle tax evasion. The letter calls tax evasion morally unacceptable and is removing funding which could otherwise go to the poorest in our communities. This is a part of the wider Close The Gap campaign which is seeking to narrow the gap between the richest and poorest in society.

The Open Letter calls for specific action by the Chancellor in three areas:

  • Ending the anomaly that when goods are bought by internet or mail order from a company based in the UK they attract VAT, but if they are bought from some off shore territories they are entirely tax free. A tax avoiding industry has sprung up, routing purchases though these territories purely to avoid tax. The £130million that this costs the UK exchequer is small in comparison to the total loss, but for instance would be enough to largely protect the Sure Start programme and children’s services from the 11% cut in the Early Years Intervention Grant.

  • Urging the Chancellor not to proceed with the draft proposals on Controlled Foreign Companies announced on 30 June. Whilst advocates of the policy claim that it will increase the UK’s ‘business competitiveness,’ what it actually offers is big incentives for companies to shift their financial operations to ‘off-shore’ tax havens as a means of avoiding paying UK taxes. Even on the Treasury’s own estimates, this will cost £840 million in lost taxes a year.

  • Urging serious consideration of the need to introduce a General Anti-Avoidance Rule into UK domestic law. Whilst we all await the outcome of the Aaronson inquiry, due to report today (31 Oct), we are convinced that such legislation could be framed to meet the objectives of deterring and countering tax avoidance in a fair way, whilst at the same time providing certainty for business.

You can add your voice to this action by emailing the chancellor and calling for tough action on tax evasion.