Friday, February 01, 2008

Missing Billions

TJN’s Richard Murphy has made a splash in the UK with a new report he researched and drafted for the Trades Union Congress (TUC), entitled “The Missing Billions” which concludes that £25 billion (almost $50 billion) is lost each year from tax avoidance: £13 billion from tax avoidance by individuals, and £12 billion from the 700 largest corporations. A further £8 billion is lost from tax planning by the wealthiest members of the UK community. Tax avoidance is defined in the UK as legal (as opposed to tax evasion which is illegal) but there is a very large grey area between them.

The report starts like this:

Few issues can be more important to a modern democracy than the integrity of its tax system. It is deeply troubling, therefore, to discover that the tax system is being increasingly undermined by the practice of tax avoidance. The sheer extent of money lost to these practices must add to the growing sense that a small group of wealthy individuals and organisations are operating beyond the normal rules of society that the rest of us believe to be fundamental to a fair and civilised life.

Quite. It also makes a series of recommendations about what can be done.

This report gathered quite a bit of attention. The Independent quotes Angela Beech, a senior tax accountant, as saying: "The Revenue is not geared up to properly deal with the challenges it faces." The Financial Times quotes TUC Secretary-General Brendan Barber as saying: “Most people think that we have a progressive tax system but it has now been hollowed out by so many loopholes and allowances that too much tax is now voluntary for the rich” and adds this:

The TUC believes it is tapping into a growing mood of resentment about the super-rich. The view, prevalent in the 1990s, that targeting the wealthy would be seen as a politically unpopular attack on people’s aspirations, is fading.

The Guardian notes that the unpaid tax costs every British worker £1,000 a year, and followed this up with a strong comment piece, looking at why half of all investment tax is paid by people who are apparently very low earners, or non-earners.

The Times quotes Brendan Barber again:

It's time for a new campaign for a fair tax system, a campaign that can unite the vast majority of the population who do play by the rules and have nothing to fear from our proposals.

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