From the TUC

Ed Miliband on our minimum tax rates plan

07 May 2009, by in Economics

Our campaign on LabourSpace.com for minimum tax rates to counter excessive tax avoidance is going round a second time now, and we’ve just had some nice feedback on the page from Ed Miliband:

Ed Miliband says:
“Good campaign John. We want to do all we can to clamp down on tax avoidance. I was pleased the Chancellor announced some measure in the Budget, including the publication of the names of deliberate tax defaulters. What do you think? Should more be done? As the TUC have pointed out, the Treasury misses out on a lot of money as a result of tax avoidance. It places significant costs on our society and shifts a greater burden of tax onto ordinary people. We need international cooperation and this was recognised at the G20 summit in London. But was also need campaigns like this to put pressure on governments to act.”

Well, to start with, thanks very much for your welcome comments, Ed. I think the TUC could easily have written that comment too. And as you hint, more should indeed be done.

You can see how popular the 50p top rate on income tax rate was with ordinary voters. It’s an issue of fairness – the people who’ll be paying that rate have benefited from the good years of late and should be willing to accept their part of efforts to help put things right now. It’s clearly hardly fair that the burden of recovery should fall hardest on those on low incomes, who’re already the most heavily hit by the recession.

How much clearer an issue of fairness is it then, that many of those due to pay the new tax rate won’t in fact even be paying a small fraction of the old one? Treasury predictions suggest 69% of those eligible to pay 50% on that part of their earnings above £150,000 will find new ways of avoiding it anyway. The accountants are already settling in for the overtime.

The measures in the budget to tackle tax avoidance are of course welcome, as is the leading role played by the Government in bringing the G20 to start seriously addressing the issue of tax havens. But they don’t tackle the problem in a systemic manner. Initiatives like a minimum rate tax or a General Anti Avoidance Principle could stop HMRC having to chase their tails as the super-rich find endless new ways duck their obligations.

As it stands, the biggest group of the rich paying higher taxes are the honest rich, more credit to them. People never like paying higher taxes, but they like seeing that others are free-riding on their contributions even less. I can’t see many objecting to those with fewer scruples being made to play according to the same rules they themselves do.

It’s nice to see you welcome pressure to continue your actions in this area, Ed – It’s something we’ll be very happy to continue providing.

PS – Anyone who wants to help us with the pressure please pop over to LabourSpace now and cast your vote!