Budget: It could be a bad day for tax avoiders

22 Jun 2010, by Richard Murphy Guest in Economics

Hidden in the small print of the Budget press notices is the following announcement:

As part of an approach to develop sustainable responses to avoidance risk, the Government intends to examine whether the option of a General Anti-Avoidance Rule should form one element of strengthened defences. This will be part of wider work on improvements to the tax policy-making process.

There had to be some good news in amongst the gloom today. This is just a small sliver of it. Undoubtedly in the notice to appease the Lib Dem coalition partners such a measure is something the TUC has long argued for – and which is is credited with having promoted in recent years – even inside HM Treasury.

It’s an important announcement if followed by action because a General Anti-Avoidance Rule does two things. Firstly it should stop artificial tax planning by basically outlawing it and secondly it should cut down enormously on the amount of tax legislation needed – allowing time to be devoted to more pressing issues of tax reform.

No one should be counting chickens about this as yet, but it is a start.