U.K. Government to Clamp Down on Tax Evasion, Boost Revenue by $11 Billion
Chief Secretary to the Treasury Danny Alexander
Oli Scarff/Getty Images
Danny Alexander MP, Chief Secretary to the Treasury of the U.K.
Danny Alexander MP, Chief Secretary to the Treasury of the U.K. Photographer: Oli Scarff/Getty Images
The U.K. government is to spend 900 million pounds ($1.4 billion) clamping down on tax evasion and avoidance in a bid to raise an extra 7 billion pounds a year by 2015, Chief Secretary to the Treasury Danny Alexander said.
The plan, announced by Alexander today at the annual conference of his Liberal Democrat party in Liverpool, northwest England, will concentrate on increasing fivefold the number of prosecutions for tax evasion, forming a team of investigators to find money hidden offshore and targeting people who avoid paying the 50 percent tax rate on incomes above 150,000 pounds a year.
“We will be ruthless with those often wealthy people and businesses who think they can treat paying tax as an optional extra,” Alexander told delegates. “Just like the benefit cheat, they take resources from those who need them most. Tax avoidance and evasion are unacceptable in the best of times but in today’s circumstances it is morally indefensible.”
The government estimates that tax evasion costs the Treasury 7 billion pounds each year, with avoidance costing the same amount and fraud by organized crime losing the exchequer 5 billion pounds a year. The measures are part of the coalition government’s drive to narrow a record budget deficit.
Party Critics
Alexander and Deputy Prime Minister Nick Clegg, the Liberal Democrat leader, are trying to persuade party members at the conference of the benefits of being in coalition with Prime Minister David Cameron’s Conservatives. Senior Liberal Democrats are aiming to answer critics both within the party and in the Labour opposition who say the government’s program to cut borrowing will hit the poor hardest.
The Liberal Democrats’ opinion-poll ratings have slumped since they entered the government in May. In a ComRes Ltd. poll for today’s Independent newspaper, half of those who voted for Clegg’s party in the May 6 election said it had “sold out” by joining the Conservatives in government.
The public wants to see the government acting against “people who can pay an army of lawyers and accountants to get out of paying their fair share,” Clegg said in an interview on BBC 1 television’s “Andrew Marr Show.” “We will increase the number of people being prosecuted and we’ll go after people putting money into tax havens.”
High Earners
A unit of the U.K. tax authority that currently monitors 5,000 high earners will be given resources to look more closely into the tax affairs of 150,000 people, Liberal Democrat officials said. The Institute for Fiscal Studies estimated in April 2009 that 350,000 people earned more than 150,000 pounds and were liable for the 50 percent tax rate, which was announced in that month’s budget by Alistair Darling, then the chancellor of the exchequer.
The changes outlined by Alexander today do not require legislation and the government is drawing up plans to tackle loopholes that allow legal tax avoidance, the officials said.
Alexander also attempted to reach out to public-sector workers today, following threats of strikes at last week’s Trades Union Congress meeting to protest government spending cuts.
“I know that the next few years will be tough, very tough for some,” Alexander said. “I know there are a minority in the trade unions who will deliberately misrepresent what this government stands for because they are spoiling for a fight. Please don’t allow their political motivations to push you into doing the wrong thing for the country. We do not want to take you on. We want to take you with us.”
Dave Prentis, the general secretary of the Unison public- sector union, told protesters outside the conference that the cuts risked a double-dip recession by cutting public-sector jobs and withdrawing money from the economy.
“Who can trust the Liberal Democrats now?” he said. “They have ditched the poor, the elderly and the vulnerable along with their election promises. Their thirst for power has led them to sell out their own supporters.”
To contact the reporters on this story: Thomas Penny in Liverpool, England, at tpenny@bloomberg.net; Robert Hutton in London at rhutton1@bloomberg.net.
Rate this Page