Clampdown on Tax Loopholes & Tax Havens
Shadow Chancellor John Mcdonnell has pledge to clampdown on tax loopholes which reduce government revenue which in turn is being used as an excuse for their harsh austerity program. McDonnell published a tax transparency enforcement programme in which he demanded
- A public inquiry to examine the loss of tax revenue and consider reform proposals.
- Forcing MPs to publish details of all their offshore holdings.
- Increased powers for HMRC including a “specialised tax enforcement unit” and a doubling of the number of staff looking at the wealthiest individuals and firms.
- Forcing foreign firms to list their owners and beneficiaries if they are bidding for public sector contracts.
- Negotiating an EU deal to force multinational firms to file public reports on their dealings, country by country, and to protect whistleblowers.
- The introduction of a General Anti-Avoidance Principle and the extension of current rules to cover offshore abuses.
- Cracking down on accounting tricks, including telling courts to ignore “artificial steps” inserted in transactions to try and reduce tax.
- Working with banks to uncover who owns the companies and trusts they work with.
- Introduce minimum standards on transparency for crown dependencies and overseas territories like the British Virgin Islands – where more than 100,000 Panama Papers firms were based.
- Drawing up plans for a register of trusts which transfer trustees’ residence offshore.
Recent sweetheart deals offered to Google and the Panama papers crisis showed the scale of the ongoing problem.
The campaign group Tax Justice Network highlights some of the solutions that can be considered.
The news and political satire show in Australia, Undercurrent describes the mechanism of how tax avoidance works.
Tackling Tax Havens
The Labour Party is committed to resolve the issues created by Tax Havens. Many solutions that are proposed by experts are being considered such as country-by-country reporting, unitary tax, automatic information exchange, true beneficial ownership, making wilful blindness a criminal offence and so on.
A Tax Justice Network program, “Tackling Tax Havens” summarises the problems of Tax havens as follow:
1. Tax havens help rich people hide money that should be spent on schools, hospitals, roads and other public services
2. Tax havens force poor people to pay the taxes of the rich
3. Tax havens help criminals hide their loot
4. Tax havens help dictators and their cronies plunder the resources of developing countries
5. Tax havens allow banks to dodge financial rules and regulations
6. Tax havens corrupt markets, concealing insider dealing and supporting aggressive tax dodging by multinational companies
7. Tax havens create a private world of secrecy, impunity and power for rich elites
8. Tax havens widen the gap between rich and poor people
9. Tax havens make laws in secret which affect us all
10. Tax havens degrade our faith in democracy