‘Last year, the Department brought in record revenues of £468 billion for the UK, including £13.9 billion that would otherwise have been lost to tax avoidance, evasion and fraud. More than half of this was secured directly from large business.’
‘HMRC could not have achieved this success without the hard work of all its people.’
Although acknowledging ‘the hard work of all its people’, it does not include giving staff a pay rise. In 2012, all those earning over £21,000 will enter their second year of a pay freeze, a year when we are supposed to pay higher pension contributions, food, energy and transport costs. For company directors and City investment bankers, hard work is rewarded with high salaries and extortionate bonuses. For those in the public sector, we are rewarded with a smile and higher targets.
The PAC report which has been highlighted in the media quotes the figure of £25 billion owed by big business, a figure though shocking, still only represents a portion of tax owed. The most recent HMRC Tax Gap report states that between £35 and £39 billion is missing in tax http://www.hmrc.gov.uk/stats/mtg-2011.pdf and PCS have commissioned their own report based on the evidence given by Richard Murphy which states £25 billion is lost annually in tax avoidance and a further £70 billion in lost in tax evasion by large companies and wealthy individuals.
An additional £26 billion is going uncollected. Therefore PCS estimates the total annual tax gap at over £120 billion (more than three-quarters of the annual deficit!). It is not just PCS calculating this; leaked Treasury documents in 2006 estimated the tax gap at between £97 and £150 billion.
If we compare the PCS estimate of the tax gap with the DWP estimate of benefit fraud, we can see that benefit fraud is less than 1% of the total lost in the tax gap.
Employing more staff at HM Revenue & Customs would enable more tax to be collected, more investigations to take place and evasion reduced. Compliance officers in HMRC bring in over £658,000 in revenue per employee.
If the modest Robin Hood tax – a 0.05% tax on global financial transactions – was applied to UK financial institutions it would raise an estimated £20–30bn per year. This alone would reduce the annual deficit by between 12.5% and 20%.
Closing the tax gap, as part of overall economic strategy, would negate the need for devastating cuts – before even considering tax rises.
Our personal tax system is currently highly regressive. The poorest fifth of the population pay 39.9% of their income in tax, while the wealthiest fifth pays only 35.1%. We need tax justice in personal taxation – which would mean higher income tax rates for the richest and cutting regressive taxes like VAT and council tax.