Hammond vows to ensure digital business pays ‘fair share’ of tax

22 Nov 17

The government is committed to a “fair and sustainable tax system” that is fit for the future, Philip Hammond said in his Budget statement today.

The tax system has to evolve with the economy and ensure that public services can be funded sustainably, the Budget stated.

 “Just as our public services must be fit for the future, so, too, must our tax system,” the chancellor said.

“It must raise the revenue we need to fund our public services. And it must be robust against abuse so that it is fair to all.”

The Budget set out an approach to ensuring that digital businesses pay their fair share of tax by “making all online marketplaces jointly liable for VAT” in the same way “we would expect traditional retailers to do”.

The government had secured £160bn in additional tax revenue and had achieved one of the lowest tax gaps “in the world” at 6.0% in 2015-16, Hammond said.

The government would crack-down on online value-added tax evasion, provide the HMRC with additional resources, including new technology to tackle avoidance and evasion, and increase the time limits of the HMRC assessments of offshore tax non-compliance.

Oxfam called on the chancellor to use the budget to step up the government’s efforts to tackle tax avoidance and implement transparency measures.

Rebecca Gowland, Oxfam’s head of inequality, said: “People are fed up with hearing how some large companies and extremely wealthy individuals can avoid paying their fair share of tax. Tackling tax avoidance would not only raise much needed funds, it would be popular with the public.” 

Chair of the responsible tax All Party Parliamentary Group, Margaret Hodge, has said tax avoidance is “utterly and totally immoral and wrong” and is “damaging public services”.

The chancellor also said the tax-free personal allowance on income tax would rise to £11,850 in April 2018 and the higher-rate tax threshold would increase to £46,350.

This comes following the Paradise Papers leak that showed how companies and individuals used offshore tax ‘havens’ to avoid tax and launder corrupt wealth.

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