Tax avoidance is ‘damaging public services’, says responsible tax APPG chair

16 Nov 17

Tax avoidance is “utterly and totally immoral and wrong” and is “damaging public services”, the chair of the All Party Parliamentary Group for responsible tax has told the House of Commons.

Margaret Hodge told MPs it was impossible to measure how much tax is lost through ‘tax havens’ but estimated it ran into hundreds of millions of pounds every year.

“It damages the public services our taxes are used to fund,” she said, at an emergency debate on tax avoidance and evasion on Tuesday, which she had called. 

“At a time when the NHS is under such pressure, when public sector workers have had their wages held down for years and our schools are struggling to deliver the best start for all our children, for the super-rich and the powerful to think that they can opt out of their duty to contribute fairly through paying taxes is completely and utterly and totally immoral and wrong, and it is our responsibility to put an end to it.”

Hodge, the former chair of the Public Accounts Committee, added: “It is impossible to measure accurately how much tax is lost through the presence of tax havens, but it runs into hundreds of millions of pounds every year.”

She also pointed out that developing countries lose three times as much in tax avoidance as they gain from the global investment in international aid.

The Labour MP for Barking called for the debate in the wake of the so-called Paradise Papers leak, which were 13.4 million documents showing politicians, celebrities, corporate giants and business leaders had hoarded cash in overseas ‘tax havens’.

She demanded the government do more to tackle “systemic” tax avoidance and evasion, and for the chancellor Philip Hammond to consider the issue when he sets out his autumn Budget next week.

Hodge wants to see multinational companies compelled to report their activity and profits on a country-by-country basis, and for UK’s overseas territories and Crown dependencies to publish public registers.

She also said at the debate “resourcing HMRC is absolutely central to the fight against tax avoidance and evasion”.

Catherine McKinnell, Labour MP for Newcastle upon Tyne North, at the debate raised the concern about the effect Brexit may have on tackling tax avoidance and evasion because “global tax abuse clearly requires international co-operation”.  

“Tax avoidance should be not an issue that divides us, but one on which we work together in the interests of all taxpayers,” Hodge answered.

Conservative backbencher Anna Soubry told MPs at the debate the government had an “excellent record” on the issue, adding that since 2010 the government had secured £160bn from tackling avoidance, evasion and non-compliance and £2.8bn from offshore tax evaders, and invested £1.8bn in HMRC to tackle avoidance and evasion.

Mel Stride, the financial secretary to the Treasury, noted the government had brought the tax gap, the difference between what the government could potentially bring in by way of tax and what it actually brings in, to 6% - a “historical low, a world-beating figure”.

She said if the Conservatives had not done this “there would be £45bn less in our Exchequer”.

The debate was a day after Oxfam called for the UK government to “step up efforts to make tax more transparent”, at an all-party parliamentary group for responsible tax event on Monday.

The cross-party APPG on responsible tax was established in September 2015 with the aim of building and maintaining a fair tax system. 

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