Tax justice

During spring 2016 the country was rocked by a leak from the Mossack Fonseca legal firm in Panama that exposed the shadowy and complicated network used by the global super rich to avoid paying tax.

Along with numerous other world leaders, Britain’s then Prime Minister, David Cameron, was caught up in the “Panama Papers” scandal after they revealed he benefited from a tax-free offshore trust his father set up.

The revelation came after it emerged that Cameron lobbied against EU legislation to reign in off-shore tax avoidance in 2013, despite repeated public vows to do the opposite.

While the Conservatives continue to ignore the glaring injustice exposed by the Panama leak, with Theresa May even threatening to emulate the Central American nation by turning the UK into a deregulated tax-haven after Brexit, Labour has promised to tackle the issue head-on.

A Labour government would carry out “the biggest crackdown in this country’s history” on tax avoidance, the party’s manifesto states. Labour would close tax loopholes and go after the network of shell companies and offshore tax havens that hide the taxable incomes of the UK’s super rich.

 

‘Robin Hood’ tax

A “Robin Hood” tax would also be introduced that would raise up to £26bn for public services over the course of the next parliament, as well as curtailing the most destabilising forms of financial market speculation.

The tax, which would revise stamp duty for banks and hedge funds on share trading, financial derivatives and other assets, is currently being prepared for use in ten other European countries.

Shadow chancellor John McDonnell said the changes would bring “fairness” to the financial system after the bail outs following the 2008 crash.

“The next Labour government will introduce a ‘Robin Hood Tax’ to make the financial sector pay its fair share after it received huge public bailouts in the crash,” he said.

“Ordinary people are still being made to pay by the Tories for a crisis they didn’t cause through the worst spending cuts for generations.

“All we’re asking for is fairness in our tax system. By making those who trade in financial derivatives pay a small fraction of their profits, we can help properly fund our public services.”

Rebalance the system

An essential part of Labour’s plan to rebalance the tax system is to restore HMRC staffing levels with an additional £200m of funding. Since 2004 HRMC staffing has fallen from more than 100,000 people to less than 60,000 today, leaving the organisation unable to investigate many tax avoiders. Labour estimates the move will bring in an extra £6.5bn to £8.5bn a year in extra tax revenue.

Unite assistant general secretary Steve Turner said, “For years the double whammy of tax loopholes and cuts to HMRC have given tax avoiders free reign. Under the Tories vital public services have been pushed to the brink of destruction, while big business and those who earn the most have got out of paying their fair share.

“Under a Labour government the interests of working people – the vast majority of whom never fail to pay the correct amount of tax – will be at the heart of our taxation system.

“Crucially the extra revenue will mean that business also benefits, as Labour’s plans to invest in the industry and infrastructure needed to create an economy that works for everyone demonstrate.”