This General Election campaign so far, with three weeks to go, has been marked by Theresa May refusing to take part in TV debates with Labour’s leader to defend the Tory record, and being generally elusive in terms of economic policy commitments, including in the area of taxation.
We all know that Chancellor Philip Hammond wanted to put up National Insurance Contributions to the tune of £2 billion in the last budget, but was forced into a u-turn.
Now, in the General Election campaign so far both Philip Hammond and Theresa May have refused to rule out more increases that could hit those with low and middle incomes.
Unlike the Tories, by committing to not raising income tax, NICs and VAT on 95% of earners, Labour has been clear that a fair share of the burden should fall on the super-rich at the very top, who are being given massive tax giveaways by the Tories, while the aforementioned 95 per cent should be spared having to pay more.
In contrast to the Tories negative campaigning and failure to commit to proper funding of our essential public services going forward, during this campaign Labour is articulating a vision of a fairer society and economy.
Labour’s message is that Government should invest in our skills and infrastructure, plus provide the resources needed for high quality public services, in order to both build a fairer society and fully unlock Britain’s economic potential.
As part of this, every day we are seeing announcements of policies that will move Britain forward from Labour as crystallised in this week’s Manifesto entitled ‘for the many not the few.’
Amongst these, last weekend Shadow Chancellor John McDonnell outlined plans to tackle tax avoidance and for a ‘Robin Hood’ tax.
With this set of announcements Labour outlined how a major crackdown on corporate and individual tax dodgers could boost our public coffers, including through creating a specialised Tax Enforcement Unit, with the number of HMRC tax enforcement officers who scrutinise the rich doubled.
Real action here is long overdue, but the Tories consistently refuse to act. HMRC admit that the ‘tax gap’ in the UK runs to £36bn every year, but tax experts think the true figure could be far higher.
Based on expert advice from economists, tax collectors and tax lawyers, Labour has therefore prepared a comprehensive programme of tax reform that will clamp down on the scourge of tax avoidance.
Furthermore, as last year’s Panama Papers revealed, tax avoidance is an exclusive club for the global super-rich that working people and small businesses don’t have access to.
The OECD estimates that each year £65-120bn of corporation tax is avoided by multinationals worldwide, whilst a £13tr is estimated to be hidden in offshore tax havens.
It’s really welcome that Labour has therefore pledged to take real action by drawing up a list of abusive tax havens and introducing sanctions against them.
Specifically, Labour has proposed consulting on the introduction of a withholding tax levied against any dividend, interest and related payments to individuals or companies in abusive tax havens. This will be deducted at source before any payment is made and remitted to HMRC.
Alongside this, a new ‘Robin Hood’ tax (or ‘Corbyn hood tax’ as some termed it on social media) on financial transactions will raise an estimated £26billion over five years – £5.6billion a year by 2022.
By making those who trade in financial derivatives pay a just small fraction of their profits, this proposal will both raise billions of vital pounds for public services and help to bring long-term stability to the banking sector by eliminating the most disruptive forms of speculation. It is, in a phrase coined by Jeremy Corbyn this week, both a radical and responsible policy.
It is a mainstream policy proposal supported by economists across the world and mirrors the financial transactions tax currently being prepared for introduction by 10 other European states.
The country bailed out the financial sector after the crash, but since 2010 the Tories have made all of us pick up the bill –whether that be by cutting benefits or starving our public services and infrastructure of the investment needed.
After seven years of Tory economic failure, again and again it is working people who are being made to pay the price as the Tories hand out billions in tax giveaways to the super-rich and big business.
The Tories would like you to believe that things have to be this way and there is no alternative, but Labours plans for tax justice is just one area where Labour is clearly illustrating things can be different.
Labour’s policies outlined this week will create a just and fair taxation system to help us invest in Britain’s future as part of an upgraded economy with world class public services that work for the many not the few.
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