£5 billion a year could be raised by investing in HMRC – giving it more power to clamp down on tax avoidance – and properly clamping down on non-doms.
This was the big announcement from shadow chancellor Rachel Reeves this week. And it’s a step in the right direction.
For context, £5 billion a year is enough to employ 150,000 nurses. It’s a huge amount of money.
The party also created a new panel of experts to advise on cracking down on tax avoidance.
The move shows Labour are becoming more ambitious when it comes to tackling tax abuse – and we welcome their ambition.
Our head of advocacy and policy, Rachael, was on TalkTV making the case that they should go even further. Rachael was also quoted in the Mail and the Mirror.
The pressure is mounting on Labour. Reeves was pushed on both BBC Breakfast and the Today programme as to why Labour aren’t going further, pursuing higher taxes on the very rich to support more investment in public services.
It’s almost inconceivable that these sorts of questions would be put to a politician on the BBC even a few years ago. This isn’t a coincidence. All of our media work is helping to shift the debate towards raising taxes on the very rich.
We are being listened to
I have said over and again in this newsletter that HMRC needs more resources to tackle tax dodging.
At the moment HMRC don’t have the resources to deter sophisticated tax dodgers (or answer the phone).
In this vacuum, the scale of abuse is huge. Currently at least £36 billion a year owed in tax is left unpaid. This is called the ‘tax gap’.
It shows just how badly HMRC is failing and unable to enforce its own rules.
HMRC is chronically underfunded. A Parliamentary committee slammed the government last year for not investing enough in the tax authority.
Parliament also found that for every £1 invested in HMRC compliance, £14 was recovered in additional tax.
Investing in HMRC pays for itself in multiples. It’s well evidenced – as our friends at TaxWatch have shown.
We’ve been making this case to politicians. And now Labour seems to be listening to our argument.
We will keep lobbying them, pushing them to implement their HMRC plans if they are elected. It is vital they go further in reforming our unfair tax system, for example by taxing the ultra-rich more, as I argued in the Guardian this week.