Responsible tax: more important now than ever
Accountancy & Tax Dame Margaret Hodge MP, chair of the The All Party Parliamentary Group (APPG) on Responsible Tax, discusses the role of the APPG and the future for Britain post-Brexit.
The All Party Parliamentary Group (APPG) on Responsible Tax was established after the 2015 election. The issue of who pays tax, how much they pay and whether the system is fair has touched a raw nerve with people of all ages and backgrounds. During my time as Chair of the Public Accounts Committee we saw tax move from being a niche concern to businesses and tax professionals to becoming a topic of conversation for people in the pub, and around the dinner table. Not paying your fair share of tax used to be seen as cool and clever. Now most people strongly disapprove of it. Aggressively avoiding tax damages your reputation. We want to grasp this moment to try to build a consensus for a fairer and sustainable tax system that works for all.
We are a cross-party group of parliamentarians who believe that Parliament should play a role in ensuring that we build an efficient, fair and transparent tax system which creates sustainable growth, shares prosperity, and commands the confidence of all taxpayers.
We want to stimulate a debate that includes everyone from the tax campaigners to the accountants and from small businesses to multinationals. As Parliamentarians we are uniquely placed to provide a neutral space for stakeholders to come together, debate ideas and find consensus on the key issues.
We have held thought provoking seminars on the future of corporation tax and had public sessions with Pascal Saint-Amans from the OECD on the effectiveness of their BEPs process.
In the week that Theresa May triggers Article 50 the need for the group becomes ever more important. One key aspect of Brexit has yet to be widely aired; the impact it will have on the tax system.
Of course the huge uncertainties on what the final Brexit deal will look like makes it difficult to have an informed debate on tax.
We know that Britain could get control of VAT rates but VAT raises around one fifth of the money that is spent on public services. With the deficit still high, the economy fragile and the impact of a hard Brexit on growth and prosperity uncertain, reducing VAT becomes more remote as a realistic policy option.
We know that both the Prime Minister and the Chancellor have threatened to turn us into a tax haven. But it seems unrealistic. Can we really afford to lose more revenue by further cuts in Corporation Tax? Unlike Ireland or Luxembourg the tax brings in substantial amounts. Can public services really cope with further cuts?
And what action will the EU threaten if we embark on a ‘tax haven’ strategy. They could make tax transparency a condition of passporting for the financial services sector. They could nullify any tax haven benefits we might want to offer by adopting a common consolidated tax base.
We also want to use Brexit to stimulate a wider debate on other topical issues. Is tax an effective competitive tool that really brings growth and jobs? Can we build a consensus around how to simplify the tax system? How effective is HMRC and what will the impact of digitisation be? How do we create a fair and progressive tax system that is both attractive to businesses whilst providing enough money for quality public services we all want and need?
If you are interested in joining our conversation and want to sign up please go to our website http://www.appgresponsibletax.org.uk/.
There is something that this Government could do now to signal that they are ready to become a responsible global leader post-Brexit. They could live up to the commitment made by David Cameron, to implement public registers of beneficial ownership in the Overseas Territories. Just last week, almost a year since the release of the Panama Papers, we saw the ‘global laundromat’ leaks that exposed yet again how secretive shell companies are being used to launder illicit funds, involving some of our UK banks. The APPG is sponsoring an amendment to the Criminal Finances Bill that would help to put an end to this corrosive practice by insisting on transparency. In the House of Commons our amendment has the support of nearly 90 MPs from across eight political parties. It is now being moved in the House of Lords. By insisting on transparency we will do much to curtail the tax evasion and avoidance that takes place in the UK tax havens.