Green MEP, Molly Scott Cato, has joined EU unions in denouncing UK government action on tackling tax avoidance as a sham. Dr Scott Cato, who attended a special hearing on tax in the European Parliament, was presented with evidence of the impacts of cuts to tax administration staff across Europe. She believes that such cuts are a clear indication that governments aren’t serious about tackling tax avoidance.

Witnesses at the hearing [1] revealed that tax inspectors bring in five times as much as they cost yet there have been thousands of job losses in tax administration in recent years – around 10% of employees across Europe, though much higher losses in the UK. Speakers also claimed that government tax deals with corporations undermine both the role and motivation of tax inspectors and reduce tax takes.

According to the Public and Commercial Services Union (PCS), HMRC employees have nearly halved since 2005. There are currently threats of HMRC office closures across the South West, with a PCS spokesperson saying all offices south of Bristol could be gone within a few years. The Barnstaple office is one scheduled to close in May this year, but PCS say offices in St Austel, Plymouth, Exeter and Taunton are all under threat. The PCS argues that this has been counterproductive, resulting in significant increases in the UK tax gap. Tax Research UK estimates this has cost the UK economy up to £120 billion a year; £25 billion in tax avoidance, £70 billion in evasion and £25 billion in outstanding taxes. Molly Scott Cato said:

“The European Parliament’s new TAXE committee further reinforced the Green view that national governments have been complicit in tax avoidance by corporations and that Osborne’s apparent attacks on tax avoidance are little more than a pre-election gimmick. The massive reductions in staff numbers at HMRC during the last five years is nothing short of collusion in tax avoidance. ”

Speaking on the BBC Sunday politics show this weekend (from 57:30), Dr Scott Cato said it was Green Party policy to increase the number of people administering tax. She said:

“What we have to do is employ more people at HMRC. We would have an additional 15,000 tax inspectors every year who would bring in five to six times as much tax revenue as it costs to employ them.”   

Notes

[1] Witnesses included François Goris from the European Confederation of Independent Trade Unions (CESI) President of CESI, who spoke on the role of tax administrations in fighting tax avoidance, and Nadja Salson of the European Federation of Public Service Unions (EPSU). See CESI report on TAXE Committee hearing.

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