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| CURRENT SECTION :: Money News | UK's most visited IT Contractor Site - 250k unique visitors March 2008 |
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Super-rich tax avoiders are costing each British worker £1,000 a year, representing a loss to the public purse of £25billion. Research by the TUC reveals corporations are avoiding £12billion a year in taxes, with a further £13billion a year owed to the Revenue by wealthy individuals. Half the amount lost to tax avoidance could raise the level at which higher rate tax starts being paid by £10,000 a year, which would help mid-tier workers on £39,825. Separate research by accountants UHY Hacker Young shows more than 3.7 million UK citizens now have a marginal tax rate of 40 per cent, up 20% from five years ago. According to the TUC, it is people on higher yearly sums – “the super-rich” - who aren’t putting enough into the public purse, thereby leaving others to carry the tax burden. The union’s analysis of the top 50 companies' accounts in the UK shows that their effective corporation tax rate is 22.5 per cent - not the 30 per cent agreed by parliament. The companies almost always pay 5 per cent less tax on average than they declare in their accounts and in the seven years up to 2006 their effective tax rate fell by 0.5 per cent each year. The report shows how super-rich individuals avoid paying their fair share of tax: £3.2 billion tax is lost by turning earned income into investment income, or by “shifting the income” to others, such as spouses, subject to lower tax rates. A further £3.8 billion is lost moving transactions out of the UK, £0.5 billion by turning income into a capital gain and £4.8 billion from various kinds of tax planning, says the research based on official tax records. To rebalance the system, a minimum rate of tax should be imposed on earnings over £100,000 a year, to limit the use of tax planning, curb tax avoidance, and avoid taxing middle Britain any further. Brendan Barber, TUC general secretary, said: “There is mounting concern at the growing gap between the super-rich and the rest of society, but so far there have been few practical proposals to do anything about it. “Our strong view is that the proceeds should be used to properly fund public services, where six million are facing cuts in their real pay, and relieve poverty – particularly child poverty.” Other proposals include stopping cuts to HMRC to ensure sufficient resources, abolishing the tax loophole for non-domicile holders, and charging income tax on capital gains held for less than a year. Revenue & Customs should also consider introducing a new 'general anti-avoidance principle' to make it easier to tax the super-rich and large companies. “This is not the politics of envy but the economics of fairness,” Mr Barber said. “It is all about getting rich and powerful people to understand they must play by the rules, not look for ways round them.” Feb 7, 2008 Email this article Printer friendly page Previous Page
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