As The Paradise Papers Show, The Tories Are Weak And Ineffective On Tax Avoidance

At Prime Minister’s questions this week, Theresa May gave the game away when she was keen to play up her Government’s record on tackling tax avoidance. However, she protested far too much, only further demonstrating how out of touch on tax avoidance they are.

The Government have spent the last few weeks defending a Finance Bill (now passed) which will ensure offshore trusts are protected from reforms to “non-dom status”. The Bill has been nothing short of a squandered opportunity to clamp down on tax avoidance and secure additional resources for much needed public services. It is also symbolic of a Government which serves the interests of a wealthy few at the expense of the many.

So the question is, did the Government introduce measures to help people in their daily lives such as proposals on investment, fair taxation or improving woeful regional productivity levels? Quite simply, the answer is a resounding no. What we did have foisted upon us was a Finance Bill which will water down workers’ rights, bring added financial burdens to small and medium-sized businesses and exempt offshore trusts from any reform of non-dom status.

In stark contrast, Labour put forward a number of anti-tax avoidance amendments, including one that would have removed the exemption for offshore trust. Another would have introduced a public register for offshore trusts. The Government, however, refused to budge, and blocked these amendments using arcane rules to deny Opposition MPs the ability properly to amend and scrutinise this legislation. They even voted down a reasonable proposal that just asked the Government to review the exemption of offshore trusts from the measures.

When it comes to the Government’s record on tax avoidance the Prime Minister also made several disingenuous and misleading statements at this week. She started with the claim that the Conservatives in seven years have closed more tax loopholes than the last Labour Government.

This couldn’t be further from the truth. Measures introduced by the last Labour Government have in fact raised ten times the amount of revenue than those introduced by the Coalition Government. Of the forecasted increase of revenue related to clamping down on tax avoidance from 2015-2019, only a quarter are due to measures introduced by this Conservative Government, the rest is set to be raised by Labour’s measures.

The Prime Minister also spoke about the Government’s “progress” in reducing the tax gap. However she refused to acknowledge that the tax gap fell every year from 2005 to 2010 under Labour. From the miasma she conjured up a figure of £160 billion she claims has been raised through extra compliance measures taken since 2010. Conveniently for the Prime Minister there is no way of verifying that figure from publicly available data. It appears that the Government is far happier seeking refuge in fantasy figures that are impossible to corroborate.

That also goes for being honest with the British public over Labour’s longstanding opposition to the Government’s protection of offshore trusts. Theresa May falsely claimed that Labour had blocked tax avoidance measures in March from being included in the then Finance Bill.

Meanwhile, back on Planet Earth it was actually the Government who refused to remove the exemption to offshore tax havens. To add insult to injury, it wanted Labour blindly to pass the longest Finance Bill in history without any parliamentary scrutiny or any opportunity to debate and amend its complex measures.

This attitude to what it considers inconvenient Parliamentary scrutiny has become all too familiar. Meanwhile, the Government seeks to maximise its powers through the backdoor. It wants to limit any scope for parliamentary oversight whether it’s the Henry VIII powers in the EU

Withdrawal Bill, the upcoming Customs Bill or the Finance Bill. We have a country that is technologically in the 21st Century but a Government that is psychologically in the 16th century – never the twain shall meet.

The Prime Minister may think that her belated protestations to clamp down on tax avoidance make her appear tough but invariably they prove quite the opposite. Tory tough talk is in inverse proportion to their action. It was ever thus with the Tories as far as tax avoidance measures are concerned.

The Paradise Papers reveal further how weak and ineffective the Tories are when it comes to tackling tax avoidance.

Peter Dowd is the Shadow Chief Secretary to the Treasury and Labour MP for Bootle