31 October 2011
Churches ask Chancellor of the Exchequer to tackle tax avoidance
Representatives from a range of Christian denominations and
charities will hand over a letter to the Chancellor today (October
31) asking the Government to tackle tax avoidance in order to Close
The Gap between rich and poor in the UK. There will be a media
photocall at 12 noon at 1 Horse Guards Road, SW1A 2HQ when the
delegation, which will include Anglican, Catholic and Methodist
representatives, deliver the letter to the Chancellor.
The Twitter hashtag for the campaign is #fairtaxes.
The text of the letter to the Chancellor follows:
We are writing as senior representatives of a range of Christian denominations and charities who have come together out of a shared concern about the urgent need to Close the Gap between rich and poor in the UK.
As the Institute for Fiscal Studies has shown, not only is the gap between rich and poor in the UK higher than at any point for at least the last fifty years, the numbers of people in both absolute and relative poverty are projected to increase substantially in the coming years. It is our experience that this level of inequality is tearing at the fabric of society. The consequence is that increasing numbers of individuals and communities feel that they have no stake in wider society and have no realistic hope of their children bettering themselves.
We welcome the Coalition Government's commitment to protect the poorest and most vulnerable from the impact of the spending cuts, but we are concerned that the cuts are nevertheless having a severe impact on many of the people we work with on a daily basis. In this climate, as Churches, Christian organisations and individual Christians, we are increasingly concerned about the impact that tax avoidance and tax evasion are having on the public purse. In an age of austerity and spending cuts, we believe that tax avoidance is morally unacceptable and tax evasion has to be seriously addressed. Tackling these issues will reduce the need for further damaging cuts in public spending.
Tax evasion and avoidance is estimated by the Treasury to cost the UK purse at least £35 billion annually. Others estimate the number to be substantially higher. This is nearly 9% of UK tax revenue and the efficient collection of this revenue would lessen the demand to cut social and welfare expenditure which is hurting the poorest in our communities so much. Treasury estimates also suggest that those who are avoiding paying their contribution are mainly wealthy individuals and corporations, so the recouping of this money would not harm the poorest and most vulnerable.
We welcome existing initiatives on the part of Government to reduce levels of tax avoidance, but would urge that you take stronger and more decisive action to crack down on unjustifiable tax avoidance measures.
In particular, we would urge you to consider three specific measures.
A first, simple step would be to end the anomaly that when goods are bought by internet or mail order from a company based in the UK they attract VAT, but if they are bought from some off shore territories they are entirely tax free. A tax avoiding industry has sprung up, routing purchases though these territories purely to avoid tax. The £130 million that this costs the UK exchequer is small in comparison to the total loss, but for instance would be enough to largely protect the Sure Start programme and children's services from the 11% cut in the Early Years Intervention Grant.
Secondly, we would urge you not to proceed with the draft proposals on Controlled Foreign Companies announced on 30 June. Whilst advocates of the policy claim that it will increase the UK's 'business competitiveness,' what it actually offers is big incentives for companies to shift their financial operations to 'off-shore' tax havens as a means of avoiding paying UK taxes. Even on the Treasury's own estimates, this will cost £840 million in lost taxes a year.
Lastly, we would also urge you to seriously consider the introduction of a General Anti-Avoidance Rule into UK domestic law. Whilst we all await the outcome of the Aaronson inquiry, due to report today, we are convinced that such legislation could be framed to meet the objectives of deterring and countering tax avoidance in a fair way, whilst at the same time providing certainty for business.
Yours sincerely, Rt Rev David Walker Bishop of Dudley
Gwen Shaffer Co-clerk of Quaker Peace and Social Witness Central Committee
The Revd Leo Osborn The President of the Methodist Conference Revd Richard Mortimer Deputy General Secretary United Reformed Church
Niall Cooper National Coordinator Church Action on Poverty
Sr Maureen Tinkler Director Vincentians in Partnership
Anne Peacey Chair of National Justice and Peace Network
Alison Gelder Chief Executive Housing Justice
The Revd Jonathan Edwards General Secretary The Baptist Union of Great Britain