Closing Westminster’s £35bn tax gap

Official figures from Her Majesty's Revenue and Customs last week revealed a “tax gap” – the difference between the tax which should be paid and what is actually collected – of around £35 billion. That’s a massive enough figure in itself.  Yet it does not even include "legal tax avoidance" by large firms using profit sharing schemes, as HMRC don’t treat this as tax it is owed. Tax experts suggest the true tax gap figure is closer to £100 billion.  

It is now unquestionable that a significant factor in this is the incredible complexity of the UK tax system – yet George Osborne’s Office of Tax Simplification employs only six people

One key opportunity for an independent Scotland will be the possibility of radical reform of the tax system to ensure a transparent, fairer and more efficient system.  That’s why the Scottish Government’s Fiscal Commission is undertaking work to recommend substantial reforms to improve the tax system we use after a Yes vote.

The Working Group includes Nobel laureate Sir James Mirrlees who lead a 2010 review of principles and characteristics of a good tax system for the Institute of Fiscal Studies. 

Our population share of even the very conservative HMRC estimated gap is around £3 billion – but rises to almost £8.5 billion if the higher figure is right.  

A more effective tax system therefore has the potential to make a very significant improvement to the public accounts of an independent Scotland – instead of Westminster’s endless austerity, where virtually nothing is off limits for cuts.

 

Image credit: http://taxfix.co.uk

Topics: 
Economy

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