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The missing billions

18 April 2008

In the April 2008 edition of Activate, tax campaigner Richard Murphy outlined his analysis of the £33bn lost to the UK economy every year through tax avoidance and planning by the very wealthy.

In his report, he says £25bn is from tax avoidance – individuals and companies using tax law in a way parliament did not intend.

The remaining £8bn comes from tax relief to people who earn more than £100,000 a year, which means they pay the second lowest overall rate of tax in our society.

He also identifies that, if collected, about £5.6bn of this tax revenue could increase public sector employees’ pay at the rate enjoyed in the private sector in 2007; less than £10bn would increase the state pension by 10%; and there would still be enough for substantial tax cuts.

How to stem the losses? Stopping the job cuts programme in HM Revenue and Customs would be a start; better staff training would help; paying workers sufficiently to stop the private sector turning them into poachers would be a third.

In a fascinating insight into the true worth of civil servants, he calculates that – including overheads – each HMRC staff member cost an average of £48,033 to employ in 2006/07, but the average yield in tax for each employee was £4,636,588. So, each member of staff recovered 96.5 times their full cost of employment.

So the potential for well-trained officials to recover substantial sums still exists, and making them redundant makes no sense at all, he concludes.

For more information, and to download a full copy of his report The Missing Billions, visit the TUC website.
 

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