Cable says government will target tax havens

Vince Cable, the Liberal Democrat Shadow Chancellor, says the Government will target tax havens because of the credit crunch and a less supine attitude towards the City.

The UK has done little in the past to crack down on tax havens as it helped the City attract business, he notes.

Cable wants a robust and fair tax system which requires everyone to pay their fair share, especially as the UK cannot afford to lose tax revenue during the current recession.
“The evidence of systematic tax avoidance by rich individuals and UK-based companies strikes a particularly ugly note in these straightened times,” he says.

There is widespread political consensus that ‘non-doms’ should pay more, although the government proposals make little distinction between the super-rich and non-doms of more modest income, Cable notes.

Identifying tax avoidance by corporations is more difficult. While companies should be paying 28% of their UK profits in tax, evidence suggests many businesses pay much less, says Cable.
“To see these catastrophically mismanaged institutions going cap in hand to the government while simultaneously organising tax avoidance schemes at the expense of UK taxpayers beggars belief.”

There may potentially be a flood of British companies choosing to relocate their tax base to Ireland, says Cable. He believes tax simplification would tackle corporate tax-dodging while lower headline rates of corporation tax would in return eliminate the complex network of tax allowances. Cable urges greater cooperation between governments to reduce tax evasion.