Better controls urged to raise tax take by 20bn
Author: Jonathan Werran, the MJ |
Local government chiefs have urged national tax authorities be as efficient in collecting levies as councils ? with a view to boosting annual tax take by 20bn and forestalling future spending cuts.
Analysis by the Local Government Association indicated that if HM Revenue and Customs (HMRC) matched local authority collection rates of 97.5% for council tax and business rates, the Exchequer would receive an extra 20bn each year.
Latest HMRC figures suggested 6.75% of tax, representing 32bn in total, goes uncollected each year.
Tax evasion (14bn) and tax avoidance (5bn) make up the lion’s share of the deficit, followed by non-payment to tax authorities (4bn), legal interpretation (4bn), failure to take reasonable care (3bn) and errors (2bn).
This cumulative total of uncollected money costs each household in England and
Wales 1,370 a year, the LGA calculated.
The LGA’s call for a coalition pledge to halve the uncollected tax deficit by the end of the current Parliament comes after recent warnings that small print contained in the
Spending Review effectively increases council budget cutbacks in real terms from 10% to 15% in 2015/16.
‘We cannot afford for local services like road maintenance, libraries and social care to continue paying the price of those who evade and avoid their tax liability,’ said
Cllr Sharon Taylor, chairman of the LGA’s finance panel.
‘Government has made positive noises on tackling unpaid tax.
‘We now want to see a clear timetable which sets out how Government will significantly improve its tax collection record.’
But in response, an HMRC spokesman said: ‘The LGA has fundamentally misunderstood the nature of the tax gap, which is not a measure of tax unpaid.
‘In fact, HMRC already collects 99% of all taxes and duties which are collectible from a very wide customer base of 60 million taxpayers, increasing our tax take by 1.4bn to 475.6bn in the last year alone.
‘On average we collect 1.3bn a day for the UK.’