Tax evasion crack down could cover cost of South West council cuts

Cracking down on tax evasion could more than cover the cost of South West council cuts, campaigners claim, as they urge MPs to tackle financial loop holes.

Local councillors argue that up to £380 million could be raised for Devon councils alone, if all businesses paid their “fair share” of tax.

This is enough to counteract the £174 million of savings already absorbed by authorities, as well the £14 million of further cuts imposed this year.

Independent Devon County councillor Claire Wright has led the call for action, culminating with a public demonstration on Monday.

Her campaign coincides with the chancellor’s controversial tax deal with Google, which saw the internet giant pay a rate of just 3%. It also comes ahead of a vote on the final local government settlement, which will see grants for Devon and Cornwall cut by £27 million.

According to estimates by Tax Research UK, Britain loses out on roughly £19 billion in tax a year due to loop holes and failures to declare taxable funds.

Coun. Wright states that if that money was recovered and dispersed evenly between councils based on population, Devon would receive around £380 million and Cornwall upwards of £157 million a year.

“I believe it is vital to demonstrate to local MPs, who are about to vote in the House of Commons on massive funding cuts for councils, just how much funding may be available to us locally if the government made strenuous efforts to tackle this issue,” she explained.

“Although it isn’t an exact science, the exercise does demonstrate that the amount of money for Devon is very large and would run into hundreds of millions.

“£380m is twice the adult social care budget and 22 times the children’s care budget. Effectively, it is equivalent to around an extra £500 for every person living in the Devon County Council area.

“That’s money that could be spent on our schools, our hospitals, children’s services and the elderly.”

Counc Wright and her fellow campaigners are urging MPs to apply pressure on the Government to eliminate tax avoidance and protect their vital public services.

In particular, she has written to foreign office minister and East Devon MP Hugo Swire, whose involvement in UK commercial diplomacy “puts him in a sound position to press for action on this issue”.

Mr Swire declined to respond to the comments, but has already set out his views on tax evasion on his website. He states that corporate tax avoidance “is an area that rightly angers people”, adding that “for too long it has been too easy for people and companies to hide their money overseas” to avoid paying.

“Tackling tax evasion is a crucial and important part of any Government’s long-term economic plan and will take tough action against evaders and those who help others to evade tax. I am pleased that the Government, through HMRC, has a comprehensive strategy to collect the tax it is owed.”

The Public Accounts Committee, whose members include Torbay MP Kevin Foster, has recently announced an inquiry into the Google tax deal.