Osborne’s crusade

‘Tax evasion is morally repugnant. It’s stealing from law-abiding people who face higher taxes to make good the lost revenue.

Those who evade taxes, like benefit cheats, are leeches on society. And my message to those who try to hide their incomes from the Revenue in offshore bank accounts and false declarations is simple: we will find you and your money.’

That was written by George Osborne in today’s Observer. He promises that the deal with Switzerland is “just the start” of his campaign to close tax havens. The rest of the article then relates the coalition’s achievements at reducing tax avoidance by increasing charges on capital gains and non-domiciled taxpayers working in Britain. Osborne contrasts his swift measures with 13 years of inaction under Gordon Brown, who, of course, rejected a similar deal with Switzerland ten years ago. As Osborne puts it, “The last government presided over a bonanza of tax evasion and avoidance.”

But there are reasons for caution. There are doubts whether the deal with Switzerland will yield what the Treasury estimates, and the European Union may yet ruin Osborne’s plan. Friday’s Financial Times reported a spokesman for Algirdas Semerta, the EU tax commissioner saying:

‘We will carefully examine the text . . . to make sure the planned bilateral arrangements are compatible with the EU savings taxation rules. The Commission will. . . if necessary take appropriate action.’

International concerns and settling old political scores aside, Osborne’s crusade on tax evasion has a context within the coalition. The Lib Dems insisted on making the tax system fairer and, now that it ostensibly is, the government can turn its attention to other areas of the tax system – notably the 50 per cent rate, which the Deputy Prime Minister has said should be debated, which suggests that it probably will be.