On Saturday 10th March, leader of the Liberal Democrats, Nick Clegg, called for a new ‘Tycoon tax’ and a change in current law to target the problem of tax avoidance by Britain’s wealthiest…
Nick Clegg has made clear his ambition for a new ‘Tycoon Tax’ on Britain’s wealthy, should the Conservative party be successful in scrapping the 50p tax rate in the budget.
Clegg wants to target tax avoidance tactics used by the wealthy; ensuring they pay their ‘fair share’ through the introduction of a ‘minimum tax rate’.
The deputy prime minister has said that Britain’s richest pay a tax rate of less than 20 per cent on earnings due to the help of “an army of lawyers and accountants” using legal tax avoidance loopholes and tax reliefs. Not available to the average Briton.
Clegg wants to stop such tax avoidance tactics being adopted by Britain’s richest millionaires as the majority of the public pay 30-40 percent of tax on their income.
Nick Clegg’s ambition for a ‘Tycoon Tax’ to be introduced emerged after American businessman and politician, Mitt Romney – USA’s next expected Republican presidential candidate – exposed that he only paid a tax rate of 13.9 per cent on his multi-million dollar income.
Speaking at the Liberal Democrats’ opening day of their spring conference, Nick Clegg, said:
“You hope that kind of thing doesn’t go on in this country. So I looked into it. There are hundreds of people earning millions per year who are barely paying 20 per cent tax, forget 40 per cent, forget 50 per cent, forget 30 percent. They are not even paying 20 per cent.
“Therefore, I think it’s time that we look at what I call a tycoon tax. If you’re earning millions per year, if you’re able to pay an army of lawyers and accountants to basically pick and choose what tax you are paying, if you are paying as low as 25, 20 per cent or even less in tax, there should be a minimum fair share that you should pay to society.”
Clegg has not projected what minimum rate he believes a ‘Tycoon Tax’ should stand at, but it is thought that it will be a higher rate than that paid of the average British tax payer.
Clegg’s proposed ‘Tycoon Tax’ is unlikely to be included in this year’s budget as rising the personal tax allowance is high on the agenda.
At the last budget, Chancellor of the Exchequer, George Osborne, announced that the personal tax allowance would rise to £8,105 by this April.
A long-term pledge has been enforced by the coalition to raise the income tax threshold to £10,000 by the 2015 election; the personal allowance for income tax currently stands at £7,475.
Tax avoidance adopted by big businesses in the UK has also been targeted by the Government. Only two weeks ago two ‘aggressive’ tax avoidance schemes adopted by Barclay’s Bank were shut down.
David Guake, Exchequer Secretary to the Treasury, wrote an article in The Telegraph on 4 March 2012, in which he defended the decision to close down both tax avoidance schemes:
“It is unaffordable for anyone, whether business or individual, not to pay their fair share of tax when we are fighting to reduce the deficit. At a time when dealing with the debt is the country’s most important economic priority and a precondition of growth, we cannot afford to allow tax to be avoided. Indeed, closing loopholes – such a disguise remuneration – has helped pay for the tax cuts we have been able to afford for business.
“So it was absolutely right that we acted swiftly earlier this week to close down two avoidance schemes that were being planned by a bank.”
Guake added that the Government will continue in their mission to ensure certainty and fairness in the tax system; coming down hard on those who practice tax avoidance and does not pay their ‘fair share’.
Kevin Kinsella, of KinsellaTax, said:
“Where and how did Mr. Clegg get his information about ‘the hundreds’ of people earning millions of pounds and barely paying 20% tax. I am going to write to him because I like to think that my tax affairs are confidential and not subject to MPs having access to them. I will let you know what Mr. Clegg says.”
Have your received a tax enquiry from HMRC?