Alexander launches 'ruthless' tax evasion clampdown

Tax evasion is not a lifestyle choice, Danny Alexander tells the conference

The government is pledging to raise billions of pounds by clamping down on "morally indefensible" tax evasion, a senior Lib Dem minister has said.

Treasury Chief Secretary Danny Alexander announced plans to attack offshore havens and other tax "dodges".

Likening tax evaders to benefit cheats, he told the party's conference the measures could raise £7bn a year by 2015, helping to cut the deficit.

He also urged public sector workers not to strike over planned cuts.

Mr Alexander addressed delegates in Liverpool amid unease among some MPs and party members about their support for a £40bn reduction in public spending by 2015, which they feel is being driven by their Conservative partners.

Workers have been holding a demonstration near the conference venue in protest at plans to cut departmental budgets by between 25% and 40% over four years.

'Unacceptable'

The Lib Dems have come under pressure from supporters to show that the wealthy will shoulder a fair share of the burden as the coalition government seeks to plug the hole in its finances.

Unveiling plans agreed with the Chancellor George Osborne, Mr Alexander said the authorities would get £900m extra in financial support for the "ruthless" pursuit of tax evaders and those who use legal loopholes to minimise their tax bills.

Analysis

At this early stage, there is not much meat on the bone of these proposals.

Treasury officials are keen to say how much money will be earned - that is £8 garnered for every £1 invested by HMRC.

But it is totally unclear what this clampdown will mean for non doms or for those people who might be resident for tax in places like Monaco but earn most of their money in the UK.

Chasing Britain's super-rich may be red meat for the Liberal Democrats but it might be rotten meat for the Conservatives and their backers.

Nonetheless these proposals are not lacking in ambition and do send a strong signal to those who pay clever accountants to squirrel money away from the taxman.

And by lumping well-heeled tax avoiders, who are breaking no laws at present, in with benefit cheats and scroungers, the government is reinforcing its "we're all in this together" agenda.

Danny Alexander is hoping that peer group pressure may bring those outside the tax tent back in.

Ministers want to see a fivefold increase in prosecution for tax evasion and Revenue & Customs will be given in extra resources to create a dedicated team of investigators to bear down on offshore tax havens and online tax evasion.

"There are some people who seem to believe that not paying their fair share of tax is a lifestyle choice that is socially acceptable," he said.

"Just like the benefit cheat, they take resources from those who need them most. Tax avoidance and evasion are unacceptable in the best of times but in today's circumstances it is morally indefensible.

"We will be ruthless with those often wealthy people and businesses who think they can treat paying tax as an optional extra."

Tax evasion and avoidance cost the Treasury an estimated £14bn a year and successive governments have vowed to take action against it.

Closing loopholes and ensuring wealthy people pay the full top rate of tax would generate an estimated £7bn a year by 2015, he added, which is equivalent to the total income tax and National Insurance paid by more than one million workers.

Labour's Liam Byrne said he welcomed any measures to reduce tax evasion but suggested they were a fig leaf for an economic policy that "hits the poorest hardest and puts honest people's jobs at risk".

Outlining his approach to next month's spending review, Mr Alexander said he did not want to pick a fight with the public sector as the government cuts spending. He stressed they want to take nurses, teachers and police officers "with us", not "take them on".

He acknowledged concerns about the impact spending cuts will have on jobs and public services, saying the scale of the budget squeeze was "unavoidable" but ministers would go about it in a way that was fair to all.

'Tough times'

"I know that the next few years will be tough, very tough for some," he said.

"But I also believe that the changes we make - empowering you, trusting you, listening to you - will make the public services a more rewarding place to work."

Start Quote

We will be ruthless with those often wealthy people and businesses who think they can treat paying tax as an optional extra”

End Quote Danny Alexander Chief Secretary to the Treasury

He sought to counter the arguments of trade union leaders who last week vowed a co-ordinated campaign of industrial action against what they say will be "savage" cutbacks.

"I know there are a minority in the trade unions who will deliberately misrepresent what this government stands for because they are spoiling for a fight," he added.

"Please don't allow their political motivations to push you into doing the wrong thing for the country. We do not want to take you on. We want to take you with us."

With deep spending cuts looming, Lib Dem leader Clegg has acknowledged that the leadership could be in for a "rough ride" at the conference.

Whoever was now in government would need to be taking difficult decisions, he told the BBC, and the Lib Dems must "grit their teeth and hold their nerve".

"This is clearly a long game... If you want to have any credit for taking difficult decisions, you have to take ownership of them now."

'Learning curve'

On welfare cuts, Mr Clegg said it was right to look at all benefits, including those paid to those on middle incomes, but would not confirm reports that an additional £4bn of budget were planned.

But Mr Clegg has been accused of keeping Lib Dem MPs in the dark about discussions on cutting the welfare budget.

Portsmouth South MP Mike Hancock, who has rebelled against his party on several Commons votes, told the BBC's Politics Show South - in an interview to be broadcast later on Sunday - "I don't want to be told by Nick Clegg that this is how it is going to be."

"I want to be asked by Nick Clegg, is that what you want to happen?"

Former party leader Charles Kennedy said public spending had to be scaled back but it was "legitimate" to question how "far and fast" the coalition was going about it.

More widely, he told Andrew Marr the coalition was a "learning curve" for both parties and while the arrangement was not his "first choice" he said it "had to succeed".

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