Tim Farron on tax: “We must not miss this opportunity to change the system”

Tim Farron by Paul WalterTim Farron has written a note about tax on his Facebook page. As party leaders publish their tax returns, (including Willie Rennie, that’s 5 minutes of your life you won’t get back if you choose to read this unremarkable document), he says that it’s actually the system you need to change. He’ll publish his in the next few days, but that is not really the point. Here are his comments in full:

The politics of envy helps no-one, but trust in politics does.

I have no desire to poke around in the Prime Minister’s private wealth, and definitely have no desire to force him to relive the pain of losing his father, having to confront that time all over again through the pages of national newspapers.

It is absolutely essential that British people have full confidence in our leaders, and that when decisions are made and Budgets are written there is not even a slightest hint of a conflict of interest or personal gain. But we are now in a position where people no longer have complete faith in this Government’s decisions.

Trust in politics and our ability to get things done is taking another hammering. It’s an poor indictment of our political system that the demand is now so great for the public to see politicians’ tax affairs. Are we now in a world where there is an assumption that a politician is doing wrong, or is playing the system?

In all of this, it’s the British people who lose out. The Tories will cling to power, unthreatened by a sensible Labour opposition, and Corbyn’s Labour will rush to find the biggest placard, the angriest slogan and the protestor with the loudest chant. Progress and action will be ignored.

I’ll be releasing my tax papers this week. It’s up to you whether you pick over them or ignore them. I don’t mind. But let’s not lose sight of what really is at stake. We can’t have faith that our system is working for all of us when decision makers seem so distant from every day decision making.

We must rebuild faith in politics by doing what matters, by reaching out and helping people, and doing what we were elected to do in the first place.

We can all join this escalation in anger, with politicians all trying to out-do each other in what inquiry they call for, or who’s head should be on the block, but none of this improves things for the better.

It is the sugar rush of politics. And sooner or later, everyone will crash back down, and we’ll all be back to normal.

We must not miss this opportunity to change the system.

This is why in March I asked Vince Cable to lead a major review on tax, to ensure people can have faith in the system and that it works in a truly globalised world.

But there are also key things the Government could do now:

1. Move to a real anti-avoidance rule. The anti-abuse rules currently in place do not go far enough and too much slips through the net.

2. Strengthen penalties for participating in repeated avoidance schemes – the changes this Government is bringing in won’t even allow someone to be named unless they have been involved in three separate avoidance schemes.

3. Use the anti-corruption summit this May to force overseas territories to hold a central list of beneficial ownership in each fund created, and for that list to be made available to HMRC

This can be the start of progress.

Let’s not lose focus. Let’s make a difference in people’s lives where it matters. That’s what they elected us for.

* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings

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17 Comments

  • Simon McGrath 10th Apr '16 - 5:06pm

    “Strengthen penalties for participating in repeated avoidance schemes”

    Tax avoidance is entirely (and by definition) legal. Therefore penalties would be completely inappropriate

  • paul barker 10th Apr '16 - 6:17pm

    I think it was a mistake for Tim to publish his Tax Returns, if we wont defend the right to privacy, who will ?
    If we want to make these sorts of Tax Avoidance illegal then we need to be suggesting possible Legislation. The USA has moved a lot farther than Britain on this, its certainly possible but it will need a wide level of Political consensus & neither Labour or Tories are interested in that.

  • ‘Strengthen penalties for participating in repeated avoidance schemes ‘

    Does he realize that tax avoidance is legal and evasion is illegal ?

  • Eddie Sammon 10th Apr '16 - 7:02pm

    First of all this is a classy statement by Tim Farron. I can’t believe after banging on about David Cameron’s Dad the BBC have joined in on going on about his mother. Is this really the biggest issue in British politics? If it was regular people wouldn’t pay £40 to go and watch millionaire footballers. The public are not obsessed with the affluent.

    However when it comes to Tim Farron’s anti-avoidance measures I disagree. There are loop-holes and they should be closed, but even Liberal Democrats have supported opening new ones, such as generous capital allowances to support infrastructure investment. People will say that’s not really a loop-hole, but that is the same what others are saying about Cameron’s gift from his mother.

  • John Barrett 10th Apr '16 - 7:52pm

    Politicians publishing their Tax Returns is a completely pointless exercise, as anyone with anything to hide will not have included such information on their return to the taxman, so it will do nothing to deal with any of the real problems linked to offshore tax havens, which now need to be tackled.

    As Tim said, we should do what matters, and this is not it.

    There are two categories of people and companies that need to be dealt with.

    The first group are the multi-nationals, the Amazons, Starbucks, Googles and Facebooks of this world, who want to pay nothing in corporation tax on profits earned in the UK, to help fund the very system that provides them with the educated staff, infrastructure and much more, which allows them to make billions of pounds of profit in the UK.

    The second group is the very rich, who are happy to continue to make the UK their home because of many reasons which result in a good quality of life, including; the legal system, security, the education system, cultural and social pastimes. While living here and enjoying the quality of life, they are also happy to hide their wealth away from the tax man to avoid contributing their fair share towards supporting anything here – including everything that supports their chosen home country and way of life.

    All this is nothing new, as anyone who can remember back to 2013, when leaked documents showed that out of £21 trillion (not billion) hidden in offshore accounts, that over a trillion pounds of UK wealth was hidden in the British Virgin Islands alone.

    And what did we do about it when we were in Government at the time? Not a lot.

    Hopefully Tim and Vince will be able to do and say outside of Government what Nick and Vince did not do and say while in Government.

  • “Corbyn’s Labour will rush to find the biggest placard, the angriest slogan and the protestor with the loudest chant.”

    People will have to make up their own minds on this, but I suggest they get on to the BBC iplayer and watch Jeremy Corbyn on the Andrew Marr Show this morning. I thought it was the best interview I have seen him give – moderate, reasonable and polite…. and sensitive about Mrs. Cameron Snr.

    I don’t think the Lib Dems will get anywhere by Corbyn bashing. All it does is remind folk of the Coalition years.

  • Philip Rolle 10th Apr '16 - 8:10pm

    This is what happens when you let morality into tax. A right mess. Differing people will have differing views on what is immoral and therefore wrong.

    Would Tim Farron explain what he thinks is legitimate and what is not?

    BTW, if we’re going to have a witchhunt, Tax Returns are insufficient: we need asset and capital source statements

  • Stephen Hesketh 10th Apr '16 - 8:36pm

    Not sure about the need for the envy reference – I haven’t personally seen any evidence of this during the current debate and it potentially gives sucker to those attempting to suggest that envy is a driver in this debate but otherwise well said Tim.

    This is however very much about fairness and the taxation system working fairly for everyone in society and not just the wealthiest.

    Ordinary people with ordinary incomes understand something is seriously wrong with a grossly unfair and over-complex tax system which, when worked aggressively, can even result in us paying more tax than a multi-millionaire or a profitable global corporation. Legal within the letter of the law but not even on the same page morally. And yes, I am perfectly happy to suggest that morality is important in matters of tax, welfare and other areas.

    People wishing to assist their families financially is, to me, entirely understandable and reasonable but the massive growth in the gap between the wealthiest and everyone else is pushing society towards a completely unsustainable and ultimately unstable situation – especially when it is taking place against the backdrop of ideologically-driven austerity and an agenda of public service privatisation.

    I am therefore very pleased to hear that Tim has asked Vince Cable to lead a review into our taxation system. Hopefully this will also consult widely and bring proposals to conference but in the meantime we should not lose sight of the fact that this is a very current topic and that it would be an excellent area to campaign on right now.

    A distinctive element of our philosophy is that we seek to balance the fundamental values of liberty, equality and community; I therefore hope all Liberal Democrats can agree that any reasonable and modern tax system must be fair, progressive, transparent and sustainable.

  • I don’t know what Tim is talking about when he’s pillorying ‘tax avoidance’. When Gordon Brown was Chancellor he changed the taxation rules to make it attractive for small businessmen like myself to set up limited companies and to take part of their income as a dividend on which Corporation Tax has been paid but Income Tax and, more importantly, National Insurance, isn’t. That is, if you like, tax avoidance, but was a matter of deliberate government policy (Ken Livingstone was pilloried by the press in advance of the last Mayoral election because he’d taken advantage of the policy). Similarly, having just inherited some money after the death of my parents, and having paid inheritance tax on the requisite part of their estate, I am choosing to give some of it away to members of my family in the hope that I live for the next seven years in order that they won’t have to pay inheritance tax on money that I have already paid it on. Yes, I hope I will avoid that tax, but I can see nothing reprehensible about doing so.

  • nigel hunter 10th Apr '16 - 10:39pm

    Talking about National Insurance businesses will have to pay more raising their costs. Low paid employees will see money taken away from them, the Living wage rise will disappear,, back to square one. They have no hidden money for they have to exist day by day. Any hidden money should be taxable and transferred to increase the lower paid. The increase in NI for the NHS will increase its costs again transfer hidden money to support it. Yes, the system should be changed to support the country.

  • Once again we see revived the age-old debate between Levellers and Diggers.

    Broadly, Leveller leaders demanded democratic, liberal rights most of which have come to pass, whilst Diggers can be interpreted as wanting rid of personal property and equal wealth for all.

    Modern-day Diggers have seized on Cameron’s inept handling of the Panama Papers’ revelations to pile opprobrium on people who are richer than some acceptable norm.

    As others here have mentioned, it is nonsense to think tax returns would include illegal activities. Demanding their publication, or what is called more transparency, would therefore achieve nothing in the fight against evasion. But it exposes what Diggers and their ilk consider to be unacceptable wealth.

    We even hear anger that the Prime Minister did not, unlike the rest of us, voluntarily pay tax presumably because he should have considered his relative wealth to be a crime.

    There is another context; having over many decades managed the compensation and benefits of senior executives in several large corporations, I can imagine them thanking the lord they resisted any lure to go into politics, to suffer such slings for, in their view, such miserly pay.

    It’s a good idea to set up a commission to examine ways of rationalising global tax collection. But we should recognise that publishing tax returns are merely a sop to alleviate a media-inspired frenzy designed to besmirch the relatively rich. And by the way, writing from France, I note the official media is seizing on the affair to decry what are surely Cameron’s welcome initiatives against international tax fraud.

  • As Simon McGrath says, “avoidance” is the term which is used to describe ways of reducing tax which are within the law. So, it might seem that when Tim talks about penalising avoidance, he doesn’t know what he’s talking about.

    However, there is of course a real problem, which is that clever tax lawyers can almost indefinitely arrange a succession of avoidance schemes which are temporarily within the law, simply because the law takes time to adapt to changes in financial arrangements. To deal with that problem, tax experts advocate a general anti-avoidance law, such that if you do something which is in theory legal but is only being done to reduce tax and is not what government wanted, then it should become illegal. That seems a reasonable idea and perhaps it is what Tim meant.

    NB, this would not catch things like incorporation (tonyhil’s worry), or ISAs, because in those cases, government chose deliberately to make tax-reducing options available. Accepting what government deliberately chooses to offer is not “avoidance”, and it certainly wouldn’t be brought within the scope of a general anti-avoidance law.

    My concern with Tim’s position, however, is that he seems to be determined to be gentler on tax dodgers than Corbyn is. Well, if that’s what Tim wants, then I’m with Corbyn!

  • ” To deal with that problem, tax experts advocate a general anti-avoidance law, such that if you do something which is in theory legal but is only being done to reduce tax and is not what government wanted, then it should become illegal. “

    I was under the impression that this is the way HMRC currently operate, hence why for several decades now HMRC will only provisionally ‘approve’ schemes, but reserves the right revoke any such approval pending evidence from actual operation – hence why the scheme Jimmy Carr invested in changed status once it became clear it’s sole purpose was to avoid/evade tax and not to actually undertake any real investment.

  • John Roffey 13th Apr '16 - 8:10am

    ‘We must not miss this opportunity to change the system.’

    Seems to me that it has already been, all but, missed as Cameron has successfully dampened the protests. It requires someone in the Commons to marshal the forces wishing for change. This means negotiating with opposition parties to focus on the real issue – the underpayment of tax by global corporations and the richest and to find a true remedy – this will not be achieved through personal attacks.

    Corbyn should be the one to do this – but unfortunately he is not a natural leader.

    If this marshalling of forces does not take place – Duncan will be proven right – the opposition will show themselves to be under-achievers!

    Seems like an opportunity for TF to remind opposition MPs that their primary purpose in the HofC is to hold the government to account and oblige them to introduce measures that will resolve important issue. This presently is far from the case.

  • Jayne Mansfield 13th Apr '16 - 9:26am

    @ John Roffey,
    I disagree. The genie has been let out of the bottle.

    Cameron is small fry. International reputations are at risk. Note what is happening today.

  • Jayne Mansfield 13th Apr ’16 – 9:26am

    ‘I disagree. The genie has been let out of the bottle.

    Cameron is small fry. International reputations are at risk. Note what is happening today.’

    Can you be more specific Jayne – as usual there are a great many regrettable issues in train at present.

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