The shadow Chancellor, John McDonnell, has said a Labour government would force people earning £1 million a year or more to publish their tax records.
McDonnell said the move would help curb tax avoidance and contribute to improved trust between the elites and the rest of society. He expressed hope that more transparency would encourage a more open and civic culture. Tackling tax avoidance would be a positive step towards funding public services more generously, he thinks.
The new rule would be based on taxpayers’ income, not their wealth. This means that homeowners whose property is worth more than £1 million would not be affected. The Guardian has highlighted figures from HM Revenue & Customs which suggest that there are approximately 16,000 people in Britain who earn more than £1 million a year. Moreover, about 5,000 earn more than £2 million a year.
There is currently limited publicly available information about the country’s wealthy, and even the leading authorities on tax and spending in the UK, such as the Institute for Fiscal Studies and the Resolution Foundation, complain that HMRC has failed to provide statistics for millionaires’ incomes.
In the current political environment, Mr McDonnell’s plan may seem unlikely to come to fruition. But the calls for increased scrutiny of high earners is another reminder that professional and transparent tax planning is essential.
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Tags: Private Client, Business Taxes
