With Jeremy Corbyn still ahead of the Labour leadership pack, who else’s fingerprints should we find on economic policy – so called Corbynomics – than tax campaigner Richard Murphy?
The influential accountant, blogger and author has seen Labour’s left wing Cinderella adopt many of his tax policy ideas.
Murphy is a deeply divisive figure among accountants, but his accounting-based critique of Chancellor George Osborne’s tax policy has presented an interesting alternative to the usual anodyne political discourse on the subject.
“Osborne’s approach is that of the accountant. I can say that: I am one,” wrote Murphy in one of his broadsides against the current chancellor. “All he’s interested in is balancing the books. How, or why, he doesn’t care. That’s his number one aim.
“Well I have a message for George based on my experience of running real businesses, which is something he’s never done: it is that if all you aim to do is balance the books you fail the customer and you fail your employees, and because you do that you end up going bust, even if the books do balance. And that’s what Osbornomics will do for the UK.”
Murphy has been contributing on a daily basis to his Tax Research blog on UK tax policy – and it seems Jeremy Corbyn was listening. The term “Corbynomics” has been bandied about by the media, but what does it actually mean? And from an accountant’s perspective, what does it propose for the tax system?
Corbyn’s central tax tenet, to echo Murphy again, is tax justice. “The UK has shifted from taxing income and wealth to taxing consumption; and from taxing corporations to taxing individuals,” said Corbyn. “We must ensure that those with the most, pay the most, not just in monetary terms but proportionally too.”
George Osborne’s inheritance tax changes were cited by Corbyn as an example of favouring the wealthy. According to Corbyn, the policy will “lose the government over £2.5bn in revenue between now and 2020. What responsible government committed to closing the deficit would give a tax break to the richest 4% of households?”
Corbyn’s tax policy isn’t just directed at the wealthy, but also business. One of his big ideas is to strip away tax relief for businesses, which he alleges amounts to a £93bn tax black hole. “Money which would be better used in direct public investment, which in turn would give a stimulus to private sector supply chains,” said Corbyn.
Corbyn’s policies have Murphy’s fair tax fingerprints all over them. Corbyn has repeated, verbatim, Murphy’s claim that government is missing out £120bn in tax revenues: comprising £20bn in tax debt, £20bn in tax avoidance and £80bn in tax evasion.
The £120bn figure quoted in Corbyn’s campaign leaflet The Economy in 2020 has come in for criticism. Murphy himself admitted to Bloomberg that only £20bn of that total is recoverable. “I didn't write the leaflet and that strikes me as an omission,” he said. “You can’t ever collect all the tax that’s owing in an economy.”
Doubts about the figures aside, Corbyn made a tax crackdown one of his central policies. Many of his ideas on tax have been aired before, but at least one of them will resonate most with accountants - a promose to reverse staff cuts at HMRC and Companies House, and taking on more staff, to ensure that “HMRC can collect the taxes the country so badly needs”.
Corbyn also suggests:
- The introduction of a proper anti-avoidance rule into UK tax law
- Country-by-country reporting for multinational corporations
- Reform of small business taxation to discourage avoidance and tackle tax evasion
- Enforce proper regulation of companies in the UK to ensure that they file their accounts and tax returns and pay the taxes that they owe.
What do you think about Corbynomics and its plans for the tax system? Do Richard Murphy’s figures stack up?