Oxfam: Tax evasion is costing the UK economy billions, whilst poorest families hit by austerity measures

Posted by Sarah Dransfield Senior Press Officer

31st Jan 2013

The equivalent of nearly £200 per household is being lost through illegal tax evasion as 220,000 people in the UK are forced to go to charity foodbanks.

Whilst many people in the UK are submitting their tax returns today, new figures from Oxfam reveal that illegal tax evasion is depriving the UK economy of £5.2 billion a year.

The charity is warning that the government's austerity measures are hitting the poorest people in the UK hardest and this missing revenue, which is the equivalent of nearly £200 per household, could go a long way to help rescue millions from the poverty trap, at a time when thousands of families are being forced to turn to charity foodbanks.

For example, it could be enough to:

  • Provide £21 a week to every household in the UK that is experiencing fuel poverty
  • Or change the effective tax rate for four million low-income workers, meaning they get to keep 45p of every £1 they earn, rather than 35p
  • Double the amount of universal childcare entitlement to 25 hours per week, giving struggling families more flexibility to work
  • Or prevent 9.4 million households from being £180 a year worse off by scrapping plans to put a 1 per cent cap on welfare uprating

Oxfam's Director of UK poverty, Chris Johnes, said: "As many people in the UK submit their tax returns today, billions of pounds owed to the government are languishing in offshore bank accounts, leaving ordinary people to pick up the tab for support and services that we all rely on.

"It is sickening and immoral that tax evaders get off scot-free whilst thousands of the poorest families are being forced to go to charity foodbanks in order to provide a meal, or go without heating when it's freezing outside."

Last week Oxfam, as part of a coalition of 100 leading charities, launched the Enough Food IF campaign calling on the UK and other governments to set new global rules to stop big companies dodging tax, whether in the UK or in poor countries, so that millions of people can free themselves from hunger. At the World Economic Forum David Cameron pledged commitment to use this year's G8 to tackle tax avoidance and evasion, and to take tough action on this issue at home.

Chris Johnes said: "The Prime Minister's promise to clamp down on tax evasion is welcome, and we need to see him act on this.  The negative response from the FTSE 100 shows what he is up against- but the vast majority of ordinary people want to see radical action to rein in tax dodging - and now."

The government's targets for clamping down on tax evasion are either low or impossible to ascertain. HM Revenue & Customs' Affluent Unit, for instance, has a target of pulling in just £600 million by 2015. Oxfam is calling for the government to do everything it can to ensure that every single penny of due tax is paid by increasing resources at HMRC and ensuring that offshore tax havens agree to the automatic exchange of all information with the UK through bilateral agreements.

Chris Johnes said: "The current targets are far too low. £600 million is a drop in the ocean, compared to the billions that are actually owed. We must get back all of this lost revenue, not only to help fix our economy, but to reverse cuts to support that the most vulnerable need and stop the shame of poor people in Britain going hungry in the 21st Century'."

ENDS

For more information, to receive a copy of the briefing note: How tackling tax evasion by rich individuals could help overcome poverty in the UK, or to arrange an interview please contact: Sarah Dransfield, Oxfam press officer, on 01865 472269, 07767 085636 or email: sdransfield@oxfam.org.uk

Notes to editors:

Tax evasion is when someone deliberately misrepresents or conceals the true state of their financial affairs in order to pay less in tax, by moving their money to 'offshore' bank accounts in countries operating as tax havens.

Oxfam's figures come from an analysis of the estimated amount taxable through Capital Gains Tax for the non-declared financial wealth being held by individuals in offshore accounts. 

The £5.2bn figure accounts for tax illegally evaded by individuals only. Official government figures put the complete tax gap in the UK (from companies as well as individually and those 'avoiding' as well as illegally evading tax) at £32 billion a year. 

Oxfam supports the work of the Trussell Trust, whose foodbanks have given emergency food to over 220,000 people nationwide since April 2012.

£5.2 billion would equate to £196 for every household in the UK, using figures from November 2012 when there were 26.4 million households in the UK.

Blog post written by Sarah Dransfield

Senior Press Officer

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