Labour Party Pledges to Combat Tax Evasion for Funding NHS Initiatives
In a bold move, the Labour Party has announced plans to tackle tax evasion and close inheritance tax loopholes in order to generate funding for the National Health Service (NHS) and free school breakfasts. The party aims to raise an additional £5 billion per year by the end of the Parliament, which will be used to improve healthcare services, reduce NHS waiting times, and provide free breakfasts for primary school pupils.
Shadow Chancellor Rachel Reeves has vowed to crack down on tax avoidance and identified “funding streams” that will honor Labour’s commitments to the NHS and schools. The funds released from “taking on the tax dodgers” will be used to finance more hospital appointments, new scanners, and additional dentist appointments.
Labour has also pledged to raise £2.6 billion over the next Parliament by closing the loopholes in Prime Minister Rishi Sunak’s non-dom plan. UK residents holding a non-domicile status are currently exempt from paying UK tax on foreign income. However, Labour leader Sir Keir Starmer announced plans to abolish this tax status last year, and Chancellor Jeremy Hunt later adopted this policy in his Spring Budget.
The decision to scrap non-dom status altogether, rather than just restricting it as predicted, came as a surprise. However, Labour criticized the government for leaving a £400 million-a-year loophole in Sunak’s plan that would benefit some of the wealthiest individuals in Britain.
Under these new measures, the current rules for non-UK domiciled individuals will end in April 2025. Tax breaks will be abolished for residents who have lived in the UK for more than four years, and inheritance tax will be shifted to a residence-based system. Nevertheless, foreign assets placed in an overseas trust before the April 2025 deadline will permanently be excluded from inheritance tax.
James Murray, Shadow Financial Secretary to the Treasury, highlighted Britain’s historically high tax burden and its large tax gap. Closing the non-dom plan loopholes and tackling tax avoidance will release funds to invest in Her Majesty’s Revenue and Customs (HMRC), according to Murray.
Labour has criticized the government for not doing enough to close the £36 billion tax gap, which represents the difference between the amount of tax owed and what the government collects. The party’s policies to close this gap include increasing the number of tax compliance officers by up to 5,000 and digitizing the tax office. Additionally, Labour aims to expand the reporting of tax avoidance schemes to HMRC under the disclosure of tax avoidance schemes regime. These measures are expected to generate up to £855 million in additional funding for HMRC.
In response, the government has announced funding for 700 additional debt officers, both in-house and from external collection agencies. Chancellor Jeremy Hunt predicts that these efforts will raise over £4.5 billion in tax revenue by 2028-29.
Labour believes that its policies will yield fruitful results for the NHS, allowing for two million more operations, scans, and appointments each year, even on evenings and weekends. The funding will also cover 700,000 urgent dentistry appointments and enable the recruitment of more medical workers.
The party asserts that every policy outlined in its manifesto will be fully funded in every year, ensuring the sustainability of its initiatives.
In conclusion, Labour’s promise to combat tax evasion and close inheritance tax loopholes marks a significant step towards funding vital NHS initiatives. By cracking down on tax avoidance, the party plans to generate billions of pounds each year, which will be used to improve healthcare services, reduce waiting times, and provide free breakfasts for primary school pupils. With a comprehensive plan to close the tax gap and invest in HMRC, Labour aims to ensure that wealthy individuals pay their fair share and create a more equitable society.
