New tax rule to bring in less than some expected
LONDON (Reuters) - Britain expects to raise some 20 million pounds a year within three years through a new measure to tackle tax avoidance, according to budget forecasts on Wednesday which tax experts and campaigners called surprisingly low.
The General Anti Abuse Rule (GAAR), going through parliament as part of a wider finance bill, is being introduced by the government under pressure to tackle tax avoidance by companies which it estimates at 5 billion pounds a year.
Taxation experts and tax campaigners voiced surprise at how little the government expected to raise through the measure - an amount set to climb from 20 million pounds in the 2015-2016 tax year to 85 million pounds a year in 2017-18.
"I was surprised the numbers were so low," said John Overs, head of tax at law firm Berwin Leighton Paisner.
Campaigning group War on Want said the figures in Chancellor George Osborne's budget statement showed the measure was "a hollow PR stunt".
A spokeswoman for the finance ministry said that in addition to increasing the amount of tax paid, it hoped the GAAR would also protect revenue by deterring further tax avoidance. That benefit was estimated at 185 million pounds by the end of the period for which estimates were given.
Revelations that multinational corporations were channelling billions of pounds in income out of Britain have provoked public anger, but a panel of MPs had said that the GAAR would in any case have little impact on such entirely legal moves.
The government also announced other measures to cut down on tax avoidance and tax evasion by companies and individuals, including a measure to stop the use of offshore vehicles to avoid income tax. It predicted those steps would raise hundreds of millions of pounds each year.
Tax campaigner Richard Murphy, who sits on a government panel advising on the GAAR, said the narrow focus of the measure was the reason why it would capture so little. Businesses had welcomed the idea in principle, but had also been concerned they might suffer if its focus was too broad.
As part of the government's aim to give Britain the most competitive tax regime in the G20 group of major economies, Osborne said the headline corporation tax rate would be cut to 20 percent from 21 percent.
(Editing by Matthew Tostevin)
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