Danny Alexander describes aggressive tax avoidance as 'morally repugnant'

Treasury minister says 2p in the pound could be saved from ordinary person's tax bill by cutting avoidance by a quarter

Danny Alexander, the chief secretary to the Treasury, has waded into the row about tax avoidance, claiming an ordinary person's tax bill could be reduced by 2p in the pound if avoidance, or the tax gap, could be reduced by a quarter.

He refused to follow David Cameron in condemning the comedian Jimmy Carr's specific tax plans but said all aggressive tax avoidance schemes were "morally repugnant".

"As a Treasury minister I wouldn't get into any individual's tax affairs," Alexander said, in a tacit criticism of Cameron's decision to single out Carr.

Carr's scheme was seen as a particularly outrageous example by the prime minister, who last week described the set-up as "morally wrong". Cameron believes there is a distinction to be made between sensible tax planning to preserve a pension, and wholesale tax avoidance.

Speaking on the BBC's Politics show, Alexander attempted to define the schemes that are wrong, and those that could be construed as legitimate planning, saying: "What we are talking about is schemes that are set up, perhaps within the letter of the law as it stands at any particular moment, but which are set up purely with the purpose of reducing someone's tax bill."

His remarks came as the former prime minister Tony Blair said the mood on the debate had changed. "In the end this is a tough time and people need to know that the pain's being shared," he said.

The chairman of the powerful House of Commons public accounts committee (PAC) will reveal on Monday that parliament is going to investigate tax loopholes. Writing in the Times, Margaret Hodge, said some of the practices that had emerged "wouldn't look out of place in a banana republic".

She said the PAC will report on the issue of salaries paid through private companies to avoid PAYE and national insurance contributions in the next few weeks.

Alexander added: "These sorts of schemes which save wealthy people potentially many tens of millions of pounds in tax, they are paid for by everybody else.

"If we could narrow the tax gap in this country by a quarter we could reduce income tax for every basic rate taxpayer by 2p in the pound.

"So it's the working people of this country who are paying the difference because so many of the wealthiest think they can get away without paying their fair share of tax."

He was pressed by presenter Andrew Neil on whether the coalition had introduced a minimum tax level, as promised by the deputy prime minister, Nick Clegg, through his pledge of a tycoon tax.

Alexander said: "We took a major step in that direction at the budget in March. There were a number of tax reliefs in the tax system on things like interest payments, on business investments and so on which were uncapped, people could use them to the maximum. We've capped many of those reliefs. The only relief now that remains uncapped is charitable donations."

He said: "Those reliefs had been limited to 25% of somebody's income. If someone makes substantial donations to charity, which I think most people in this country would agree is a worthwhile thing to do, then they can reduce their tax bill."

He also claimed the general anti-avoidance rule in the budget would pick up some of the worst examples of tax avoidance.

Contributor

Patrick Wintour, political editor

The GuardianTramp

Related Content

Article image
Jimmy Carr tax arrangements 'morally wrong', says David Cameron

Cameron criticises comedian but says he has not had time to look at allegations about singer Gary Barlow's tax affairs

Patrick Wintour in Los Cabos and Rajeev Syal

20, Jun, 2012 @3:54 PM

Article image
Will Jimmy Carr's career survive the tax avoidance furore?
The comedian's hard-won reputation and popularity could be permanently damaged by his 'morally wrong' tax arrangements

Brian Logan

22, Jun, 2012 @5:41 PM

Article image
Danny Alexander promises crackdown on tax avoidance to raise £4bn
Lib Dem chief secretary to the Treasury also says those earning more than £50,000 a year may have to pay more

Patrick Wintour, political editor

25, Sep, 2012 @9:57 AM

Article image
The Guardian view on tax avoidance: half-hearted politicians are the weakest link | Editorial
Editorial: Dodges can sneak through the smallest crack. Which makes it infuriating when London and Brussels fail to tackle the gaps systematically

Editorial

12, Apr, 2016 @6:31 PM

Article image
Paying a plumber cash in hand morally wrong, says Tory minister

David Gauke, exchequer secretary, rails against cost to the UK of the hidden economy in which income tax is dodged

Nicholas Watt, chief political correspondent

24, Jul, 2012 @7:05 AM

Article image
Footballers accused of exploiting tax relief scheme
Chair of Commons committee says lack of tenants for £264m Newcastle data centres fuels perception scheme is aimed at tax avoidance

David Conn

20, Jun, 2013 @10:18 PM

Article image
No results found, Dave? The Google search for fair taxes goes on
Prime minister shows he rates hard-nosed multinationals more highly than a ‘bunch of migrants’ any day

John Crace

27, Jan, 2016 @5:28 PM

Article image
Direct aid, subsidies, tax breaks – the hidden welfare budget we don’t debate
Vast sums are handed out in corporate welfare, and official silence is skewing the debate, so the public don’t know where billions of their own taxes are going

Aditya Chakrabortty

07, Jul, 2015 @8:05 PM

Article image
Are salons really at cutting edge of tax avoidance? | Zoe Williams
Zoe Williams: The hairdressers' VAT dodge went out with the perm

Zoe Williams

23, Mar, 2012 @8:59 PM

Article image
These tax scams are all legal – that's morally repugnant | Simon Jenkins
Simon Jenkins: Cameron and Osborne thunder about the likes of Jimmy Carr, but seem terrified of upsetting the rich or closing tax havens

Simon Jenkins

21, Jun, 2012 @7:29 PM