Parties should ensure any tax change pledges are not just a popularity contest for the 2015 general election, says ACCA

Politicians of every party face a stark choice between raising taxes or properly resourcing HMRC if they are to raise the revenue needed to stabilise the UK economy, ACCA (the Association of Chartered Certified Accountants) has claimed.

Chas Roy-Chowdhury, head of taxation at ACCA, said ahead of the Conservative Party Conference starting today (Sunday 28 September):

“Taxes will almost certainly rise, no matter which political party comes into power at the next General Election.

“We believe that, in order to raise the money needed to provide the services required, politicians must consider either raising VAT to 21 per cent, increasing National Insurance Contributions (NIC) or lowering the threshold at which inheritance tax (IHT) becomes payable” he said.

“None of these increases would be popular with the electorate and changes to NIC, which could be seen as a tax on employers, or IHT, would not raise the money needed – leaving a VAT hike –paid by everyone - as the ‘least worst’ option. But there is an alternative – which is to provide more funding for HMRC to enable it to collect billions of pounds in unpaid tax.

“HMRC itself estimates that £30 billion is lost to the Treasury each year through tax evasion, which is illegal, and through avoidance, which is not but is made possible by complex legislation. HMRC urgently needs investment to enable it to pursue tax avoidance and evasion more effectively and deal with the intricacies of tax legislation and it is an issue which politicians should address before they begin to think about raising taxes for hard-pressed businesses and the honest majority,” said Chas Roy-Chowdhury.

ACCA is holding a fringe event at the Conservative Party Conference, with The New Statesman magazine, on the topic of ‘Does business care about politics?’ on Tuesday 30 September at 10.30am.