Tackling Tax Avoidance
HMRC are to get an extra £77m to spend on tackling tax avoidance and evasion via offshore companies..
They expect to turn that into an extra £2bn pounds saved from tax avoidance. So, this begs the question why they do not spend more and cut fewer HMRC jobs.
With the clamour for action from Margaret Hodge and her Public Accounts Committee, the Chancellor announced that he was giving HMRC £77m more to tackle tax avoidance.
That takes the total up to £917m – less than a 10% increase.
However, Treasury minister, Danny Alexander, said that that extra money would bring in an extra £2bn a year. That’s by using it to tackle tax evasion and avoidance.
That‘s a Return On Investment of £26 for every £1 invested.
A survey a few years back showed that the Fortune 500 companies in America had a Return On Investment of $4 for every dollar spent on IT.
They said that this was the best ROI that they got from anything they spent their money on.
So, this ROI of £26 per pound spent by the Government is truly amazing.
Do you know what any businesses would do if they got that ROI?
They would pile more and more money into it.
Of course there is the law of diminishing returns. They may get less than £26 for every pound they spend on top of that.
However, they could come all the way down to an ROI of £4 per pound and lower and it would still be worthwhile.
High Return on Investment
So, the questions is, if they are able to get a Return On Investment of £26 per pound spent, why the hell are they not spending a lot more on it?
The Budget deficit would be gone in no time.
Tackling Tax Avoidance would, therefore, reap great benefits.
Or, am I missing something?