Michael Meacher speaks for the voiceless on tax justice

Michael Meacher believes the UK GAAR proposal is narrow and ineffective

On the face of it, Meacher is an unlikely hero of the tax justice movement. He has been an MP for more than four decades, but none of his briefs – as Under-Secretary for Industry and Under-Secretary for Health and Social Security in the Harold Wilson and James Callaghan governments and as Minister of State for the Environment under Tony Blair – included tax. His political career is now approaching its twilight years, but Meacher has shown he is far from ready to give up the fight on the issues that are important to him. Top of that list is tax justice.

Last month, Meacher was afforded the rare opportunity to get a private member's Bill on the record, and he chose to use it to highlight the inadequacies of the government's efforts to tackle tax avoidance through its general anti-abuse rule (GAAR). The Bill, written by activist accountant Richard Murphy, had the good fortune of coming on the day the GAAR consultation closed and a day after Meacher led a three hour debate on avoidance in the House of Commons. While his efforts are staunchly opposed by the Conservative-led government, it has added momentum to the campaign for greater tax transparency and public pressure to crack down on avoidance.

When we met, immediately after the Bill was read in Parliament, he was on his way to hospital following an accident, his fingers in bandages and his face cut. That he was keen to delay the doctors to sit down and talk about his GATAP Bill shows perhaps more than anything else just how serious Meacher believes this issue to be and just how serious he is about his cause.

The chance to table a private member's Bill does not come around often. They are allocated only 13 days each year and only five hours of debate are given to each session, in which multiple Bills, successfully proposed by MPs in a ballot, are on the agenda with no overtime allowed. That Meacher was able to get his Bill on the record alone was a miracle.

"What happened today was a classic in Commons filibustering and shenanigans," says Meacher. "There were three Bills, mine was number three. The first two were both agreed with the government, and in fact concerted with the government. Our front bench in both cases accepted it, no one would disagree with it. We had five hours. But how long did it take two consensual Bills to be agreed? Four hours and 49 minutes, which left me 11 minutes."

Nevertheless, Meacher was able to use those 11 minutes to make his speech and commend his Bill to the House. It has no chance of being accepted; he admits as much even as we have barely sat down.

"This is not going to see the light of day if for no other reason than the government has a majority and they bitterly dislike it and they could never accept a GATAP," he says. "It's not a PR exercise, I'm promoting a cause. I made two speeches on two consecutive days, which is almost unheard of. You wait for weeks to make a major speech, then three come along at once like the 77 bus."

Instead of a GATAP, the government is promoting a GAAR, intended to target artificial and abusive tax avoidance schemes which, because they are often complex or novel, could not have been contemplated directly when formulating the tax legislation.

But tax justice activists say the GAAR is too narrow and will only capture the most extreme and egregious cases of abuse, while letting most slip through the net.

"Fundamentally, my Bill will stop tax avoidance and the government's won't," says Meacher.

Meacher and the Association of Revenue & Customs, the union which represents senior officials at the UK tax authority, believe the real purpose of the GAAR is not to counter tax avoidance, but to narrow its definition, making everything else ethically and technically acceptable because it is outside that narrow remit.

"It actually is extending the boundaries of what is acceptable as legitimate tax avoidance," he says.

Meacher's Bill is much wider. Its fundamental principle is that HM Revenue & Customs (HMRC) will be able to challenge any transaction where it believes the primary purpose is the artificial contrivance of avoiding tax rather than any genuine economic transaction.

The GATAP, taking in VAT and national insurance, covers a much wider range of taxes and avoidance methods than the GAAR, too.

"The GAAR does not see transferring income to capital as tax avoidance, which is frequently used," says Meacher. "It is regarded as tax avoidance under my Bill. At the core of my Bill is an economic test: if, having taken account of all the relevant economic circumstances of the transaction, it is judged that tax is not being paid in terms of that transaction but a wholly different basis, then it can be challenged by HMRC."

Conservatives opposed the Bill as being too wide, but Meacher does not believe this is the case because companies can challenge HMRC's decision in court. Since HMRC does not wish to be seen to be making a foray against a company and then losing in the courts, Meacher believes the tax authority will have solid evidence before they make a challenge.

The Bill also encourages HMRC to publish its views about what transactions and structures are acceptable. This would provide greater certainty for taxpayers and, of course, certainty is one thing taxpayers desire above all else.

"It would publish anonymised rulings so there should be greater certainty," says Meacher. "The aim is not just to have a wide net. It has to be in a manner that's certain. If you have a tax arrangement and you're still not quite sure by all the material put out by HMRC, the Bill proposes you can write to HMRC and ask if it's acceptable or not."

Taxpayers looking to take advantage of this service would be expected to pay £1,000 ($1,600) plus VAT, or 5% of the potential value of the arrangement, but Meacher stressed both would be less than what companies would have to pay an accountant or lawyer.

The Bill will be debated again on October 19, but with little chance of success. For the moment its impact will be limited to raising awareness and building momentum.

While poll trends suggest Labour is on course to win the next general election in 2015, two and a half years are a long time in politics and Labour has yet to draw up its main policy commitments. Meacher believes the time to do that is now.

"I am seeing [Labour party leader] Ed Miliband quite soon," he says. "There are four or five things I want to raise with him and this is certainly one of them. I regard tax avoidance as a very big issue and I will certainly be doing my best to impress that on him."

Whether or not Meacher will be able to sway party policy remains to be seen, but he was encouraged by the level of the debate he was able to provoke. Coincidentally, his name came up in Back Bench Business Committee Procedure the day before the Bill, which gave him the opportunity to lead a three hour debate on the subject he would never have been afforded otherwise. While it went along party lines, he said there was no "tribalistic mud-slinging", and the Conservatives, far from saying Labour was too extreme, treated it as a legitimate issue.

"They're saying yes it is an issue, yes you should pay your taxes, but we don't quite agree on what tax avoidance is," says Meacher. "Compared with two or three years ago, that's a considerable advance."

Despite tax never being a part of Meacher's ministerial brief in the Blair government, the issue is one close to his heart and he will continue to press it for his next nine years in Parliament.

"If you look back to my earlier career, I have always been interested in income distribution and the huge injustice of massive inequality and the fact that's growing," he says. "Tax avoidance is part of it."

Meacher points to the latest Sunday Times rich list printed in April, noting that the wealth of the 1,000 richest has increased by £155 billion.

"And who are the people who engage in tax avoidance?" he says. "Overwhelmingly this group. That's why I'm interested and have always been and will continue to be for as long as I'm in Parliament, which is the next nine years."

Meacher is a softly spoken man, but where he becomes most animated and passionate is when he's discussing the inequality presided over by what he says have been 33 years of Conservative policies – 18 years under Margaret Thatcher and John Major, 13 years under Blair and Gordon Brown, and now David Cameron. He is particularly incensed that the Conservatives seem to have no interest in cracking down on avoidance, despite public debt and public anger over service cuts.

"Most of the Tory donors are in this category," says Meacher. "I was staggered by research that shows half of all annual donations to the Tory party come from the banks. They're the most effective lobby in the country. The Tories will do nothing to hurt them. We're five years on from the collapse of Northern Rock that began it and you tell me what reform has taken place? They very nearly brought down the global economy, they wrecked the UK economy and led us to austerity. Quite apart from punishing them, what serious reform has been put in place and what is to stop another financial crisis happening next year? Everyone knows these beggars in the city get their colossal salaries from finding ways around regulatory arbitrage."

"It tells you about the nature of Britain and the class system and where the power lies. Nothing's been done," he adds.

The GATAP is not the only anti-avoidance weapon Meacher is supporting. With his public backing of country-by-country reporting "to block the massive loophole of transfer pricing", and of automatic information exchange, and his criticisms of successive Conservative and Labour governments attempting to weaken the EU Savings Directive – which he says should be strengthened to include offshore trusts – it would appear he is fully in the Tax Justice Network's camp.

"The non-dom rules ought to be abolished," says Meacher. "They were founded in 1799 and are being used anachronistically for completely different reasons. The UK is the only country in the world apart from Ireland which does not tax worldwide earnings. We should have a genuine crack down on the tax havens. Even [UK Chancellor of the Exchequer, George] Osborne would agree with that, but what he means by it is totally different from what I mean by it."

Meacher is keen to note that a large proportion of tax havens are British crown dependencies and that far from being a benefit to the UK, they represent a huge diversion of resources away from the national interest. This, he says, is channelling colossal amounts of money to tax havens for a miniscule number of people and he is outraged this survives.

He believes that full and automatic information exchange is necessary. He notes the principles of General Charles de Gaulle who once cut off a non-compliant Monaco's water supply over tax fraud.

"The real point is, if they don't comply, we, and other countries – the US and Germany are far more uptight about tax avoidance than we are – will regard all transactions with you as illegal. We'll regard you as a pariah."

Meacher says it is outrageous that tiny islands can massively distort the economic interests of the UK and that they are not being stopped.

"The Cayman Islands have 15 times more companies registered than people," he says. "30,000 inhabitants and 457,000 shell companies. Why doesn't this become a political issue? If you went out in the streets of Oldham and told people this, they would be really angry. If you got this money back, you wouldn't need these cuts, you could promote jobs and turn around the economy."

For Meacher, it is about the nature of power in Britain.

"The Conservatives, which have always represented the rich and the powerful and which New Labour tried to imitate, see things through the prism of their own values and principles," he says. "And they are fundamentally counter to the interests of the vast majority. Certainly the lower two-thirds, which don't have a voice. Labour have ceased to provide the voice, the trade unions are muted and the newspapers don't talk about it."

If Meacher has his way, the Labour Party, which he believes is moving in the right direction under Miliband, will provide that voice again. But in the meantime, it falls to him to speak for the voiceless. And with Meacher taking the cause of tax justice to heart, it will only continue to grow in prominence.