Government accused of aiding tax avoidance with post-Brexit freeports plan

PUBLISHED: 08:39 10 February 2020 | UPDATED: 11:30 10 February 2020

Boris Johnson salutes from the deck of the tall ship Tenacious, which is moored at Woolwich, in east London. Photograph: Dominic Lipinski/PA.

Boris Johnson salutes from the deck of the tall ship Tenacious, which is moored at Woolwich, in east London. Photograph: Dominic Lipinski/PA.

PA Archive/PA Images

Labour has accused the government of reviving a Thatcherite plan to introduce new freeports in the country, which they say will aid tax avoidance.

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The government says the ports, where UK taxes and tariffs will not apply, will create thousands of jobs, but they have dismissed allegations that it will lead to people dodging taxes.

Ministers have launched a consultation process aimed at naming the locations of the sites by the end of the year, so they can be up and running by 2021 after the UK leaves the EU.

Shadow chancellor John McDonnell said the move was an initiative of a "far right" government.

"This is the revival of a failed Thatcherite plan from the 1980s, designed to cut away at regulation and our tax base.

"There is very little solid evidence that so-called free ports create jobs or boost economic growth, showing this up as another ideological move from a far-right government.

"This plan only represents a 'levelling-up' for the super-rich, who will use free ports to hoard assets and avoid taxes while the rest of us feel the effects of under-funded public services."

But chief secretary to the Treasury Rishi Sunak denied the plan will facilitate tax avoidance, and said a US trade boss reassured them they are safer than other ports.

"I absolutely don't think they do and obviously you have stringent rules," the Tory minister told Sky News.

MORE: The true cost of freeports - and who really benefits from them

"It's worth pointing out that the EU is pretty much the only place in the world that doesn't use freeports, for example there are over 200 in the US, employing several hundred thousand people, hundreds, billions of dollars of trade happens in those areas and that's replicated around the world.

"The US head of customs and border protection told me a while ago he thinks their free trade zones are actually more secure than their regular ports, because they go through vetting with the customs bodies before they get given freeport status, and they have dedicated agents in the freeports, so I think that's a bit of a red herring."

The freeports could see goods brought in to them not receiving tariffs until they enter the domestic market, with no duty payable if they are re-exported.

Freeports could be located inland as well as adjacent to ports, the government added.

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