A Labour government would force all taxpayers who earn at least £1m a year to make their tax records public, shadow chancellor John McDonnell has said.

As Philip Hammond prepares to deliver his first full budget next week, McDonnell told the Guardian he hoped more transparency about individuals’ tax affairs would cut down on tax avoidance and encourage a more open civic culture.

He said that Labour had been inspired by the practice in some Nordic countries, including Norway and Sweden, where the publication of tax records is common.



“There is a big issue now about, people don’t have trust in the establishment – they don’t think they’re listening to them, don’t think they’re paying their way or being fair. So one way of re-establishing some element of openness and transparency would be, why not – over a million, you publish your tax return. Why not?”

He added: “I think openness and transparency is the basis of confidence and trust. And what we’ve got in society is a lack of trust, in people who make decisions and people of the establishment. And I think we’ve got to start rebuilding trust in our society. And on the tax evasion, tax avoidance, it would help on that, certainly.”

He believes tackling tax avoidance is a necessary first step towards funding public services more generously. “The first thing is making sure that tax avoidance and tax evasion are tackled properly; and the second issue is making sure that you invest rather than give it away. At the moment we’re getting the worst of all worlds – they don’t collect it; they don’t tackle it; and at the same time what they do collect, they give away.”

Some senior politicians, including former prime minister David Cameron, published limited details of their tax affairs after the Panama Papers scandal last year, when the Guardian revealed details of investments in offshore trusts.

McDonnell said Labour would not legislate for all politicians to reveal the details of their tax affairs but stressed that he had made his own tax return public. “I have a responsibility, if I want to look after the tax affairs of the country.”

Several cabinet members, including the chancellor, Philip Hammond, and health secretary Jeremy Hunt, are millionaires, but few are likely to earn as much as £1m annually, although George Osborne, the Tatton MP and former chancellor, made more than £500,000 from speeches in the United States last autumn alone.



The new rule would be based on taxpayers’ income, not their wealth – so homeowners whose property is worth more than £1m would not be affected. Much less than 1% of British households earn more than £1m in income each year.



McDonnell’s policy chimes with a project by Finance Uncovered, a not-for-profit network of investigative journalists, many in developing countries, who have written to more than 7,000 politicians in 20 countries, including Britain, urging them to publish details of their tax affairs.

Finance Uncovered’s Nick Mathiason said: “There is, in our view, a clear and substantial public interest in elected representatives fully disclosing their sources of income and their tax payments. Elected representatives are paid by taxpayers to make decisions on taxation and on how our money is spent on behalf of all of us.”

McDonnell, a longtime champion of tax transparency, will announce his new approach in a pre-budget speech on Thursday. “This issue around tax evasion and avoidance, we are coming back on the stump on that,” he said.

Labour will make better funding for the NHS and social care its central demand for next week’s budget. McDonnell said Hammond had created some room for manoeuvre by loosening his tax-and-spending rules in the autumn statement, and should spend it on the struggling health system.

Asked how much extra funding the NHS and social care systems should be given, McDonnell said: “What they need; what they need.”

“If you can do that, I think what you’ll find is that it will stabilise the system – but it’s got to be consistently funded,” he said.

McDonnell is Jeremy Corbyn’s closest political ally, and the tax transparency policy is part of an attempt to show that the Labour leadership is pressing ahead with drawing up radical policies, despite the embarrassing setback of the Copeland byelection, when Labour lost a seat it had held since the 1930s.

Labour MPs such as Keir Starmer have emphasised the need for new policies to improve Labour’s election results. Photograph: SilverHub/Rex/Shutterstock

Shadow Brexit secretary Keir Starmer said on Tuesday that Labour has “no prospect” of winning the 2020 general election unless it changes course, and suggested Corbyn’s leadership was partly to blame for the party’s poor performance in the Cumbrian seat.

Corbyn has already floated the idea of tackling excessive pay by using government procurement projects to encourage companies to narrow the ratio between their lowest and highest-paid workers.

Asked about whether the transparency policy would raise concerns about privacy, McDonnell pointed to the system in Sweden and Norway, where the government maintains a database of tax details, from which anyone can request information.

“We can’t go on with a situation where people don’t have confidence in the taxation system. Like the Panama Papers – we can’t have a situation, with overseas dependencies and things like that, that goes on like this. Not when people are being treated on trolleys in hospitals,” he said.

Alex Cobham, director of the Tax Justice Network, welcomed Labour’s commitment to greater transparency, but suggested the priority should be politicians, rather than highlypaid individuals in private life.

He said: “I would say maybe it’s politicians rather than just the most wealthy we should be interested in. Ultimately we need to be more concerned about potential conflicts of interest, and trust HMRC is doing its job properly for everyone else.”

How much tax do British millionaires pay?

There are 16,000 people in Britain who earn more than £1m a year, according to the latest full-year figures from HMRC. Of this figure, about 5,000 earn more than £2m a year.

They earn a combined £39.8bn and are expected to pay almost 40% in tax to the exchequer, but the exact amount isn’t disclosed. In recent years, as increases in the personal threshold each year have taken more low earners out of paying income tax, they have made up a larger slice of the government’s income.

Combined with all the 300,000 additional rate taxpayers – those earning more than £150,000 – they contribute about £46bn, equivalent to £150,000 each.



As government ministers were keen to point out last year when figures became available, the amount this larger group pay each year has risen from 2% of the nation’s tax bill in 1997 to 27.3%.

But the publicly available information about the better off is limited. Even the leading authorities on tax and spending in the UK, such as the Institute for Fiscal Studies and the Resolution Foundation, complain that HMRC has failed to provide statistics for millionaires’ incomes except in aggregate.

It means that government claims of receiving higher tax payments from the super-rich despite scrapping the 50p tax rate remain a subject of dispute.

Little is known about the welfare payments they receive in the form of tax reliefs on pensions and other legitimate methods of reducing the tax they pay.