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Brown to blitz welfare tax cheats

LONDON: Britain is to clamp down on widespread tax and benefit fraud, with a raft of new measures designed to tighten the net on the multi-billion pound "black economy".

Britain's Chancellor of Exchequer Gordon Brown promised on Thursday his March 21 budget would hit fraudsters hard, forcing people to turn their back on welfare and tax scams.

Brown, acting on a keenly awaited report on fraud compiled by Labour peer Lord Grabiner, said there would be no hiding place for fraudsters.

"We will crackdown on those who don't come back into the legitimate economy with tough penalties and bigger sanctions," Brown said."

"There are a million vacancies in our economy and our goal is full employment... I believe that people who can work should work and not claim benefit unfairly," Brown said.

Successive British governments have tried to tackle the burgeoning black economy, often with limited success, and the growing sophistication of fraud makes it increasingly difficult to track down and control.

Black economy fraud is wide-ranging, covering people who simply work for cash and dodge tax, to organised welfare scams where benefits are falsely claimed, sometimes on a huge scale by organised crime rings.

New rules to be introduced by Brown will mean that people convicted twice of benefit fraud will have payments withdrawn - a replica of the American-style "two strikes and you're out" crackdown.

The jobless may also be made to visit job centres regularly and at unpredictable times, and simply "sign on" for benefit more often.That will make working and claiming jobless benefits at the same time much more difficult.

The Grabiner report suggests around 120,000 people are working while claiming unemployment benefit at a cost of around 500 million pounds ($787.8 million) a year to the taxpayer.

BLACK ECONOMY WORTH 50 TO 80 BILLION POUNDS

The British government considers "the informal economy" as a whole to be worth anything from 50 to 80 billion pounds a year, equivalent to 6-8 percent of the country's gross domestic product. That means a huge loss of tax revenue for the government.

But fraud is rife across the tax and benefit system, the Grabiner report says, and suggests that tax evasion should be made a statutory offence, which could be tried in a magistrates court. Currently, only very large scale tax offences are prosecuted while small scale offenders may simply be fined.

Britain's Labour government has unveiled a series of measures to try to tackle long-term unemployment, but has been frustrated by the size of the black economy and fraud, and the apparent unwillingness of many benefit claimants to embrace the world of work.

"Billions of pounds have been lost to the informal economy every year, leaving honest, hard-working taxpayers, who play by the rules, footing the bill for those who either don't pay the taxes they owe or claim benefit while they are working," Brown said.

As part of Brown's measures, there is likely to be a new telephone hotline giving advice on joining the legitimate economy.

"There's many people who drift into the black economy and then find it difficult to get out of it. We want to give them the advice about how they can get back into the legitimate economy," Brown said.

Brown asked Grabiner last year to head a task force bringing together the Treasury, the Inland Revenue, Customs and Excise, the Department of Social Security and the Employment Service, to look at smuggling, fraud and welfare chea.-Reuters