Owen Espley of War on Want hit the nail on the head yesterday when he described Labour’s plan on tax avoidance as “tinkering around the edges.” 

It is an absolute scandal that while our NHS is being torn apart, local democracy slashed and public sector pensions cut, all in the name of austerity, £25 billion a year is lost due to tax avoidance. 

Add to this an estimated £70bn lost to illegal tax evasion and £26bn in uncollected taxes and the scale of the problem becomes clear — a tax gap of over £120bn.

In a typical stage-managed speech on Thursday to a University of London audience, Ed Miliband once again attempted to relaunch his flagging leadership with a speech in which he talked about a “zero-zero” economy. 

He righty focused on the appalling growth of zero-hours contracts and contrasted it with those at the top of society who pay zero tax. 

For an opener, it sounded promising — until we got to what the party was actually going to do about it.

Labour’s response offers a marginal improvement on a Tory policy which practically encourages tax avoidance by ensuring there is no penalty when caught, simply a requirement to repay avoided tax. Yet it still falls far short of the mark. 

Threatening a “tough” penalty which can be anything up to the value of the tax avoided still makes tax avoidance a calculated risk for big corporations and the super-rich. 

And if Labour’s estimate that this will raises £2.5bn a year out of the £25bn lost to tax avoidance is correct, the odds seem to be heavily weighted in favour of getting away with it. 

Either way, someone will still be pocketing the remaining £22.5bn and laughing all the way to the bank.

A real solution to this would involve far stiffer penalties — for both tax avoidance and tax evasion — to replace the current sweetheart deals, where companies have been allowed to negotiate the proportion of their missing tax they pay. 

It would also involve investing properly in the staff at HMRC whose job it is to catch these millionaire tax cheats. Since 2005, HMRC has lost almost half its staff and is set to lose another 10,000 over the next three years. 

It is no good threatening penalties if we can’t catch the perpetrators in the first place. 

You can almost hear the tax dodgers rubbing their hands with glee every time another cut to HMRC is announced.

But it is not just closing the tax gap which is needed. Even if the rich could actually be forced to pay their taxes, they would still be paying a smaller proportion than the rest of us. 

The richest fifth of the population pays just 35.1 per cent of their income, while the poorest fifth pays 39.9 per cent. 

This is just not acceptable and changing it should form a core part of Labour’s attack on inequality. 

What is needed is a complete overhaul of the tax system, including higher taxes for the rich and the abolition of regressive taxes such as VAT.

Labour could do worse than listen to the experts at PCS, whose tax policy is clearer than that of any of the main political parties and addresses the major issues if inequality.

Unfortunately, Labour’s response on this issue is symptomatic of its wider approach. 

Ed Miliband has claimed that he will take on “vested interests” and “powerful forces” to build a more equal society but, for all the rhetoric, he seems to have sidestepped an ideal opportunity to do just that. 

Until the Labour Party is willing to stand up clearly for oppressed and exploited working people and against the corporations and the rich who milk the system, it will fail to offer a genuine alternative.

It is time for the Labour Party to answer the question — which side are you on?