The shadow chancellor said in an interview with the Guardian that the richest taxpayers would need to publish their tax returns in a bid to improve transparency and openness under a Labour government.
He said, “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.
“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.”
The Labour MP added, “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?”
McDonnell told the newspaper that he was inspired by some Nordic countries which have similar rules in place, including Sweden and Norway.
The proposal would be based on people’s income and not their wealth, which means that people with properties worth more than £1m would be excluded.
The shadow chancellor is expected to announce his proposal in a pre-Budget speech on Thursday.
Last year, the National Audit Office (NAO) found that one in three of the UK’s richest people were being investigated for unpaid taxes.
The NAO said that HMRC was conducting “formal enquiries” on a third of the UK's high net worth taxpayers – those with wealth of more than £20m.
It said “it can be challenging” for the Revenue to understand the “complex” tax affairs of high net worth individuals, as they often have more choice over how they manage their income and assets than the average taxpayer.
According to the European Banking Authority, the UK was home to more than 80% of the European Union’s highest-paid bankers in 2015, with more than 4,000 financiers earning more than €1m (£860,000).
Six UK bankers were paid more than €20m, including bonuses.