Tax

The change in the attitudes of ordinary working people to their obligation to pay tax is another example of the success of the very rich in convincing us that their interests are identical with our own. They have a variety of arguments which purport to justify their conclusions, founded on their conception of human nature, and elaborated through such notions as the Laffer curve. Most of them necessarily relate to the individual, but of course a great deal of the income and wealth in this country is generated in the form of profit for businesses, great and small.

For the plutocrat the imposition of tax is illegitimate whether it is to be paid by individuals or by companies, and so it is necessary to develop tales which justify tax avoidance for businesses as well as for ordinary people. There are a plethora of such arguments and they have resulted in multinational companies which do not pay tax on very much of their income at all. They transfer the location of profit to what Richard Murphy calls the "secrecy jurisdictions", (otherwise known as tax havens) which charge very little tax: and those places live off that income.

Richard Murphy reports today that he is at an international conference in Helsinki devoted to consideration of "tax justice". One of the speakers is Chinese, and he has told that conference that 73% of China's trade is channelled through those secrecy jurisdictions. That is a startling figure, is it not? It is extremely unlikely that the Isle of Man can absorb a huge amount of chinese goods, given the size of the place, and the same goes for the other tax havens. How can one pretend that 73% of china's total production is bought and used in the Isle of Man, the Cayman islands, Luxembourg, British Virgin Islands etc? It is laughable. Or that 73% of what they buy is made in those places? It is also an indication of the amount of tax avoidance/evasion which goes on. A great deal of it is legal: because of weak taxation laws and the blackmail that is "try to tax me and I will move my operation somewhere else" there is a great deal of indulgence of this. And we are told it is not possible to take any other decision because of the complexity of multi nationals' structure and operations. Well they are complex precisely because they are smoke screens: but if 73% of China's trade goes through those tiny wee places you do not really need to guess that the purpose is to avoid tax: for there is no other reason at all for doing that.

The only reason we do nothing about that is that we do not want to: the political will is not there. The devil is in the detail, certainly: but this is taking the piss.