Tax

www.guardian.co.uk/politics/2012/ju...hmrc?CMP=twt_fd

As you are no doubt aware, there has been a lot of attention paid to tax in this country recently. It is quite a shift, because for some years the conventional wisdom has been that nobody likes tax, and avoidance (the legal version of not paying what you are due to pay) is natural, and indeed justifiable. Most people do think one should pay what you have to, and no more: so evasion (the illegal version of not paying what you are due to pay) has been seen as wrong. The public have not been much exercised by it, however: I think they assumed that HMRC dealt with it, and that the residual was an irreducible loss, much like shoplifiting. Shops make a provision for inevitable loss through theft. and it is reflected in prices. Folk don't pay much attention to that and I think they accept that the costs of total prevention would outweigh the savings. They trust the shops to have made that calculation and that the balance is where it should be, in terms of profits and prices.

For some reason that has changed. Perhaps through the efforts of pressure groups people have become aware that very rich people and companies don't pay much tax, and that it matters. Campaigns against such people as Philip Green, have been widely reported; HMRC's cosy deals with Vodaphone and Goldman Sachs have been subject to parliamentary inquiry and have been drawn to public attention; and most recently the Tax Justice Network have shown that between £13 and£21 trillion is lodged in secrecy jurisdictions and tax avoided thereby. People have realised that this is not a small problem after all: if TJN's figures are correct a great many countries currently in debt would not be: and that is not something we can or should tolerate. It is theft on a very grand scale indeed.

So our government has decided to respond and it seems that they believe the problem is plumbers!!

It is well known in this country that certain trades will give a discount for work done if the customer pays in cash. It is equally well known that the source of this discount is the fact that the payment is not declared and is therefore received tax free. This is known as the black economy. It is legal to pay in cash: but it is illegal not to declare the income for tax purposes. The customer can therefore pretend that he believes all is well: and take the benefit of the other person's tax evasion. This is not a defensible situation for either side: but it is wholly risk free for the customer and it has gone on forever

Revelations about industrial scale tax evasion and avoidance have led to a great deal of public anger: and it is not against plumbers. Now this might be characterised as a "two chickens" argument, and to some extent it is. But as with the shoplifting, it is possible to take the view that pursuing this aspect more than we do now is not cost effective: that may be true (unlikely) but this government is drastically cutting the staff who engage in tax enforcement and it is simultaneously launching initiatives against this kind of thing: which further reduces the numbers who are trained and equipped to investigate large scale abuse by big corporations. Those people are already handicapped by the fact that they are few: and typically one tax inspector is pitted against an army of accountants and such, who are dedicated to tax avoidance on a massive scale: a very unequal contest, further hampered by the utterly ridiculous policy which dictates they should work "in partnership" with those they seek to police. Not plumbers, naturally: just big business. That rot is throughout the public service, however, and the corrosive and corrupting effect is well know

According to the government there is £35 billion a year lost to tax evasion and avoidance. ( Other commentators put the figure far higher, but that is an argument for another place.) What is interesting in Mr Gauke's remarks is that he estimates that only £5 billion of that is due to tax avoidance, a figure impossible to believe given the evidence of the offshore stashes. But he says they are going to clamp down on that too: it is no accident that the only big organisation mentioned is the BBC: that is part of the ongoing attack on the BBC which is being fought on many fronts and which aims to abolish the BBC in the long run.

So the problem is plumbers and the public service: and it is long standing. Mr Gauke says so: he says people sold themselves into slavery in ancient rome in order to avoid tax. Believe that if you like.

On thing he said, I agree with:


Quite.