Why on earth would the Sun focus on benefit fraud rather than tax avoidance, asks Alex Hern. Could it be because of the actions of their proprietor, one R. Murdoch Esq?
The Sun has today launched its campaign against tax evasion, vilifying those, usually the very richest in society, whose scams cost the taxpayer a total of over £15 billion a year (pdf).
The Sun has today launched its campaign against benefit fraud, vilifying those, usually the very poorest in society, whose scams cost the taxpayer a total of over £1 billion a year (pdf).
Tom Newton Dunn, the paper’s political editor, writes:
THE SUN today calls on readers to help end the benefits frauds that cost the country a record £1.2 BILLION last year.
We urge Brits to shop the cheats stealing from honest taxpayers when the nation can least afford it.
Campaigning Iain Duncan Smith last night backed The Sun’s crusade to end the scandalous benefits fraud crippling the country…
The Sun’s first move is to hand over the evidence on Denise Knight, 44, who enjoyed a day on theme park white-knuckle rides despite claiming Disability Living Allowance for a bad back.
The Department for Work and Pensions will investigate whether the mum from Llangadog, Carmarthenshire — featured on our front page yesterday — is still entitled to her £50-a-week benefit.
The decision of the Sun to hone in on benefit fraud is an odd one. If, as they suggest, the £1.2 billion a year lost to deliberate fraud is ‘crippling the country’, then tax evasion, which costs the treasury over ten times that, must be outright killing it.
The annual fraud indicator (pdf) estimates a £15 billion loss through tax fraud – deliberate underpayment of taxes. And rather than their targets being people who are ill-placed to defend themselves against accusations, the archetypal tax evader is Conrad Black – rich, above the law, and with full knowledge of what they are doing.
But that’s the low end of the estimate. The Tax Justice Network reported that almost £70 billion were lost to what they call the ‘shadow economy’.
And when you count tax evasion – which includes everything from companies having PO box offices in the Cayman Islands to individuals, from leading businessmen to top-tier politicians, paying themselves as companies – the difference becomes staggering. The TJN estimate over £120 billion of taxes are undercollected through evasion and avoidance annually.
Of course, there may be a reason for their blind eye. As Left Foot Forward reported last year:
As far back as 1995, the Independent reported that in the previous ten years, Murdoch’s News International had paid “virtually no tax”.
While corporation tax was set at 33 per cent, NI paid £11.74m of its £979.4m profit – just 1.2 per cent.
As recently as 2009, News Corporation’s proprietor was being pursued by his homeland’s government after failing to pay the correct rate of corporation tax, both in Australia and the United States.
Earlier this year, Australian Capital Territory (ACT) treasury officials won a legal battle,which awarded them A$77m for avoided taxes and duties. The Guardian reported in 2005 that Murdoch’s family company was moved to Bermuda; the tax bill of A$1.2 billion had the potential to be avoided.
Of course, it may be Murdoch is unaware of his corporation’s tax-shy practice given how little he knows about other key operational issues at News International.
Update: We’d underestimated tax avoidance by £50 billion. Our graph is now even longer.
See also:
• The government’s got big plans for workfare – don’t expect them to back down easily – Izzy Koksal, February 27th 2012
• The DWP’s ‘scrounger’ rhetoric is causing real harm – Alex Hern, February 6th 2012
• Labour’s untenable position on social security and disability – Declan Gaffney, January 3rd 2012
• Tax isn’t taxing when you’re Goldman Sachs – Alex Hern, December 20th 2011
• Hypocrite Murdoch tells us how to vote yet avoids billions in tax – Claire French, July 11th 2011
68 Responses to “It wos the Sun wot couldn’t do maths: Prioritising benefit frauds when tax fraud is 10x worse”
Jacob Hatton
define right. we all pay tax based on what we are entitled to pay. if you are an employee, you and your employer pay through PAYE. if not it becomes more complicated. we do not all necessarily do full tax returns like many nations do and so to many in the UK tax is just ‘the thing you pay at a set rate depending on how much dosh you have’, but that simply isn’t the case. in a lot of countries with complex tax codes everyone, including the poor will claim deductibles for this or that. what is ‘right’ is that the system is fair, not whether somebody legally claims a capital gain over an income when they sell their house.
Anonymous
What is really irresponsible about The Sun’s campaign is that it will drive up the amounts of public money currently wasted on chasing up the 96% of malicious calls made to the benefits hotline.
Shirley
@LordBlagger: did you know that part of the increase in DLA claimants is due to:
a) premature babies now living where once they would have died, but living disabled;
b) 1 in 5 soldiers come back from war with at least 1 limb missing;
c) general population growth: the population has grown significantly since DLA was introduced;
d) people surviving serious accidents/injuries/illnesses because of developments in medical care; e) people living longer and illnesses that would have shortened life incredibly are being treated better so people who are chronically sick live longer?
DLA is the most difficult benefit to get, has to be supported by your GP, includes a medical assessment and even then claims are regularly turned down. DLA fraud is estimated by this government to be less than 0.5%, and its own investigation department only managed to find 79 potentially fraudulent claims, but none of them were ever taken to court. Yes, there will always be a few who slip through the net, but please, do not be deceived by this governments claims about DLA and how giving Personal Independence Payments will help disabled people, it is their stated aim to cut benefits to disabled people by 20%.
I think you are muddling up DLA which is a non-means tested benefit to support the extra costs a disabled person has in their already difficult life with Incapacity Benefit, (now Employment Support Allowance) which the Thatcher and Major governments used to massage the long-term unemployed figures by moving people off unemployment benefits onto incapacity benefit.
JC
I don’t understand what you mean by not being rich enough to lobby politicians. You can write to your MP. I have done and he replied promptly supporting me. you could write an article here supporting tax reform and a more simple system with few allowances and loopholes. Doesn’t cost much.
Why is the Sun prioritising benefit fraud when the tax gap is 100 times bigger? » Tax Research UK
[…] Left Foot Forward has blogged that it would have been great to report today that: The Sun has today launched its campaign against tax evasion, vilifying those, usually the very richest in society, whose scams cost the taxpayer a total of over £15 billion a year (pdf) […]