Tax avoidance can have a devestating social cost. We shouldn't be afraid of pointing that out
Apparently we would all be doing clever things with our money if only we had the cash to pay an affective accountant. As the U2 guitarist David Evans( aka ‘The Edge) once rhetorically asked (presumably during time-out from telling the Irish government to give more money to Africa): “Who doesn’t want to be tax-efficient?”.
Indeed, who wouldn’t want to be tax efficient?
The answer very much depends on what sort of society you want to live in. Were the question phrased more honestly – i.e. bearing some relation to what the consequences of being ‘tax efficient’ are – I suspect the answer would be rather different. After all, lessening your tax bill through financial acumen may be satisfying from a purely self-interested point of view, but depriving cancer patients of otherwise affordable medical treatment, or preventing a dementia sufferer from getting the care they require in old age – both of which are consequences of depleted treasury coffers – hardly cover a person with glory. To deploy the well-known phrase: taxes are what we pay for civilized society.
Despite the lurid tabloid headlines about an underclass milking the benefits system, tax avoidance is a far bigger social scourge than fraudulent benefit claims. Just 0.7 per cent – or £1.2bn – of total benefit expenditure in 2012/13 was overpaid due to fraud. This compares with £5bn a year that the government loses through tax avoidance. The rich are ‘running rings around HMRC’, according to chair of the Public Accounts Committee Margaret Hodge. Meanwhile the poor get splashed across the tabloids with headlines about them being ‘on the take’. We get angry about benefit claiments yet, for every £1 swallowed up by benefit fraud, £4 disappears through tax avoidance.
To put this into perspective, George Osborne’s first budget planned for cuts of £6.2 billion and public sector workers currently face a three per cent rise in their pension contributions to save the state just under two billion. A modern hospital costs in the region of £90 million whereas a state-of-the-art school costs around £10 million. Free school dinners for every primary school child in the country would cost an extra billion.
This isn’t to say that we should rely on the Government to tackle tax avoidance (and evasion). We ought to be able to leave it to them, but only Ed Miliband has so far demonstrated a willingness to do anything significant about the problem.
The problem is deeper than that, anyway. Politicians will only act if there is a genuine groundswell of public opinion that sees tax avoidance as a big issue. UK Uncut have done much to change things in recent years with a number of high profile campaigns aimed at firms and individuals that squirrel their money away overseas, but more needs to be done to link in the public mind the real cost of tax avoidance – the hospital closures, the children denied otherwise affordable cancer treatment, the pensioners freezing in their homes – with the supposedly amoral act of becoming ‘tax efficient’.
The law is the most important tool in tackling tax evasion, but the point about tax avoidance is that it often takes place within the law. The law must be tightened where possible, certainly, but a public shift in the way tax avoidance is viewed also needs to take place. Tax avoidance, either by companies or individuals, is as anti-social as drink driving, and like getting behind the wheel in a state of inebriation it can have devastating consequences. The left shouldn’t be shy in pointing that out.
James Bloodworth is the editor of Left Foot Forward. Follow him on Twitter
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18 Responses to “Comment: Within the law or not, tax avoidance should be socially unacceptable”
blarg1987
A good lawyer could argue they could be prosecuted based on intent.
The argument companies give is to be tax efficient, now most people would see that being going to HMRC filling out a form and paying the tax HMRC ask for.
Instead some companies are hiring lawyers and accountants and creating reams of paperwork to use tax structures which are designed to encourage businesses to take risks etc as tax lowering vehicles instead. That is not tax efficent but tax beaurocratic.
madasafish
You clearly appear to have no idea how complex taxation is. It is NOT simple and anyone who suggests it is is either simple or ignorant.
Tolley’s Tax Handbook is now five volumes long and the tax code is over 11,000 pages.
If you run a multinational company operating in say 50 countries , you could have over 500,000 pages of tax code to follow,
Anyone who suggests you can do that without an army of lawyesr and tax accountants is living in la-la land.
Sorry to be so rude but your reply is risible and basically shows your utter ignorance of tax complexity.
As for proving “intent”.. you would be lucky to prove anything with modern taxation. Yes you can for obviously artificial schemes but taxation is not simple and there are choices in what you do.
Jacko
I reckon I could write your posts for you. Here’s a quick guide to Leon-speak.
1. How to start your post
Start off with “oh yes”, “ah yes” or “yes yes”.
2. Use one or more of the following
“keep on…” or “no surprise that you…”
3. Insert a bizarre, extreme comment such as “want to kill British workers”, or “demand all opposing voices be silenced” etc
4. Use a favourite phrase such as ‘spewing hate”, “lashing out”
5. Use a second favourite phrase such as “The Other”, “pogroms”, “1%”
6. Make a completely unfounded assertion about the person to whom you’re replying, such as stating that they live abroad, they don’t pay tax, they don’t work, etc, even though you patently have no way of knowing any of this.
7. Finish you post with “right” or *sigh*
8. Repeat ad nauseum, day after day, week after week, until you’ve racked up literally thousands of posts in a completely futile, pointless exercise.
Anyway let’s put it all together:
Ah yes, no surprise that you keep on spewing hate against the Other as you lash out against British workers to protect your 1%. Unlike you I pay tax, right. *sigh*
Well, it’s not perfect, but I’ve pretty much got it down. What does everyone else think?
littleoddsandpieces
The biggest tax avoidance is the return of the Truck System, now called the salary sacrifice system, paying low wages (far below the minimum wage) and part expenses (deductions for admin), thus avoiding paying National Insurance and PAYE by firms.
A tax barrister said this was denying up to billions of pounds of tax a year.
Worse.
It is leaving these part time workers outside the welfare and state pension system, by having no credits within the National Insurnace Fund scheme as too low waged – below the lower level to get either
NI credits or contributions.
This appears entirely legal, to leave workers facing a future of penniless starvation if fall out of work or when too old to do manual jobs AND to deny the state its rightful tax to fund feeding the starving (most people going to foodbanks are in work and Fareshare, the supplier of the foodbanks is not state subsidised).
The UK is the sole EU nation that does not provide free cafes, without conditionality and vouchers, equally feeding the working poor, poor pensioners and the unemployed, providing daily hot cooked meals and hot drink.
All workers with a retirement age from next year face losing their state pension altogether even
if paid National Insurance all their working lives.
See why, under my petition, in my WHY THIS IS IMPORTANT section, at:
https://you.38degrees.org.uk/petitions/state-pension-at-60-now
blarg1987
You are right you have to follow the tax affairs of that country, however you are missing the point,
Most of the complexities in the tax system are set up to encourage businesses to take risks to expand industry without affecting their major assets, so if the risks do not work out it does not take down the core industry.
What is happening is that these are being used as tax avoidance vehicles instead of for the purpose they were set up for.
Yes you do need some lawyers and accountants to manage the tax affairs, however you requires more of them to sort out schemes to avoid paying tax then paying it.
You could with modern taxation for example Starbucks and coffee, they buy their beans through Luxembourg, however the beans come from another country, one can say if it was meant to be efficient you would purchase your beans from country of origin not pay another country for them.