'What we must do is create a legal system which penalises individuals and companies that use tax havens

Helal Uddin Abbas is the former Leader of Tower Hamlets Council

‘Nothing is certain except death and taxes’. This was the famous quote from Benjamin Franklin who was, among other things, a founder of the United States of America.

Franklin was one of the most distinguished men of his generation in many fields but he was wrong on the tax bit and I’ll tell you why. In his day, states, including the one he helped found, were relatively small with an equivalent tax base and a nearness of the executive to the people they ruled. You also didn’t have to deal with things like armies of tax lawyers, offshore jurisdictions and politicians who basically declared that greed was good and that the wealth created by tax evasion would trickle down, eventually, to the poorest.  That hasn’t happened and instead taxes are not a certainty for the super-rich. So what do we do now.

What we must do is create a legal system which penalises individuals and companies that use tax havens but most of all we need to create a public culture whereby people who use them are regarded not as shrewd business people who create jobs, but in fact pay the minimum wage and leave areas very often devastated when they move operations to somewhere more profitable. They are individuals and corporations who game the system and use every loophole, including legal means, to avoid taxes.   

Yet some of these entrepreneurs, courted by the media and held up as role models are amongst the biggest tax dodgers on the face of the earth. From everybody’s favourite underdog Richard Branson to national treasures The Rolling Stones the list of celebrities who use tax havens and offshore companies is endless.

Since I have been in the Labour Party, over forty years, every Labour party conference has vowed as an essential part of the next government to take on the expat tax dodgers, and then hasn’t. And not only hasn’t but has rewarded too many of them, and one is too many, with knighthoods and peerages. This time we have to change.

We are facing the biggest crisis in terms of people without food, heating and somewhere to live since the last World War and that was as a result of enemy bombing, not repeated economic crisis. All the way through stock market booms and busts we have been told that the market is for everyone and always rights itself with long term benefits for those who stick with it. After all, the best long term and safe investment is the FTSE 100 and property! There is just one problem with this scenario, the people in this country who need the help of Labour most don’t have shares and don’t own their own homes.

For the last twenty-five years I have been a grants coordinator with a leading London charity dealing with poverty and have not only seen it worsen with the trend accelerating. People who would have been in secure employment and owning their own home are now on short term contracts and house prices are beyond them. One bout of sickness and a loss of wages can mean eviction and a descent into poverty from which there is an ever-increasing chance of never escaping. We are returning to the Victorian Poor House.

The energy giant BP reports third quarter profits this week of seven billion pounds. This scale of surplus is no longer unusual and can be the source for what I am proposing, a specific Poverty Relief Fund, let’s call it PRF for the moment. The excess profits should be taken from the companies and simply paid into the treasury where it will be spread over a range of debts and projects. I am proposing a ring-fenced fund that deals only with a specific range of issues. At least one meal a day provided for every child that needs it, free travel for an adult taking a child to school, food vouchers to be exchanged at supermarkets which will give preferential prices, a law to stop all power and water companies cutting supplies for debt. If the Scandinavian countries can do this so can we, the list is virtually endless but achievable.  And finally. When I was leader of Tower Hamlets Council, I subsidised law centres and expanded the whole system of free legal advice, one of the things that the 1945 Labour Government saw as an essential human right. In my daily work with charities, I am seeing more and more human misery in terms of evictions, debt collection and everything associated with the feelings and reality of powerlessness when confronted by officialdom and authority. For every hundred thousand people there should be a free law centre provided by funds from the PRF. This may seem a bold and possibly unrealistic scheme totally at odds with the prevailing orthodoxy of the last forty or so years, but then so was the NHS once!

So! Back to Ben Franklin. For the last fifty years the political agenda has been led by the neo liberal free marketeers whose strategy has led us to the position we are in not just in this country, but worldwide. It was and is wrong and provably so therefore we must change it. It’s up to the next Labour government to prove that Ben was correct and that tax is as certain as death.

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