Following all the publicity about Jimmy Carr’s tax arrangements for his multi million pound fortune which means that he pays just a fraction of the amount the rest of us have to shell out, Liberal Democrat Chief Secretary to the Treasury Danny Alexander has written for the Sun newspaper about Government measures to clamp down on those who avoid tax.
Frankly, I think people who dodge the tax system are the moral equivalent of benefit cheats.
Both sets of people think they can bend the rules everyone else lives by for their own benefit.
The Coalition are already cutting income tax for working people but the truth is, if everyone paid what they owed, we could have even lower tax rates.
Whether you’re a tax dodger or a benefit cheat, our approach is the same — we will track you down and when we find you, we will come down on you like a ton of bricks.
Let’s also not forget what our taxes are for. They bring in the money that funds our schools and hospitals. They build our roads and they police our streets.
He went on to outline the measures the Government is taking to make sure people pay their tax which should bring in an extra £7 billion a year by2015.
You can read the article in full here.
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19 Comments
Good luck to him. But I’m reasonably confident that someone earning several million pounds per year is going to have more at stake avoiding millions of pounds of taxes than someone working for the income and revenue.
And I’m also convinced that full-time tax accountants are going to be more competent at avoiding tax than Danny Alexander is at enforcing its collection.
I am also not happy at DA bending to the Sun line on benefit cheats. I am fairly certain your average tax dodger (certainly of the variety that these efforts are targeting) is gaining an awful lot more than your average benefit cheat.
I’m glad government ministers are speaking out against tax evasion and look forward to the vigorous pursuit of people using offshore banking, including Tory donors, Lords, MPs and others.
However, Alexander’s argument is a bit odd – he’s arguing that if everybody paid their taxes he could cut them further, but then he also says that taxes pay for infrastructure. Does he want to cut taxes or pay for infrastructure, it’s hard to do both?
Why is someone who makes use of perfectly legal mechanisms to avoid tax “bending the rules”, and how can you come down on someone like a ton of bricks if they have done nothing illegal? If ministers find it distasteful (which they are right to) perhaps they could put their time to good use (i) getting the distinction between avoidance and fraud clear in their own minds and (ii) making the tax system a little less riddled with loopholes.
Well done the Mirror for exposing this. Well done Danny Alexander for reacting like that. And let’s hope he and the HMRC start serious work on fixing things taking account of Julia’s excellent points (i) and (ii).
If anyone thinks that “the RICH” are about to start paying their fair tax burden; then they are clearly in cloud cuckoo land.
This government . . . just like the last government . . . will DO NOTHING, to upset the rich elite or the system that they are ALL members of.
You people are kidding yourselves if you think Danny Alexander will change anything.
@Julia – yes – it’s not an easy distinction to make – but there is a difference between reducing your tax bill by using measures in line with the intention of the law (e.g. giving to charity) and reducing your tax bill by finding mechanisms which deliberately frustrate the intention of the law.
Of course the general anti tax avoidance measure should make this clearer, because it will then be illegal to do the latter.
@Silent Hunter – I doubt any Government will ever crack this completely, but this Government has made a good start. We will be able to see whether or not they’ve achieved their target by looking at future tax take. So far it looks like Danny Alexander has made some progress.
This government has been in power now for over 2 years, HMRC knows what the loopholes are. Seriously how difficult can it be to close the most blatant schemes. The cynic in me is convinced that while the Lib Dems are in coalition with the Tories pretty much all you will do is talk about. it. If the political will was there it could have been done by now, seemed to get the tax cut for those earning over £150,000 through quickly enough.
If EVERYONE had to be on PAYE up to a certain level – say £1 million, then at least this would a token effort to reassure us we are all in this together.
Solutions – Abolish all the exemptions and they can’t avoid the tax.
Another solution is to publish a list of tax avoiders on the front page of the Financial Times or perhaps the Sun – these people dont like publicity and this also then gives the rest of us a choice as to whether we do business with them.
My own self-assessment tax sheet keeps reminding me that I owe the Chancellor the huge sum of £2 – but does indicate they are not intending to collect my debt until my next tax return is due.
EXcellent to see this, I look forward to finding out in due course how effective it is.
But lets not draw a moral equivalence here between tax dodgers and “benefit cheats”.
Most “benefit cheats” find ways of dodging the system that will make them a small amount better off per week. For those who claim benefits their income is so low that this is money they desperately need simply to get by in life.
Tax dodgers on the other hand are often people who are well off and could easily pay the full amount of tax continue to live a comfortable lifestyle.
It’s the tax SYSTEM – penalising enterprise, employment, transactions and trade – that’s the real immorality.
@Geoffrey
And what exactly is “the full amount of tax” on an income?
Remember as a rule of thumb only the 4.1M tax payers who are paying tax at higher rate and above (ie. earn over £42,476) give more to HMRC than they get back in benefits etc. Interestingly, HMRC’s own figures show that the proportion of taxpayers paying higher rate and above has increased from 6.5% in 1990-91 to an estimated 13.8% for the current tax year.
The system does not “penalise” enterprise, employment, transactions or trade. People can still gain from all of these things.
Tax doesn’t prevent enterprise, for example, but it does mean that part of the profits from enterprise are taken by the government. Only PART is taken, and only from the PROFITS, so there is still profit remaining to be used or distributed by the enterprise as it sees fit.
Why is this fair? Because government is a service to the country, the service costs money, and the service delivers the environments in which enterprise, employment, transactions and trade become possible.
@Liberal Neal “…I doubt any Government will ever crack this completely…”
Which is rather the point I was making.
“…but this Government has made a good start….”
Er . . . NO . . . it hasn’t!
“…So far it looks like Danny Alexander has made some progress…
And that would be . . . ?
The cynic in me suspects that no action will be taken on K2 and other schemes which pass off income as “peppercorn-interest indefinite loans” because political parties can use precisely the same mechanism to avoid declaring large sums from private individuals as donations. It would hardly take a lot of effort to define what the spirit of the word LOAN means .
Many of the Conservative’s wealthy backers want a low tax rate for themselves (the delivery of which is in large part what they are paying for). Also the Conservatives’ own politics leans that way, never mind that the Thatcher era theory of ‘trickle down’ is clearly wrong. But public opinion and coalition with the Lib Dems make low taxes for the wealthy politically toxic. What is to be done?
Simples! Say one thing, do another.
Osborne talks up a storm about how morally repugnant tax avoidance is but actually does nothing much to prevent it. As Graham Aaranson QC put it in a review commissioned by Osborne (and which the government plans to adopt almost wholesale), “I have concluded that introducing a broad spectrum general anti-avoidance rule would not be beneficial for the UK tax system.”
http://www.taxresearch.org.uk/Blog/2012/06/19/tax-avoiders-have-nothing-to-fear-from-george-osborne/
It also serves another useful purpose enabling the Conservatives to argue that higher rates are a waste of time because they produce so little extra tax revenue.
So, the fact that the tax bucket is full of holes is a feature, not a bug.
We need a general anti-avoidance rule with real teeth but we also need a far simpler tax code (with correspondingly less wrinkles to hide in) that is genuinely progressive, not faux-progressive like the current one.
we are coming to get you……………………………… s l o w l y
but. Cameron got the soundbite……
@Stephen Donnelly :
“Cameron got the soundbite……”
but he may well be the one who gets bitten on the bum eventually for his efforts. I imagine that researchers for newspapers and TV programmes all over the country are sifting through the likely tax avoidance of Cameron and Osborne family members, in-laws, Cabinet member, Tory donors. It will be amazing if DC is not publicly called on to comment on the ‘moral turpitude’ of one or more of these in the next few weeks/months.
Andrew Neil’s closing credits on ‘This Week’ last night, where he had a Cameron ‘home video’ where Sam said that Gary Barlow was her favourite member of the band ‘Take that…and that.. and this.. and that’, were a scream.
Does OBE stand for:
Overflowing Brown Envelopes?
Offshore Banking Everytime?
Osborne’s Blustering Elderstatesman?