Osborne discovers that rich people dodge their taxes, bears seen looking for a quiet tree
In an interesting turn of events, following an instruction to HM Revenue & Customs, a review of a collection of anonymised personal tax returns reveals that the twenty biggest personal tax avoiders have reduced their liabilities by a pretty staggering £145 million (a prize to the first person to calculate the number of nurses/council houses/subsidised bus routes this would pay for).
And whilst the notion of a ‘tycoon tax’ was derided by many, including some Liberal Democrats, as a bit of a gimmick when Nick Clegg announced it at Spring Conference, it may turn out that he had a point after all. But, given George Osborne’s past record on taxation and the wealthy, who suggested an anonymised review of individual tax returns anyway?
And for those of you who take an interest in tax policy, more news on the consultation over a cap on unlimited tax reliefs is available on the HM Treasury website. With reference to the impact on charities, the document states;
The cap will not impact on the tax reclaimed by charities under the Gift Aid scheme. However, the grossed up donation (that is the donation made by the donor plus the tax reclaimed by charities) will be taken into account when assessing whether an individual donor has reached the cap. If the cap has been reached the donor will receive no tax relief on the grossed up donation above the cap and, as now, the donor will need to have paid enough tax to cover the tax repaid to the charity.
Which at least deals with one element of the charity sector’s concerns…
It’s renewal time for tax credits
Far be it for Liberal Democrat Voice to do the Government’s work for it (and yes, I can guess what hostile readers of this piece will be thinking), but the first renewal packs for tax credits will be hitting doormats across the country next week. It is expected that 6.5 million people will have renewed their claim by the end of July, and those eligible will be encouraged to do so online.
So, for those of you campaigning in the coming weeks, prepare for a bit of casework…
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12 Comments
Hi Mark, the impact on charity’s will be bad and the concerns are manifold – see here for a deconstruction of the Treasury’s ‘clarification note’ http://giveitbackgeorge.org/2012/04/04/how-to-read-the-treasurys-clarification-statement-on-the-gift-aid-cap/
As a wealthy man who does not pay income tax at the highest rate, GO must have more than a passing acquaintance with good tax planning, so why is he “shocked”?
Perhaps he was annoyed that his accountants had missed some tricks.
…………………..And whilst the notion of a ‘tycoon tax’ was derided by many, including some Liberal Democrats, as a bit of a gimmick when Nick Clegg announced it at Spring Conference, it may turn out that he had a point after all……………..
If you define ‘a point’ as a ‘full stop’ that is what GO did to the idea. Firstly, we were adamant that there would be no reduction in the 50% rate, then it was only if there was some sort of ‘Tycoon Tax’ and then….. well, we know what happened.
Of course George Osborne has only just learned about rich people dodging tax – Ken Livingstone’s only just published his tax return!
Poor Tories can’t seem to catch a break even when they start persuing policies which make the rich pay their way: it always screws over someone. Perhaps this kind of reform is a case of Nixon in China.
http://www.economist.com/blogs/democracyinamerica/2012/04/tax-policy The Economist has a blog on the Buffet Rule, which is very similiar to Clegg’s proposed Tycoon Tax. The writer concludes that closing tax loopholes in the tax code is a better way to raise revenues: I’m sure the recommendation is transferable.
I’m a particular fan of Emperor Diocletian – it would seem Polly Toynbee has happened across him recently – for a number of reasons, but his way of collecting increased taxes is worth mentioning: the taxes people paid were part of the public record, this acted as a deterrent to fraud. The second reform was that Dicoletian made the wealthy (decurions) liable for any shortfall in tax collection.
In other words, 1700 years ago, they knew that transparency and putting the greater burden on those most able to pay was the way to make tax work effectively. Why did we forget this?
Publishing their names on the front page of the Financial Times might be a deterent – or how about on Page 3 of the SUN on SUNDAY.
What I don’t understand is why, if the problem is “Some rich people give their money to dodgy charities”, the solution is to punish the good charities. The claim that “The cap will not impact on the tax reclaimed by charities under the Gift Aid scheme.” is misleading if the changes reduce the level of donations made in the first place.
I would also suggest a prize for whoever guesses which political party/parties the twenty biggest personal tax avoiders are most closely aligned with. Can’t be us or the tories, surely, because we’re going to take £145 million from them. Aren’t we?
>And for those of you who take an interest in tax policy, more news on the consultation over a cap on unlimited tax reliefs is available on the HM Treasury website.
It really irritates me when people write articles that include such statements but are too lazy to actually give the relevant URL, with the obvious implication that they don’t really want you to look at source documents or bother participating in the consultation.
For those interested the full Treasury statement can be found here: http://www.hm-treasury.gov.uk/cap_unlimited_it_reliefs.htm
Another deconstruction of the statement may be found here: http://www.ncvo-vol.org.uk/sites/default/files/how_to_read_the_treasury_0.pdf
A couple of worked examples (showing why the Treasury’s claim “The cap will not impact on the tax reclaimed by charities under the Gift Aid scheme. ” is misleading and potentially an outright lie) can be found here: http://giving-thought.tumblr.com/post/19684603109/giving-the-cold-shoulder-philanthropy-in-the-budget
Concerning the Consultation the Treasury statement states:
“A consultation document will be published in the summer. Before that point, Treasury and HMRC will be making contact with representatives from the sector to gather evidence and views that will inform the development of that consultation.”
Mark, if this is not the Consultation you were referring to then please kindly provide a correct reference and URL…
Finally, we can be thankful that the Treasury is finally admitting it has made a mistake on this. However, I do note the distinct lack of LibDem crowing about this, hence I can only assume that they played no part in getting this statement out of the Treasury…
£145m would pay all the costs of the three-year training of over 3,000 midwives; by chance that’s the number of extra midwives David Cameron promised before the last election he’d recruit if he became PM (the promise was dropped, post-election).