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Government half-measures on tax avoidance and pay not enough

So Jimmy Carr was out of order in his K2 tax fiddle, he was in Cameron’s phrase ‘morally wrong’ for trying to avoid tax, and now he’s tweeted his apology by saying he made ‘an enormous error of judgement’ (having the previous day said defiantly “I pay what I have to and not a penny more”), Cameron got his man, so that’s all done and dusted then.

Except it isn’t: one celebrity swallow in repentance doesn’t make a summer. There are 1,100 rich persons cheating taxpayers out of due tax on £168m a year by using K2, plus, it’s now been revealed, another celebrity Gary Barlow of Take That and 1,000 others who also squirrel away another £480m a year in offshore music investment schemes to dodge proper payment of tax. But that’s just the tip of the iceberg.

There are thousands of such schemes which cheat taxpayers (who of course have to pay more because tax dodgers pay less) out of a total estimated last year by HMRC at £42bn – that’s one-third of the entire UK budget deficit. In other words, if that money hadn’t been chiselled out of the reach of the Exchequer, one-third of the public spending cuts would not have been necessary. However, that HMRC estimate is almost certainly very conservative. Richard Murphy, an acknowleged expert at the Tax Justice Network, believe the figures could be as high as three times that – some £25bn in tax avoidance (immoral, but not illegal, like K2 and Barlow’s Icebreaker 2), £75bn in tax evasion (illegal), and another £25bn or so in tax liabilities written off as uncollectable.

Dealing with the tax avoidance machine operating on an industrial scale cannot be done by investigating one scheme after another and then blocking them seriatim. Many of the schemes are on a vastly greater scale than Carr and Barlow, who are relative minnows on the tax avoidance production line, and the artificial contrivance of some of the devices is so extreme – Barclays Capital being a doyen of such elaborate manipulation – that a comprehensive legislative outlawing of all such practices is now clearly necessary. My own Private Members Bill is designed to do this, and even the Government is now talking about a GAAR (general anti-avoidance rule) for next year.

And it’s not just companies and the banks who are the culprits. In the last few months it emerged that 25 mandarins were paid through companies by the Department of Health, as was the head of the Student Loans Company. City investors who made bumper profits from PFI contracts were founhd to have parked the proceeds offshore to escape tax. The fat cats owning Britain’s trains sent £700m to offshore tax havens. Senior civil servants posed as ‘consultants’ to dodge tax. Lycamobile, one of the Tory party’s largest donors, paid no Corporation Tax for 3 years. Some highly-paid BBC executives avoided tax by have their earnings paid into service companies. And so on and so on.

2 Comments

  1. Mike Fisher says:

    Why pick on one celebrity?. Can all the rich tax dodgers be named and shamed before we have more summer riots, then again all the poor people get the blame. There is so much frustration in amongst our poor population that eventually it will all break out again in our inner cities.

  2. mick hall says:

    It seems to me we are crying out for a web site which names and shames those who are dodging their tax bill. Cameron’s dad seems to have been a past master at dodging his responsibilities so I doubt we will get much support from that direction.

    On the Carr stuff, I wonder what the comic did to get under Cameron’s, skin giving how his old man operated, I doubt it has much to do with tax avoidance.

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