Tax Avoidance: “No Representation without Taxation”
The recent scandals involving major multinationals like Starbucks and Amazon, and celebrities like Carr and Paxman, have brought the attention and concern of the public to the issue of tax avoidance and evasion. According to a recent document published by War on Want, “as much as £20 trillion is now held in secrecy jurisdictions, better known as tax havens. These allow big companies and rich individuals to hide billions away from the prying eyes of the tax collectors. If this money was subject to tax it could generate as much as £180 billion a year in extra revenue”. Now our faith in the current tax system is to be challenged even more, as we learn that the new head of HMRC, replacing the disgraced Hartnett, famous for the so-called “sweetheart” multi-million pound deals with tax avoiding companies like Vodaphone, is likely to be the highly criticised head of UK Border Agency.
When CEOs of these “giant corporate parasites” employ accounting firms like Deloitte and KPMG to lower their tax payments, are they worried that the end result could well be the closure of rival firms, and thousands losing their jobs? They must know that by paying relatively next to nothing in tax, they are able to undercut the prices offered elsewhere, and ultimately drive others out of business. Amazon, for example, seems to be intent on clearing all highstreets of retail outlets, just as Tesco and the major supermarkets want to see the end of corner-shops, butchers and fruit and veg stores. Such “economic cleansing”, similar to some of London`s councils foisting off their poor inhabitants to more northerly climes, cannot be tolerated.
What are people who deliberately avoid paying their fair share of tax actually doing? Aren`t they telling the rest of us that the tax laws are for us, and that if we want a better country, with hospitals, roads, schools and all the trimmings of a modern 21st century society, we have to pay for it , because they will not? Of course, they want to enjoy the benefits, share the occasional Olympic-type glory, but when it comes to paying their share, they`ve presumably got better things to do with their money.
When rich individuals set up their own companies, so that income tax can be avoided and the much lower corporate tax be paid, or even better, when they can borrow from the company and pay no tax, as they have not actually earned anything, they lower the amount of money going into the Treasury`s coffers, and make future tax rises more likely, and cuts to hospitals` and schools` budgets more likely. They clearly are not concerned that such avoidance, losing the government billions every year as it does, will inevitably cause job losses, leading to mortgage and rent problems, depression and despair, and driving thousands more children into poverty.
The government of course, well aware of the electorate`s disgust, has declared war on tax avoiders; businesses that think they can pay no tax in Britain need to "wake up and smell the coffee", David Cameron famously said, whilst Osborne described all avoidance as “morally repugnant”. However, this mere window dressing is a feeble attempt to hide the truth, which is that the Tories have no intention of stopping what Margaret Hodge, in her role as chair of the Public Accounts Committee, has described as an “industry”. Let`s face it, if they invite representatives from KPMG to advise Treasury committees dealing with corporation tax, they are not going to close loopholes; if they introduce their initiatives, like the Patent Box wheeze, which results in some businesses paying as little as 5% corporation tax, they are never going to change the tax culture of the country.
So what can a government, or in our case, an opposition party, intent on such change, do? How about some transparency for starters? In this age of modern technology it is possible to make available online the tax details of all individuals and corporations, as various Scandinavian countries have done. This would put moral pressure of sorts on to CEOs and individuals to change their ways, as they see their careers and reputations reaching their rightful conclusions. Now that a General Anti-Avoidance Rule appears to be heading for the statute book, one deterrent becomes more obvious: a few prominent businessmen and “celebrities” in court, with all the associated press coverage, and some hefty fines, and even some prison sentences, could have a chastening effect.
One other possibility remains: could there be a better time to remind everyone what being a British citizen entails? Why should tax avoiders, who do their utmost to avoid making their proper fiscal contributions, maintain their right to participate in the democratic process? Why should sports people be allowed to represent us if they contribute next to nothing towards the costs of running their country? "No representation without taxation" sounds a good slogan! Should MPs, judges, councillors and such like be allowed to hold public office if they avoid paying their fair share? Should the taxpayers` funded BBC employ "celebrities" who have formed their own companies for one obvious purpose? Should known tax avoiders appear on the Honours list? Should knighthoods and such like be returned by people since discovered to have been fiddling their taxes?
So much could be done, or pledged, by a political party intent on ending the current culture of tax avoidance. They might make a few enemies on the way, but they would be sure to win many more votes! However, don`t hold your breath. In April last year, the Guardian reported that Cameron promised the tax details of leading Coalition cabinet members would be made public after the May elections. When he failed to do this, Labour`s silence was deafening.