Tax avoidance: written in August 2012

The elephant left in the room of the potential Labour voters may well be immigration and/or crime and punishment, but sitting comfortably in the corner of the lounges of the Labour leaders and MPs is the jumbo known as “tax transparency”, something clearly none of them is keen to discuss.

Long before the Jimmy Carr expose, but keen as ever to cash in on the public`s distaste for bankers` malpractice, in April of this year Cameron said that the tax details of leading Coalition cabinet members would be made public after the May elections. No surprise that this didn`t happen; the surprise was Labour`s reaction, deafening  silence! Wasn`t this a wonderful opportunity to nail the “posh boys” once and for all? Cameron had clearly failed to honour the pledge because of the embarrassment the revelations would cause; they were either earning megabucks and putting most of it in offshore accounts, or having their ministerial and parliamentary salaries paid, not directly into their current accounts, but into their private companies, to avoid the higher rate of income tax by qualifying for the lower rate of corporation tax. Imagine the furore that would ensue, a scandal on the front pages around the world; government ministers elected to set fair levels of taxation for the people, fraudulently not paying them themselves. Resignations would be demanded by the electorate….but not by the Opposition! The only possible reason for Milliband and co. not putting the knife in the heart of the unelected plutocracy we`re forced to describe as a government must be that  his party is up to the same tricks; tax avoidance, costing the Treasury billions clearly isn`t the preserve of the rich Tory-voting upper classes and their Westminster cronies. Too many of the Labour MPs getting their  salaries paid into their own companies, possibly too many of the shadow cabinet, so neither Milliband nor Balls have the necessary ammunition to go on the offensive. For all I know it`s the done thing throughout Westminster; it certainly would explain the feeble attempts to claw back the billions lost in tax avoidance. Why not join with Obama, Merkel and Hollande in an anti-tax evasion alliance? Why no effective opposition to the job losses incurred by tax inspectors at HMRC? Reducing their number  by over three thousand is hardly an indication that parliament is at war with tax avoiders.

 The Guardian recently reported that HMRC was having difficulty with Ipsa because many MPs were trying to reduce their taxes because they were having to pay accountants to help them with their expenses! An Ipsa spokesperson admitted that the MPs were “more akin to businesses” these days.

So what can Labour do? Why not adopt tax transparency for all individuals and businesses as a pledge to be included in the next election? It could be easily done, by insisting that all tax records be put on HMRC`s website. If there`s to be a new non-predatory capitalism, everyone has to be sure the correct amount of taxes is being paid, by individuals as well as corporations. The argument that this would infringe the human right to privacy will have to be countered with facts about other countries successfully imposing it, and figures about how much money would be saved and how many job losses would be prevented. Add, also, another detail, that of including the topic, the  “moral obligation of paying tax”, in all schools` Citizenship or PSE curricula. Also, if, as Polly Toynbee wrote, in June, that  we need to be on a "war footing", tax avoidance needs to be seen for what it is, a crime against society, and those, who devise methods to evade the payment of what is due to the Exchequer by law, as criminals. Individuals who form their own companies, purely to avoid paying the full amount of taxation due on their salaries, need to be exposed, and the practice outlawed. In fact, as might happen in a wartime emergency, why not make it illegal for individuals and corporations to take any action which is deemed to be against the spirit of the taxation laws? A few high profile cases, and a few so-called celebrities and CEOs in gaol for a few months, could well work wonders.

 This is a jumbo-sized problem, an elephant who refuses to be ignored any longer. Addressing the problem will take time; Labour MPs will need months to end their unscrupulous practices, which even Osborne had the brass neck to call “morally repugnant”, but the electoral, not to mention ethical,  rewards would be enormous. We cannot expect capitalism to improve without more stringent measures being imposed on tax avoidance, and if that is to happen, clearer guidance is needed for Labour candidates, whose tax records would be under the most intense scrutiny. Once the tax records of all the candidates were in the public domain, the voters would be in a better position to make a sensible choice, and one would hope, in view of the values of fairness and justice, which the party is meant to uphold, it would be to the electoral benefit of Labour.

Milliband has been keen to stress, since his election as leader, that not all politicians are the same, not necessarily a view strongly held by a large proportion of the electorate. Making transparency on tax a key Labour policy would give Labour MPs and Labour candidates the moral advantage, crucial for election success, and begin the much-needed process of creating a new perception of the nation`s political classes. Delaying the process can only benefit the Tories, as crucial to future Labour success is winning over the 18-35 groups who easily can be put off voting altogether by more and more tax avoidance scams being exposed.

As a teacher in a 6^th form college I see a generation of decent and extremely industrious students in need of political guidance and leadership. They can be won over, but 21^st century thinking will be required: they are not impressed by people who say one thing but do the other, by people who criticise others whilst guilty of the offence themselves, by people who openly support the protests in Russia by Pussy Riot and others to look “cool”, but who endorse the gaoling of teenagers for four years for messing about on Facebook during last year`s riots, or by older generations pretending to listen to popular teenage bands. They are impressed by people with principles and who act in accordance with them, especially if those principles tie in with beliefs in fairness and justice. Teenagers respond badly to teachers whom they perceive to be showing favouritism, acting unfairly, and who refuse to listen.

Taxation, however, is something that is not always understood, and many people, of all ages, think 50% tax mean half of all earnings is taken.  Rather than merely criticise tax avoiders, politicians would benefit from explaining why such avoidance is unjust, because it leaves financial gaps which others have to fill, and because it is mainly practised by the wealthy, whose earnings dwarf the average income; a real –life scenario would be a good idea to publicise, with actual figures and only the names fictional. Imagine how effective this could be, if earnings were in the millions, and the tax avoidance meant the banker, footballer or whatever, lived on £40,000 a week rather than scraping by on the mere £30,000 without avoidance. On a related issue, Labour would do well to consider a new tax band for all those earning £75,000 -150,000 who seem to have escaped from the Coalition`s austerity attacks., and be more Hollande-like  in their fiscal thinking.

 So tax transparency, not often discussed or written about, a veritable “elephant in the room”, should be in the Labour party`s next election manifesto. It may require some “book-tidying” by some MPs, but the rewards could be enormous. I recommend it to the House!