Chasing tax evaders vs flogging a dead horse

Words are a powerful tool, and rarely more so than when they are enlisted in the cause of propaganda. Stick with me, because I’m coming back to that. First, some context.

The UK debt currently stands at almost £1.5 trillion – yes, trillion.

Borrowing continues, thereby adding to the debt and, consequently, increasing the interest that the country pays on its debts.

Interest payments on the debt cost us over £40bn a year. That’s equivalent to 40% of the entire NHS budget, or nearly half of the spend on Education. In interest payments. On Government debt.

Now, into this context we must place HMRC’s best estimates of how much money is lost in tax evasion and avoidance (one is legal, the other is not; both are thought reprehensible). What will this staggering sum be? £40bn? No. £50bn? No.

In fact, HMRC’s own estimate is that it’s somewhere around £7.2bn. Seriously. That’s it. Others disagree and put the number at £17bn, but it’s hard to see how they calculate that amount. Even so, £17bn is still a piddling amount in the context of the total tax take and the extent of our debt.

I don’t know about you, but I want my government working hardest where it can do the most good, and where it has the best chance of achieving results. Tax as a moral issue is ok up to a point, but would you give the go-ahead for your tax inspectors to raise costs of, say, £3bn, on the off-chance of collecting that elusive £7bn? I wouldn’t. The law of diminishing returns is immutable, and I wouldn’t want to see all those lawyers and accountants cashing in for the fight.

Which brings me back to propaganda. In the wake of Starbucks’ agreement to pay UK tax, LibDem MP Stephen Williams said that tax is not a voluntary contribution like giving to charity. Can’t argue with that.

But then he went on to say that tax “is a legal requirement”, and that people like Starbucks have to stick to the law.

For propaganda purposes he uses some of the right words, but not necessarily in the right order, and taps right into the zeitgeist.

Starbucks haven’t broken any laws. They are operating within the law as it exists.

And who is it that frames that law? Well, gosh, it’s the likes of LibDem MP Stephen Williams, who was a Treasury spokesman. And who is it that examines these laws for loophole after loophole which they can then sell to clients? Why, it’s British accountants, of course.

Some time ago a Select Committee, had an accountant (whose identity I missed) in front of them.

Question: “How many of the tax avoidance schemes you have sold to your clients over the years are now illegal?”

Answer: “ All of them.”

Question: “But you still look for new ones.”

Answer: “Yes.”

Now here’s an interesting proposition: why aren’t we attacking the accountants who show the likes of Starbucks, Google and Amazon ways around our tax laws? Is it because they is British? Or is it because that doesn’t tap into our anti-American, anti-global sensibilities?

These are fair questions if only because, despite trying, I still haven’t managed to get Boots the Chemist into this debate. As a brand, Boots is as British as roast beef, and they are a far bigger miscreant in the tax avoidance world than Starbucks.

In any event, Starbucks, Google and Amazon provide employment in the UK. Starbucks, at least, pays rents, and local taxes, and buys from local suppliers. They are, in the jargon, a net contributor to the UK. And given the massive waste of public money here, I could really care less about a couple of £billion lost to the Treasury – of which Starbucks share would be a gnat’s whisker.

As an example of the extraordinary effort and hyperbole involved in these matters, I leave you with this thought. In what he called “the largest tax evasion settlement in UK history” George Osborne revealed a deal with Swiss banks which is expected to benefit the UK to the tune of more than £5bn. Over the next six years. Yes, you’ve got it. Less than £1bn a year.

Seriously, George, haven’t you got bigger fish to fry? Ah, but we must never underestimate the power of words, and the value of propaganda.


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