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This is a Tax Crisis, Not Just a Deficit Crisis

At our CLP last night I had the privilege of chairing yet another fantastically high quality debate as Shaun Moody led us in a discussion on the economy. Here are my thoughts.

The Tories portray the current downturn as a “deficit crisis”, and only someone in complete denial would refute this. But the deficit is only the first part of the reason that the banking disaster hit the UK so very hard. It would be accurate to say that this crisis is as much a “tax crisis”. Why? 

In April 2012 the Tax Justice network produced a report into taxation, which had been commissioned by the Public and Commercial Services Union (PCS). The results were shocking. The report showed that £25 billion each year is lost to the Her Majesty’s Revenue and Customs via tax avoidance. This is defined as companies becoming “tax efficient” by shuffling money around into off shore accounts, or taking advantages of loopholes.

An example is the case of Barclay’s Bank who were criticised by Tory Treasury Minister David Gawke when a Daily Telegraph investigation in February 2012 found that the Bank had avoided £500 million in tax by using “an aggressive tax efficiency policy”. Gawke sought to legislate as the only means to stop such abuses, and in extraordinary strong language for a Tory Finance Minister he said, “”We do not take today’s action lightly, but the potential tax loss from this scheme and the history of previous abuse in this area mean that this is a circumstance where the decision to change the law with full retrospective effect is justified.”  

The PCS report then went on to claim that a further £70 billion is lost to the taxpayer in criminal tax evasion.

That’s an eye-watering sum in anybody’s mind. If these figures were anywhere near accurate that would mean that 120 times the amount lost in benefit fraud goes out of the pockets of the UK Government in tax fiddling, or downright theft.

It is vital to make this point. The ripping off of the benefits system and welfare is a criminal offence and deserves action of the strongest kind. But ask yourself this. When was the last time you saw a TV advert or a billboard poster highlighting, and warning people about corporate and business tax evasion? No, us neither. Yet everyday, especially on buses we are bombarded with a campaign to target benefit cheats. We have tried to request from the Government how much is spent on these campaigns, compared to other Government advertising but as of May 2012 we had been waiting six months for a reply. 

The PCS report concludes that less than 1% of revenue lost to the exchequer results from benefit fraud. So next time we hear politicians compete for the title of “Toughest on Benefit Fraud”, ask them why they are concentrating on such a mickey mouse amount of money. The answer is simple. Demonise the vulnerable as distraction from the rich shamelessly ripping off the rest of us.


About dermotrathbone

Writer and co author "Through Red Lenses". Activist Unite the Union, Save Our NHS Hull. Fan of Yorkshire County Cricket Club, Hull FC, Munster and Ireland Rugby. Views are mine alone and may not reflect the organisations concerned.


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