Monday, 25 June 2012

Morality of Tax - My piece for yesterday's Sunday Times

Jimmy Carr, Gary Barlow – it’s been quite a week for moralising about tax fairness at the top. Mr Cameron has launched in with both feet describing Carr’s Jersey tax arrangements as "straightforward tax avoidance" and in doing so offering a veritable feast of inevitable and uncomfortable stories about other Tory tax dodging donors and in the case of Gary Barlow OBE, supporters who have rewarded with an honour.

It’s been a bad three months for the Conservatives on tax arguably still fending off Ed Miliband’s now famous conference speech calling for a moral society, highlighting Britain’s disdain of the naked and negative impacts of aggressive capitalism parking Ed’s tanks on the lawns of yearning Tory nostalgia.

George Osborne in another mea-culpa is the Conservative responsible for the opening of Pandora’s problematic moralising tax box describing in his budget aggressive tax avoidance as "morally repugnant". This populist banana skin has the potential to gain Olympian legs. The Tories have for generations politically hid behind the collective line that "tax is a private matter".

The part time chancellors infamous pre election News of the World detoxification appeal that “we’re all in this together” to defend the misery of austerity had appeared a simple Damascus road journey. Mind you his statement that he “was shocked to see that some of the very wealthiest people in the country have organised their tax affairs, and to be fair it's within the tax laws, so that they were regularly paying virtually no income tax. And I don't think that's right," should have forewarned a hapless Prime Minster that "tax is still a private matter".

An awakening Britain finding morality on tax fairness at the top is only part of the picture. For too long avoiding tax has been a cause to celebrate. The “thieving taxman” synonymous with the negative lexicon of tax – not helped by the abandonment of one nation Conservatives by the individualism of 1980’s Thatcherism.

At the last election I made the point in my election address that tax as a 3 letter word had blended into an immoral context. I made the point that tax was in reality a contribution to the community, and the language of tax needed to change to redefine the morality of taxation.

The reality is cash in hand (tax evasion) in Hyndburn is all too frequent. In fact it is endemic. People regularly offer in particular sole traders cash for jobs to avoid tax. People operate small non taxed businesses notably through ebay in their back room. I reported a plasterer who I believe had not paid any tax or NI in three years. He had never had a receipt book and saw no need, it was all cash in hand.

I called at my local garage who told me what I know as a local MP, cash is king, the tax man the enemy. He told me the vast majority of customers offer and expect to pay by cash to knock off the 20% VAT. He made the point that if he adds VAT they are undercut by those that don’t and so they bury the VAT in the quote hopeful that their honesty won’t be punished.

HMRC’s fast food taskforce visited 85 businesses earlier this year and identified errors or tax evasion in each outlet investigated totalling £9million. Tax evasion and tax avoidance is everywhere, it’s an issue that is classless.

The Government has recently had to take the unprecedented legislative step of making scrap metal a cashless trade to stamp out crime, immorality and make transparent all financial transactions.

Whilst the debate swirls around the Prime Minister and the circus of wealthy celebrities caught not paying their fair share there is a much wider question about the immorality of tax avoidance full stop. HMRC estimate that some £35 billion of tax is uncollected and some estimate undeclared tax many times that amount. We shouldn’t laugh along with those that celebrate paying less tax, we should look in disdain. As I said to my mechanic, the irony is that those avoiding tax will be those that shout the loudest if they or their loved had to be denied expensive cancer treatment because of NHS cutbacks.