It takes 2.4 million households to pay for the tax gap

Posted on February 2 2009

The Guardian has launched its Tax Gap series. As it notes:

Last October the public accounts committee criticised the Treasury for its inability to measure the missing billions. It said: "The department does not have a robust measure of the corporation tax gap. It should develop such a measure and publish the results."

I have, of course, already worked on this issue, and the research I did for the TUC is extensively referred to.

These are difficult to relate to real life. But if the TUC is correct, it means that 2.4m households - a tenth of all those in Britain - are paying over their entire annual income tax just to plug the gap left by the legal manoeuvres of big corporations.

I am, of course, happy with the research I did. I do, in fact, think that as with all my estimates it is cautious and bound to underestimate the problem as a result.

But look at that statistic: it takes 2.4 million households to make up the gap caused by legal tax avoidance. See it this way and it is obvious what is happening: the rich are making themselves richer at the expense of ordinary people in the UK.

No wonder those ordinary people are fed up with the taxes they pay.

No wonder they are annoyed at the stealth taxes they have been charged with.

No wonder they are fed up with politicians who will not stand up to these corporations.

The Guardian is right to draw attention to this issue: it is the cause of one of the fundamental social grievances in our society right now and it has to be addressed.

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2 Responses

  1. Jeff Woad says:
    February 2 2009 at 1:27 pm

    Richard

    Your focus seems to be on the tax havens’ lack of transparency, but the real issue is the UK tax laws which allow the legal tax avoidance to take place. I am a tax accountant who has worked ‘offshore’ and in the UK, and the vast majority of the tax ‘lost’ by the UK is through legal tax planning, so while transparency might embarrass the users, changing the rules is the only direct way to stop it happening. The havens are merely facilitating what has been allowed, and even encouraged, by the UK for a number of years. Isn’t your focus on the havens themselves misplaced?

    Regards
    JW

  2. Tax Research LLP says:
    February 2 2009 at 6:20 pm

    Jeff

    I agree with you: the UK is culpable too

    I say as such, often, I think

    Richard