Reports of a tax amnesty for those who have been hiding cash in off-shore accounts are sweeping the UK's accounting press. Reports suggest that the penalties during the amnesty may be as low as 10% of the tax evaded. The tax itself, plus interest on it, will also be due.
I have two problems with this. The first is that I do not like tax amnesties. The law is there to be complied with; not to be waived at will. The problem with having an amnesty is that people then expect another, and so evade in the meantime. There are suggestions that this is the pattern in the periodic amnesties that seem to punctuate Italy's difficult taxation history. Being pragmatic though, I'd like to get the money offshore back into the UK, with tax paid. So I accept a short amnesty period (a matter of months, with settlement of all liabilities when declaration is made being a condition of participation) might be acceptable if it was understood that this would not recur.
But then there's the second problem. Evasion justifies high tax penalties. Errors justify 10%, even if innocent. Negligence 25% - 30%. Evasion clocks in at 50% plus in a normal investigation. So why offer very low rates of penalty in an amnesty? 30% would be a saving, and most people know that the Revenue are going to find them in due course. In which case the carrot has to be simple. Take the amnesty. Pay in full in one go.Or face 100% penalties if you do not declare now, with no negotiation available. That's still an incentive.
Incidentally, if the Age's report of their being £180 billion offshore is right (and I suspect it is low) then the expected tax yield (assuming 5 years offshore) at 5% would be £45 billion of income to be taxed at 40% (most likely), or £18 billion of tax plus interest on this at an average of, say, 20%, or another £3.6 billion, and then penalties at 30% of £5.4 billion. That's at least £27 billion. Which helps fill any Chancellor's 'black hole'. You can see why Gordon might want to get in now. He won't want the Tories to get this pot of gold.
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People who suffer from socio-economic deprivation and turn to crime to survive don’t seem to get a conviction amnesty, so why should the rich.
Chris
From a public opinion perspective I am sure the public do not view tax evasion as the same level of crime as offences against the person.
Another another example would be benefit fraud which always seems to attract a jail sentance. Perhaps again this reflects public opinion.
David,
I read Criminology as part of my degree.
There is a massive injustice in criminal and civil law in the UK. The poor seem to end up in criminal court for minnor offences and receive heavy sentances, whilst the rich end up in civil court, where they get a slapped wrist.
More importantly public opinion is led by media hyped moral panic.
Research conducted in Scotland noted that 33% of local news coverage was on low leval working class crime, but in reality only 8% of news was actually low leval crime.
Elliot Curry is the seminal researcher in relative deprivational crime and its missconception and aetology.
In addition the law of the UK was/is written by white, middle class, males predominantly.
Chris
I do not think this is just a Uk issue. I would be interested to know why. Is it bad representation or how the judiciatry view offenders?
David,
No it is not just a UK problem, but i believe that low level working class crime has a direct corrolation to socio-economic policy.
Two of the worlds most developed countries are the US and UK. Both are severly neo-liberal, with growing socio-ecinomic divides, rising relative poverty (despite what New Labour says) crime is high imprisonment is high, extreamly high in the case of the US and prodomantly Afro-Caribian.
I believe that the criminal justice in the UK is based on social class. I have witnessed this personally in courts.
Chris
This is more than a tax issue. This is much more of a moral issue which needs airing in more than a tax forum.
I would add that IMHO, as a society it is “respect” that missing at all levels.
David,
I agree that respect is a problem in modern society, but taxation was historically started to protect the wealthy, not the poor, and therefore the wealthy have a moral obligation to pay their codified tax liabilities.
Unfortunatly, the “big 4” accountancy firms have no morals, ethics, or social conscience. they even write government policy and use blackmail if they cannot get their policies implemented. LLP being the case I have researched.
Chris – criminology was (a relatively small) part of my degree too and yes, there are a ton of proofs for the position you take. I doubt the Big Four’s of the world could care less and I’m not sre there’s even much point in arguing the case. That’s always been my problem with this issue. Do you tackle it on the basis of social conscience or on the basis of facts supporting a wider injustice?
If there is no social conscience as expressed by the government of the day’s actions then it becomes a pointless exercise doesn’t it? Seems it’s been like that since 1979.
Dennis,
The very reason for the role of Attac and the Tax Justice Network is because governments, TNCs, the “big 4” etc have no social consecience, ethics or morals. Our aim is to research, campaign and educate the people of the world of the behaviour of the aformentioned and fight for change.
Another problem is that people like Richard Murphy, John Christensen, Prem Sikka, others and myself are being accused of being ideologues because of our stance. I do not see this as a problem, but understand that ideology and ideologues are regarded by the political establishment as irrelavant and outdated. To get back to the point.
The percieved decline in public behaviour and rise in social problems is nothing more than a reflection of the societies we live in and are governed by.