In possibly the most lacklustre speech ever made by a minister to a party conference Danny Alexander has announced HM Revenue & Customs is to get £900 million of resources over four yeasr to tackle tax avoidance and evasion.
Except it isn’t.
"There are some people who seem to believe that not paying their fair share of tax is a lifestyle choice that is socially acceptable. It is not."
"Like the benefit cheat, their actions take resources from those who need them most."
"Tax avoidance and evasion are unacceptable in the best of times but in today's circumstances it is morally indefensible."
Earlier in the day Nick Clegg had criticised Labour for not doing more to clamp down on tax loopholes that he described as "perfectly legal but morally questionable". According to the Guardian:
He said it was not fair that the better-off were able to afford "an army" of experts to avoid paying their dues when others faced pay and pension misery as the coalition's public spending cuts bite.
Clegg said: "You cannot ask millions of people in this country to have restraint in pay, to have their pensions looked at again because we are having to deal with the deficit and allow people who can pay an army of lawyers and accountants from getting out of paying their fair share of taxes."
"At the same time you make sure you beef up the resources — as we will do in our announcement today — in a big and significant way to recoup billions that should be in the government's coffers to deal with the deficit."
Brave words. And I’m sorry, but they’re hollow and meaningless.
HM Revenue & Customs has lost 30% of its staff in he last five years. It is to lose 25% more. It’s staff cost about £2.45 billion a year in a department that costs £4.8 billion a year to run. And as I noted earlier today — the Treasury is determined to impose 25% cuts on the department on top of those it has suffered in the last five years. Of course that won’t all come in a go. But using currency of current value it’s going to be £300 million in year one, £600 million in year two, £900 million in year three and £1.2 billion year four — making 25% by the end of the period. Add it up and that’s £3 billion of cuts in routine spending, with only £900m million coming back (much it seems to be spent outside the department with layers and on private sector debt collection, which is wholly inappropriate for the task) and you immediately see that this government that announces spending of £900 million is actually cutting it by not less than £2.1 billion.
In that case there’s not a hope — not one iota of a hope - that they’ll achieve their goal of closing the tax gap.
How can I be so sure? Because I’ve just shown that the problem with uncollected tax is not the peripheral issue that Clegg and Alexander are claiming — it’s systemic. That means only systemic reform will tackle this issue. And they’re not delivering that.
So what are they doing? I suggest all they’re doing is putting out a false message — that they’re tackling tax abuse, claiming there is no more tax to collect after these taken these measures and that therefore cuts must be imposed — as is their ideological desire.
I have a simple answer to that as well. Just as I don’t believe that they’re giving extra resources to HMRC in the announcement they’ve made to day — because that’s obviously untrue — they’re also not telling the truth when they say they’re going to tackle the tax gap — because that’s very obviously not the case.
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Richard,
Who did they appoint to lead the Government Efficiency Review, Philip Green.
This is what Danny Alexander (his own words) says on his appointment:
“I was actually on holiday at the time when he was approved,” Alexander says. “I did approve it. Look, I think that sort of commercial expertise can help government to help find savings in the back office and savings in procurement which then mean that there’s less savings having to be found from frontline public services. In the end that is something that is beneficial.”
Sorry Mr Alexander I’ve just seen Pinky and Perky flying past my window! If you want to sell clothing at knock down prices he’s the man to go to but please Mr Alexander don’t insult mine and the electorate’s intelligence with this ‘savings in the back office and procurement horse manure’ because that’s all it is ‘horse manure’.
And the line ‘I was on holiday’ when all this came up, priceless! Sorry Mr Alexander, but I assume you have a mobile phone and possibly even a laptop and I am certain you were contactable. You have ‘approved’ a man who has questions to answer over his tax affairs and you want us to believe you are serious about tax avoidance/evasion.
As I said before priceless!
This announcement from Danny Alexander sounds like the classic “giving with one hand, taking away with the other” sleight-of-hand. So you get an extra £900m on one hand and then £3bn of cuts on the other.
It’s not a new technique to this government – New Labour used to do this all the time – but I think people are getting wise to this kind of deception now, and hopefully they’ll see through this kind of cheap spin.
A big problem with the coalition is that it’s really an acquisition – of the Lib Dems by the Tories. When Lib Dem ministers get up to speak they (mostly) sound more and more like Tories (the reverse is sadly not the case… George Osborne never sounds like a Lib Dem, for example). These Lib Dem ministers are being absorbed into the Tories by a process of osmosis… a terrifying fate.
@Howard
You’re right
And it’s fascinating to hear Clegg apologising on the one hand for being rude to Cameron last year and slagging off Labour on the other
He clearly hasn’t learned a thing
Does he really want to be taken credibly next time round
Mind you, I don’t think Labour will need him
I think you have the analysis of the Tax Gap and an underesourced HM
Revenue & Customs spot on. However I do not agree with the political
inferences you seem to think follow on without argument. You are in danger of losing support from people who were around to see just how bad Old Labour were.
@Stephen Griffiths
Please explain….
Why is collecting tax such a bad thing?
Is it better to educate children or reward cheats?
Interesting analysis.
I was somewhat underwhelmed when I read about the Government’s plans to narrow the tax gap. Whilst the rhetoric is encouraging, looking to boost income by £7bn when the (official) tax gap is £42bn isn’t all that impressive. That is roughly the same figure that missing corporation tax is thought to account for – and nothing (that I’ve read) is explicitly said about that.
“Danny Alexander has announced HM Revenue & Customs is to get £900 billion of resources over four yeasr to tackle tax avoidance and evasion.”
Are you quite sure that we are going to spend what amounts to our current national debt on HMRC admin? Or did you mean “millions” instead of “billions”?
@Robert Webb
Sorry
Corrected