I made a speech at a TUC rally a year or so ago when I said the following:
If we spent the money that the government proposes to spend on tackling benefit fraud on beating tax cheats then I can tell you this with absolute confidence we wouldn't get back £1 billion a year. We would get back £20 billion a year.
And by chance that's the annual investment that we need now if we want to turn this economy around to create the jobs we so badly need — and which would create the wealth and generate the tax — all the tax — we need to clear the deficit.
Which is exactly why we don't need cuts.
But the Conservatives won't do this.
And I'll tell you why.
They would rather the tax cheats of this country have this money than the pensioners of this country have this money.
Better that the cheats have their ill-gotten gains, they say, than the children of this country get the education they need.
And the better the accountants, the lawyers and the bankers have this money they say than the sick, the unemployed, the disabled, the public servants and the defenders of this country have it.
That's the Conservatives' choice. It's a choice to support tax cheats.
It's the wrong choice.
You know that.
I know that.
Together we must fight them.
We must fight for fair taxation.
We must fight for the jobs of those who will collect tax.
And we must fight so that the honest people of this country can have the money that the Conservatives will give to the cheats.
That's the fight we have on our hands
And friends that is the fight we must win.
I stand by that analysis.
My logic is a simple one, but one that is rarely said. By choosing to leave money in the shadow economy - which is what the government is doing by choosing to cut staff at HMRC - it is deciding that it is better that criminals - because that is what tax evaders are - have money than do children who need education, pensioners who need to keep warm, those on benefits who simply can't make ends meet, the disabled who need services, armed forces who need kit and so much more besides.
I make it clear, this is an explicit choice by our politicians right now: they are choosing to support criminality.
They are doing so because they think the consumer spending of criminal tax evaders is more important to the economy than meeting the social needs of the young, the poor, the disabled, the vulnerable, those who defend and protect us and those who ensure that these services are delivered.
And let's be clear: in making that choice they're saying they think that money paid to the government is wasted. But they're wrong! tax does not disappear. It is not a black hole. It is spent! It is spent on supporting these groups in society who need to spend to meet their needs and in paying the public servants who support them. So it directly supports consumption too. But consumption by different people. Tax collected supports consumption by those in need and those who work for an honest living. But the government is choosing instead to support consumption by those who steal to pay for it.
The choice the government is making by reducing the resources to tackle tax evasion is therefore a simple one. They're saying they think criminals are more important than honest people in real need. And that criminals are more important than people who work for an honest living.
That's why they choose to ignore £69.9bn of tax evasion in the UK a year.
That's why they're sacking tax inspectors.
And they're wrong to do that. Because in doing so they're ignoring the biggest single criminal activity in the UK, and the one that's tearing the heart out of our society and our economy.
And that's why tax evasion has to be tackled. Now.
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Thanks for pointing me to this Richard. Interesting reading.
Actually HMRC is creating 9,000 new enforcement and compliance posts and spending £900m on tackling tax evasion so it is not true that the government is not focused on tax evasion. Most of the cuts in staff numbers is on the admin side where increased use of online filing is reducing the number of people needed to shuffle paper around.
“There will be some 9,000 new posts in high value enforcement and compliance work and HMRC is planning a major programme to redeploy, retrain and recruit suitable staff.”
From the NAO report on HMRC
The previous govt cut 17,000 from HMRC between 2005 and 2009, and had planned to cut another 8,000 by the end of 2011. Both the shadow economy and issue of tax evasion existed well before this govt came into power, so it is a little unfair to blame them for it. Labour did precious little to address it too.
Please stop lying
It is sacking 12.000 staff and transferring a few to specialist avoidance
The rest is just spin without substance – as the unions involved confirm
And yes, I criticised Labour when in power too
Have you read the NAO report or are you claiming they are lying?
Or is your definition of a few 9,000?
I am starting to believe you are so blinkered by your hatred of the tories that you can’t see anything else.
http://www.guardian.co.uk/politics/2010/oct/20/spending-review-civil-service-job-cuts
13,000 job cuts at HMRC
You cam play semantics all you like – as your Tory friends are
That’s the overall loss
And you can’t collect tax without people
Now, where’s your apology?
Yes and if you read the NAO report you would see that the job losses at HMRC would have been 9,000 larger, that is the different between gross and net job losses.
And please, you are referencing a Guardian article versus the NAO report of HMRC budget.
Why do you need people to collect tax? I was speaking to a friend recently who lives in South Africa who was saying that his tax form is totally electronic, his equivalent of a P60 goes into the form electronically, it retains records of his rental properties, its links into his bank interest statements and it tracks his assets from year to year. When he submits the return the tax is calculated immediately and his refund is in his account the next day. HMRC is simply in the dark ages relying on people instead of systems, no wonder the tax gao is so large.
“HMRC plans to achieve the initial 25 per cent reduction in costs mainly through staff reductions”
From your treasured report.
Wow! Can’t the oppositon latch on to this, or are they part of it?
I fear they were part of it
But they can change their spots
Caroline Lucas is running with it
“13,000 job cuts at HMRC”
Mainly admin roles which are no longer needed because of online filing. By your own admission some are going to avoidance and they are even creating more inspectors,
That is absolutely untrue
And they are not making more inspectors
I talk toi those intimately involved on ARC and PCS and what you are saying is profoundly incorrect
In 2000 Harry Markopolis went to the SEC with a file on the corruption of Maddof many years before his fraud came to light. The SEC did nothing. The describe this as regulatory capture, in UK we have political/judicial/police/regulator capture, they no longer work for the interests of the public.
The police rather than arresting those who committed crimes against the public by phone hacking vie for back handers from the hacking perpetrators .
All government is a crime, but the current situation seems to be taking this truism to absurd lengths. Richard in this article I sense some hint of patriotism for your country this is not allowed, if you persist you will require sensitivity training.
how did this speech go down at the TUC out of interest? obviously they are major labour supporters and as others have pointed out Labour had a reasonable amount of time in power to do something about it…………..but did little.
Very well of course
I knew my audience
Hmmmmmm interesting argument but you miss one vital point. The biggest criminals run the country and until they are brought to boot then tax evasion will always happen. Just a thought.
Much as I follow your argument overall, it doesn’t address the largely subsistence black economy that goes on amongst small time traders, market traders, small businesses etc. These are not the rich you refer to, but they are certainly the criminal. They are only criminal because the minimum income level of taxation is so low (that is criminal).
If the minimum income before tax was raised to 15-17,000k per year, you would reduce tax evasion (by number of cases) by around 90%.
Stupid taxation can criminalise some very good, but poor people. I very much support “local” small businesses and traders, and am fine if they trade largely in the black.
And respectfully, I entirely disagree
We could not deliver our welfare state, health and education services with such a tax system, however progressive it might be, in which case you are arguing I think for radical privatisation or denial of access to servicescand I can’t condone that
Thanks for the reply. Yes, we entirely disagree. Until the taxation system prioritises for wealth over income we will continue to see a large number of relatively hand to mouth low income earners criminalised or remain on the border of absolute poverty.
Although we entirely disagree, I find your tweets and blogs excellent.
Don’t get me wrong
I want a profoundly progressive tax system
And want to reduce tax charge on lowest earners
But I will never condone evasion
And there’s no doubt paying tax is a neccasary reciprocal part of the welare state without which it would not work
RM is right – you cannot say its ok for one social group to evade tax and not another – if you go that way you will have a complete breakdown of society. why stop at evasion, why dont you say its ok for low earners to burgle large homes to supplement their income?
I was suggesting a change in the law as opposed to unlawful evasion, but I also don’t have a problem with the second option. I see it working a lot in Greece and Italy – the poorest simply evade taxes (where possible) and the government doesn’t chase too hard for it (bit like an adult playfully chasing a kid).
It doesn’t result in social breakdown – those societies are wonderful. It does result in a less well funded welfare state, but look to the massive, immoral (and illegal) tax evasion on behalf of the very rich. Not only evasion, but also export of their wealth destroying the economy.
These almost “hand to mouth” level earners have no one to fight for them in their way. Government doesn’t, big business doesn’t, and you can see even a campaigner for justice such as RM dismisses their requirements. Withdrawing their tax payments to pay for their subsistence can be seen as a non violent protest or simply good personal economics…. or criminal.
You can’t argue for welfare and tax evasion at the same time
It’s a simple point
But so obvious your argument is wrong
You can argue for more progressive tax systems and the welfare state
But you don’t seem to be doing that
The welfare state – indeed, the Courageous State – has tio be built ion respect for the law