I spoke at a fringe meeting at the Green Party last night. This is roughly what I said (as I never stick to my script):
Thank you for inviting me to speak this evening.
I admit the theme of tonight's event is familiar to me. I have now dedicated more than a decade of my life to asking what we can do about tax dodging. That would, I think you would agree, have been a bit of a waste of time if the answer was “not a lot”. Thankfully, it isn't.
Right here, right now in the UK there is an enormous amount that we can do to tackle tax dodging. What I'm pleased to note is that again, right here, right now in the UK, you in the Green Party are amongst the few who are taking those options seriously.
Before, however, I explain what we can do about tax dodging, let me make it clear why tax is so important.
Most people think tax is just about raising revenue to pay for government services. And of course, to some extent that's true.
But, tax is about many more things than that.
Tax is about redistributing wealth and income to those who need it, to relieve poverty and to create opportunity in our society.
Tax is also about repricing market failure. It makes the polluter pay. It puts a price on the finite resources of the world. It imposes a cost on harmful activity.
As importantly, in the way that tax raises money and in the way that it is spent, and in the balance of the two, tax lets government intervene in the economy to build the society we want.
As a result of all these things tax is the way in which democracy is put into action.
But what that means is that having a fair, honest, and robust tax system is an essential foundation for a vibrant society where everyone's voice is heard and respected.
I regret to say that this is why I also think that right now we aren't getting the tax system we need. Neoliberal politicians know that if tax dodging was brought to a close in the UK then there would be no deficit and so there would be no austerity and they would not have an excuse for cutting the size of the state or the role it plays in creating the future that we all want, but they don't. Tax dodging does, as a result, suit their purpose.
That is why, I suggest, that our domestic tax authority — HM Revenue & Customs - so drastically understates the tax gap in this country. They say that the tax gap is about £35 billion a year. I think it is more than £100 billion a year. I am candid: I accuse them of deliberately miscounting. They ignore abuse by the likes of Google, Amazon, Apple and others and wilfully go on from there.
So, the first thing that we have to do in this country if we are to tackle tax dodging is to correctly estimate how much tax is lost to our government each year. It's absurd that there are only two such estimates at present, one by HMRC and the other by me. Isn't it time we got some others, properly funded and definitely independent of HMRC and representing a range of political and economic outlooks to look at this issue? I don't care if they think I'm wrong: I know for certain they would prove HMRC are.
And then we need to learn the lessons from such a study. It will show, I promise you, that tax avoidance is important. But, maybe, not nearly as important as you think. I now think inroads have been made into tax avoidance. Big companies no longer want attention from UK Uncut, Christian Aid and me. They're changing their ways. And no one wants to be a Jimmy Carr or Gary Barlow. The price of becoming a tax avoider has been increased. We know that campaigning works.
But that does not mean that the mechanisms we have to tackle tax avoidance can't be improved. We need to sweep away the fig leaf of a General Anti-Abuse Rule this government introduced and deliver a proper general anti-avoidance principle that says if you try to cheat on your taxes we can stop you.
And we definitely need to force all multinational corporations to put on public record exactly where they trade and pay their tax. That is of course country-by-country reporting, which I first created more than a decade ago.
We could also demand that anyone bidding for a public contract get the Fair Tax Mark. One FTSE company has done it. More will follow, I can assure you, because I am the creator and a director of this scheme. It is possible for companies to do it. It should become the norm.
But that does not avoid the fact that tax evasion is a problem at least four times bigger than tax avoidance is now, in my estimate. And that means we have to turn on the cheats in our communities, and maybe even in this room. Yes, this is uncomfortable stuff.
But dealing with this is essential if we are to build an honest economy where those who pay can compete on a level playing field with those who don't. This is the foundation for a sound small business economy. In that case I always wonder why the free marketeers don't want it. What does that say?
So we need to invest, heavily in HMRC. Not just to enforce the living wage, which they regulate and on which I applaud your new commitment, but to collect the tax that is due in this country.
And we need to invest in proper company regulation so that the 400,000 companies that go missing in this country each year without paying their tax are brought to account. This licenced identity theft is made possible by our state because it is obsessed with deregulation and reducing the so called burdens on business. But its light touch has now reached the point where paying tax has become optional for many businesses. This has to be stopped, and I'd like to thank Caroline Lucas for her support for my work in exposing this issue.
So we have to change our attitude to tax. Tax is not a burden. Tax is something that can liberate us to make the choices that can transform our lives, our economy, our future, and our sustainability. We can have these choices but only if we embrace the fact that this means we must collect the tax we need to put those options on our agenda. It's precisely for this reason that I'm writing a book called the Joy of Tax, out next March, that will set out how this could work.
Instead we have the neoliberal option right now, of talk of deficits, of cuts, of tax being our oppressor and that we have no choice but keep grinding our economy into the ground to meet the needs of the markets — who despite the rhetoric are actually buying all the debt the government can offer them because it is, as any wise investor knows, the best place to invest right now.
So beating tax dodging involves practical action. But it also means we must rebuild our political narrative on tax. And that's precisely where you come in.
You are the change we need. You can help deliver this. Tax is high on your agenda and I welcome that. But what you need to do is change the headlines. We're not hear to simply beat tax dodgers. That just makes them look like petty criminals.
No, we should be saying that it is tax that gives us choice and the future we need and that the cheats are denying us that. They're stealing our future. And that's large scale crime.
It's when the world realises that this is the case that we'll really get change. I'm hoping you can do that, starting tonight.
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Great talk last night Richard – sorry I had to rush off before the end – train to catch!
Good to see you too
Will read book with interest
I have no time for neoliberals: you have stated their position clearly enough.
But what of the old-fashioned Manchester Free Trade Liberals?
I am going to make an obvious but unfashionable point: fair taxes are an essential part of a free market economy and an issue for grassroots Conservatives.
What’s it like to be, say, an optician on the High Street, watching your most dangerous competitor expand their chain of chemists into your business, buying out your colleagues and undercutting your prices on the back of tax-free profits?
Take a look at at the billion-pound reduction in taxes that Boots the Chemist achieved by screwing a brass plate onto a wall in Switzerland – all perfectly legal, and signed off by HMRC under a labour goveenment – and try saying ‘level playing field’ and ‘free market’ with a straight face.
What’s it like running a corner shop, trading on convenience against Tesco’s economies of scale – but fighting the additional handicap of a competitor who pays far, far less tax than you? Cornershops can and do fiddle their accounts, but only a giant plc can send their money – our money! – on holiday to the Cayman Islands.
A ‘holiday’ that is an accounting fiction, and HMRC can at any time declare it to be so: but they choose not to; and, having so chosen, these abusive arrangements are by definition legal.
Some ‘Free market’ that is; and here we have a ‘Tory’ party, in its old true meaning, back in the century of the original Free Trade Liberals: a party of privilege for an aristocracy above taxation and the law, monopolists and rent-seekers and courtiers, devoted to the suppression of free trade and enterprise, squeezing the middle classes and the labourer alike.
Fair tax is a businessman’s issue, a conservative issue, not just a ‘Left’ issue.
So we find you preaching to the Left about Tax Justice, when the small-to-medium-sized businessmen who are the grassroots of the Conservative Party – conservatives with a not-so-small ‘c’ – have every reason to see equitable taxes as a burning issue, and every reason to loathe the neoliberals with a visceral hatred that would shock the firebrands of ‘The Hard Left’ if it still existed.
A hint: Grant Shapps is worried about the local Conservative constituency associations. You might find eager listeners there, and in local Chambers of Commerce, and even in the local branches of the CBI, out in the provinces and away from the baleful neoliberal influence of their Headquarters.
You are right
It makes complete sense for business to hate tax dodging
Tax dodging corrupts markets
That the don’t says a great deal
nicely put.
i think the Greens are perfectly placed to fill the gap Labour has vacated. environmentalism hasn’t got the negative connotations it had in the past, they aren’t all middle-aged men in suits and they appear different enough from typical politicians that young people and disillusioned voters might give them a chance.
Richard
I’m a bit confused. In your speech you say:
“We could also demand that anyone bidding for a public contract get the Fair Tax Mark.”
But on your other blog on this topic you say:
“It does not say they require [the Fair Tax Mark]
That would be impossible”
Were you suggesting something in your speech should happen even though you knew it to be impossible?
“We can demand” is not the same as “can legally enforce” as yet
Change happens as a result of demands
The two are wholly reconcilable
No-one, by now, will, if they know anything about _my_ opinions, expect this dyed-in-the-wool eco-socialist to have _anything_ good to say about 19th Century ‘Manchester School’ Free-Trade Liberalism: and I don’t. It stank. This was the ‘liberalism’ of the workhouse and the distinction between the ‘deserving’ and the ‘undeserving’ poor; of ‘laissez-faire, laissez-aller’; of the economic policies that led the then British Government to refuse point-blank to release grain stocks that would have fed starving Irish peasants in the late 1840s, when potato blight (_Phytophthora infestans_) had destroyed their staple food crop. Defend all that if you can; I’m dying to hear it.
The trouble is, we’ve gone back to all that. ‘Neo-liberalism’ is just a rehash. There is no great philosophical difference. Read J.S. Mill and W.S. Jevons and compare and contrast, as they say in exam questions, with – oh, anyone you like: Eugen Böhm von Bawerk (http://en.wikipedia.org/wiki/Eugen_B%C3%B6hm_von_Bawerk), Irving Fisher (http://en.wikipedia.org/wiki/Irving_Fisher), Ludwig von Mises (http://en.wikipedia.org/wiki/Ludwig_von_Mises), Joseph Schumpeter (http://en.wikipedia.org/wiki/Joseph_Schumpeter), Friedrich von Hayek (http://en.wikipedia.org/wiki/Friedrich_Hayek) or Milton Friedman (http://en.wikipedia.org/wiki/Milton_Friedman), and the differences will be minor at best. Talk about back to the future! It is as if J.M. Keynes had never lived! The whole idea of demand deficiency has gone, so J.A. Hobson might as well not have lived, either; and as for Karl Marx – well, that goes without saying!
As for the tax issue, keep plugging away, Richard: your efforts WILL be rewarded one day.
If I live long enough – actuarially less than 30 years to go
Nil desperandum! 30 years from now is 2044 (when I shall be 88, if I’m still here, which I rather doubt).
If we haven’t brought about _very_ substantial change in the way our World Government, economy and society are run by then, then it will be far too late for all us, and the human race will be doomed to extinction. Change is not an optional extra, or a luxury, but a vital necessity. We either change, and change soon, or die.
Agreed