The Times has reported that:
Amazon has shut down the accounts of thousands of Chinese companies that use the website to sell cheap products in Britain without paying VAT.
Over 48 hours, tens of thousands of products had disappeared from the site after their suppliers were banned from using the platform. The crackdown follows a deal with HM Revenue & Customs (HMRC) this year under which online platforms including Amazon and eBay agreed to provide data and block vendors engaging in persistent tax evasion.
It added:
Amazon confirmed that it had removed “thousands” of sellers, adding that they could be reinstated if they became VAT compliant. It urged other online retailers to sign up to the agreement with HMRC.
First, that's good news.
Second, why did it take so long? I sat in on meetings with politicians where data on this issue was supplied several years ago. And HMRC would not act.
The action of these suppliers has been criminal.
Amazon's failure to address it until compelled to do so has been negligent.
But HMRC and the Treasury's failure to act for so long when this was known has been incomprehensible. Billions of tax revenue has been lost and an untold number of UK based businesses have been harmed.
Tax evasion is not a victimless crime. And it's shocking that HMRC has failed so persistently to support the victims of it when they have long had the means, but an absolute absence of will, to do so.
Who is to blame? I suggest UK politicians, for creating a culture where tax abuse has been encouraged. And UK politicians for being too dedicated to shrinking the size of the state to ever want to collect tax. And UK politicians for not realising that tax cheating undermines honest business and effective markets. And UK politicians for being too in awe of giant corporations. And UK politicians for believing that cheap is always good.
We've all paid a massive price for such misplaced beliefs.
Tax justice is a good thing.
It's time our politicians believed it. And acted on it
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My understanding of MMT suggests that this tax lost is important for 2 reasons:
Unequal competition
Spending will not be cancelled by tax which could lead to inflation.
Is this correct?
You’re partly correct
But there is also a failure to redistribute
A failure of fiscal policy
A failure to maintain the value of money
And the failure to uphold the rule of law to consider
MMT has consistently understated the role of tax. It is still my biggest problem with it
“MMT has consistently understated the role of tax. It is still my biggest problem with it”
Which is why you need to keep beating the drum as ‘Tax Research’ and ignore all this talk of
rebranding (?)
The ignoroscenti casually dismiss MMT because they hear only the ‘money tree’ (leading inevitably to ‘hyper’ inflation – because everybody knows that’s what happens when you print money) and completely ignore the other side of the equation which is taxation and the crucial role it plays in managing the economy.
If we’re talking money this rather appropriately the ‘other side of the coin’.
“MMT has consistently understated the role of tax. It is still my biggest problem with it”
I’d say some of those fringe MMT enthusiasts who don’t fully grasp the true meaning that Governments aren’t fiscally constrained do perhaps understate the role of taxation. But the main figures ie Kelton, Mitchell, Wray, Mosler generally it right.
I’d be interested in specific examples where you might think they haven’t.
There are still some in the broader MMT community who do not see tax as an instrument for delivering social and economic justice. They see it as any old cash flow so long as 8t is sufficient to constrain inflation. The indifference of some in MMT to offshore when I came across the MMT community was quite surprising. I think things are improving .
Maybe MMT could morph into MM&T – Modern Money & Tax?
Richard, this is not a problem – it’s an opportunity. MMT isn’t complete without the tax side. I find it extremely exciting, especially with my LVT hat on. The implementation strategy I’ve been working on has sought to always ‘balance the budget’, i.e. make the introduction revenue neutral when replacing all the current property taxes as the first stage. It’s always constrained how we can reduce other harmful taxes, such as income tax on average wages and VAT – even NICS which, with MMT, does not have to be reserved for paying state pension as I had previously believed. This would allow the dynamic effects of LVT to be demonstrated. But also, from the broader point of view, it allows emphasis of the purposes of taxation other than just revenue raising – The Joy of Tax.
Agreed
It is good news, but as you say the consequences of delay have been vast. But Thanks for holding feet to the fire. Real change takes years as you know only too well.
M
I reckon nothing happens in less than a decade
Being an “accessory” is also a crime. Cannot these platforms be convicted and fined?
Only now…
Yes, about time! A huge thank you for your tireless work on this. Corbyn should name you Tax Tsar after the election. I also hope you and others can shift Labour’s position on fiscal matters!
Can you attempt to clarify the problems MMT has with tax? Taxing back money, leaves a fiscal space in which the government can operate? How does that operate say in health care provision in different jurisdictions?
Lastly best wishes to your son after his recent accident!
I very much doubt that I am suited to be a civil servant
The only problem some in MMT have with tax is seeing its social function and not just viewing it as a pile of money
First, it is one thing saying ‘I saw data on this’ – but what sort of data did you see? The sort of ‘tax gap’ numbers you and HMRC come up with? ‘We estimate that £xxxxxx is lost due to these sellers’ or detailed data? I’m highly sceptical of your number of ‘billions lost’.
Second, why did it take so long? Because these things are not straightforward. I, like you, would like to be able to just say ‘wam, bam, thank you mam’ but the VAT system is not simple. A flat tax on income, however would be simple…. but that is another story. That leads to three:
Third, in general, you are a proponent of complex tax systems (probably your background as an accountant) and when these complex tax systems do not meet your standards, you moan. Would it not just be better to eliminate the complexity? For example, if car tax, and the TV licence were eliminated, there would no avoidance or evasion of car tax or the TV licence! And that pretty much sums things up.
I have dealt with the nonsense implicit in these arguments many time
I suggest you read The Joy of Tax
I m not rewriting it here
Ah! The oil snakesman in you! Might you be able to point me to a peer reviewed article in a reputable journal by any chance Mr. Murphy?
You can look such things up as well as I can
And since a) peer review is frequently designed to maintain the status quo and b) rarely tackles policy issues you clearly reveal your agenda
You did not come here to have your mind changed and I am not inerest3d in trolls
@ Tim
I’ll confess that I’m totally confused by your post. I can’t for the life of me work out whether you’re a proponent of simplicity over complexity or not.
On the one hand you state that both you and Mr Murphy are “wham, bam, thank you mam” men regarding VAT, but these things are not simple; hence the time taken to get it sorted. You may prefer simplicity but also recognise that this is not always possible or even desirable.
Then you state that RM likes tax to be complex, presumably because he is/was an accountant. So which is it, in your opinion?
Then you state, ” Would it not just be better to eliminate the complexity? For example, if car tax, and the TV license were eliminated, there would no avoidance or evasion of car tax or the TV license! And that pretty much sums things up.”
Pretty much sums what up? That’s one of the most circular arguments I’ve come across in a long time. Perhaps I need to get out more?
Of course you’ll automatically get rid of car tax/TV license avoidance or evasion if you get rid of car tax/TV licenses. So what! That’s a complete non-statement. You might as well state that the cure for flat feet is to cut them off…. problem sorted.
I’m a fan of simplicity; it definitely has it place and uses. But maybe, just maybe, complex solutions are needed for complex societies. Constitutional monarchies are a lot more complex than absolute monarchies to set up and run, and democracy a great deal more complex to run than dictatorships. I know which I prefer.
Trial by combat is a heck of a lot more simple than trial by judge and jury, with all the gubbins and rigmarole associated with the latter. However, being a short-arsed female (petite in polite society) with biceps a sparrow’s kneecaps would put to shame, I’d definitely prefer trial by judge & jury than by combat. Who wouldn’t in my position?
On a more personal note, it would’ve been a lot simpler and quicker to amputate my arm rather than the surgeons spending several hours performing micro-surgery on it instead. Thank god that those doctors were NOT “wham, bam, thank you mam, pass me the meat clever,” type of surgeons.
And of course, the simplest type of tax to calculate is that everyone, regardless of means, pays the same amount. Collecting such taxes is another matter. The Peasants Revolt, and the more recent Poll Tax riots, spring to mind.
So-called simplicity isn’t always the best solution. Take Universal Credit for example. That was supposed to simplify the previous complex social security system by rolling several benefits into one monthly payment.
Sounds great in theory; not so good in practice. The reason the previous (still existing in places) system was so complex is that people’s lives are complex, and to add to the complexity, that degree of complexity also varies. No wonder social security ended up so labyrinthine; it had to if it was to serve it’s purpose.
But by refusing to recognise that complexity, UC has actually complicated social security even more than it already was.
Come to think of it, and assuming you are an ardent fan of simplicity, the simplest solution would be to replace UC with a Universal Basic Income for all.
I could be wrong, but you appear to be a fan of a flat rate of tax for everyone. I wonder if you’re also a fan of a basic income for everyone as well. What’s sauce for the goose, and all that.
@Tim
Tax systems aren’t complicated because the nasty government doesn’t want the plebs to understand it. They aren’t complex by design as a tool to control people.
Tax systems are complex for one extremely simple reason. Ready for this one? Drum roll… people keep trying to avoid paying tax.
Gov – “You shall pay tax of x% on your income”
MotCO* – “Ah, but what do you mean by “pay”, who is “you”, how do you define “income”, and if the “income” is earned elsewhere, why should you be able to tax it?”
Gov – “OK then, you shall be assessed, if you are a chargeable person, and be liable to pay x% in tax on profits and gains that you earn. If it’s been taxed somewhere else, we’ll cross that bridge when we come to it”
MotCO – “Fine. But hang on – How do I know if I’m a chargeable person? What is a person? What do you mean by “profits” and “gains”? Why is there a difference between the two? What if the gains arise from capital? What constitutes “earnings”?”
And so on… ad infinitum, ad bloody nauseum.
So, the tax system absolutely HAS to be complex because the courts of this land, quite rightly, don’t accept “Oh, look, just shut up and pay your dues!! You know damn well what I mean!!” as an argument.
People say “But I just want a clear, simple tax system” – to which I say no, you damn well don’t. What you want is to be free from taxes. Just be big enough to admit it. I could at least respect that and attempt to reason with it. I’m sick to my back teeth of tax avoiders trying to justify their actions by blaming the rules that only exist because of THEIR behaviour.
*Man on the Clapham Omnibus, again.
@ Geearkay
BRAVO! A man or woman after my own heart. You managed to say very succinctly, and humorously, what I was trying to say to Tim, in my stumbley manner, via monarchs, dodgy combat & sparrows, amputations and even Universal Credit (the mind boggles!)
Tax dodging is a bit like spies and the arms race (not amputated arms this time.) As one nation develops some super-duper weapon, another nation has to counter that by developing an even more super-duppery weapon, and so on and so forth. No wonder things, including tax systems, end up so mind-mindbogglingly complicated.
And as you very adroitly point out, those whinging about that complexity are the ones who helped cause that complexity in the first place which they then take full advantage of. The word hypocrisy doesn’t even begin to describe that level of downright dishonest double-speak gobbledygook.
Trouble is everyone and their uncle is at it. There’s almost a romantic flavour attached to putting one over on the tax man. I include myself amongst these tax dodgers. Whenever I’ve been unemployed and brassic I bought my rolling baccie of Billy the Baccie Man, who ended up serving time at her maj’s pleasure (Billy that is, not me.)
How many fine upstanding middle-class people pay tradesman cash to fit their wardrobes or what have you in order to save the 20% VAT (the Laffer Curve in action? From another perspective.)
And I can’t say that I blame them. If ever I were in a position to actually pay someone to do my DIY I’d offer to pay cash too, and stuff the VAT man. The VAT Man Cometh, but not for my hard earned dosh he isn’t!
Let she who is without sin cast the first stone, and all that. I’m just as big a hypocrite as Tim appears to be. Oh well…. Nobody’s perfect!
I am an advocate of MMT and regularly share Tax Research posts on FB.
One question. Having explained the purposes of taxation to someone, especially if you have just quoted Beardsley Ruml, “Taxes for revenue are obsolete,” their brow tend to furrow if you later refer to it as revenue. Avoiding the word ‘revenue’ would keep things more distinct. There may be a good technical reason, but why use the term “tax revenue”?
It is revenue if revenue is an income
But you could call it tax take if you wish
Actually, revenue is a pretty good word to use for taxation. What is bad is the idea that it provides income for the state. Revenue comes from re + venir; means to come BACK. It encapsulates the idea that taxation returns unto Caesar what originally came from Caesar, the correct spend first, tax later order.
It`s annoying that the libertarian trolls can repeatedly call on the nonsense that progressive taxes are `complicated` ( as if a computer, or even yer average accountant, can`t deal with more than one percentage calculation a year). Like `family finances` this argument appeals to mathophobes (seemingly a majority) and `common sense` – which is rarely either.
Rubbish. 10 or 20 or 30 perecent VAT. Flat tax. 20 or 30 or 40 per cent flat income tax. Make the flat income tax progressive up to, for example, 50k income. Do away with all other taxes. Apply same principle to income earned on capital. Job done. And more equality too.
https://www.theguardian.com/commentisfree/2012/may/22/flat-taxes-taxpayers-alliance
Every single word you have said is utter nonsense
@ Tim
Dear god in heaven’s name, NOW you’ve succeeded in confusing me even more.
You state, “Make the flat income tax progressive up to, for example, 50k income.”
EH!!!!!! Isn’t that a contradiction in terms? I always thought that the whole point of a flat rate of tax is that it’s the same rate for everyone, so how can it also be progressive up to, for example, 50K income? Isn’t that what we’ve got already but with different cut-off rates?
You state, “Rubbish. 10 or 20 or 30 perecent VAT. Flat tax.”
And? But that’s what we’ve already got; a flat tax of VAT at 20% which, incidentally, is also a highly regressive tax precisely because it’s a flat rate of tax. Is that the point you were trying to make? Your wording is so poor I can’t work out just what point it is you’re trying to make here. Maybe I’m being obtuse, or maybe you’re just being plain confusing. I’m so confused I don’t actually know which it is.
Then you go from the sublime to the ridiculous:
“Do away with all other taxes. Apply same principle to income earned on capital. Job done. And more equality too.”
Do you mean that all other taxes on income earned on capital should be scraped along with all other taxes apart from your contradictory progressive flat tax up to 50k?
Or are you referring to effects of the Laffer Curve and how to avoid that? Are you a fan of the Laffer curve? I’m always amazed that fans of the Laffer Curve always presume it only applies to wealthy people. Given that you need a fair degree of wealth to re-locate elsewhere to a lower tax area, it probably does. But I fail to see how making taxes more avoidable the richer you are also creates more equality.
When it comes to getting jobs done I’m glad you’re not a surgeon with your attitudes. At least, I hope you’re not a surgeon. I’d be missing an arm by now if you were one of my surgeons.
Sandra
Tim hasn’t a clue what he is talking about
Or what he really wants
Richard
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Central bank balance sheet expansion is not just an aim in itself: it is a commitment to economic agents – financial markets, corporates and households alike – that the central bank will not allow the stock of money to fall: that, on the contrary, it will ensure that the quantity of money will increase over time, so that deflation will simply not be allowed to occur.
If this commitment is credible, together with the commitment that policy rates will stay low for a long time, businesses will gradually regain the confidence to invest and create jobs, and individuals will gain the confidence to increase consumption and generate economic activity.
I read this in FT 10/12/14. Is balance sheet expansion what is shown on the BOE cash reports? Is this a part of MMT? If it is it has been in the public domain some years, why, other than yourself, tried to debunk the magic money tree. Happy fathers day hope your soon is well.
The son is fine! Teenagers bounce.
Thanks for the material
@ Tim
Now you’ve confused me even more. Now, according to yourself, RM is a snakes oil man, as well as being a ‘wham, bam, thank you mam’ man AND likes complex tax systems…. all at the same time.
Had to google ‘snake oil man’ to find out what that actually meant, as follows:
‘The term “snake oil salesman” refers to a person that is pushing a product that is deemed to be overhyped at best, and fraudulent at worst.’
Maybe you’re right, Tim? I don’t think so though. I strongly recommend that you take RM’s advice and read his Joy of Tax book. I got my copy second-hand for a song. I don’t pretend I understand all of it, but it combines two very rare qualities. It manages to be a really thought provoking book and a dead good read all at the same time and, as an added bonus, not too many graphs to do my head in with. The first chapter – Tax & Society – breaks you in gently. So, regarding tax stuff anyway, RM is most definitely a gentleman and not a ‘wham, bam, thank you mam’ author.
I think you’ll enjoy The Joy of Tax.
Thank you
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