There is the clearest indication given in the media this morning of the failing UK state. As the FT notes:
The UK tax authority has drastically scaled back inquiries into online sellers using platforms such as Amazon and eBay, despite concerns over VAT evasion and complaints from bricks-and-mortar retailers.
They go in to note that in the last eight months of 2020 HMRC made only 80 data requests to users of internet sales platforms compared to 2,684 the year before despite VAT evasion through such platforms being estimated to cost £1bn-£1.5bn a year in lost tax revenue. For all practical purposes that is the collapse of a tax system.
What they also note, in a different article, is that it is now almost impossible for small distillers to export single pallet loads of product to the EU, making trade and the chance to make a profit very hard for them. What is more, even when everyone learns the new systems such is their complexity that they will be very expensive to use.
The issues are, of course, related. They are both about a failed tax system, and no society can afford such a system. But that is what the UK is developing, and very rapidly. The system now forces the compliant out of trade whilst turning a blind eye to the non-compliant. It takes decades to recover from that.
In the meantime the resulting deficits will be used as an excuse to undermine public services. In fact, I have no doubt this is why some are more than happy for this situation to develop.
The scale of illicit business will, of course, rise, as no doubt it is doing almost exponentially in the absence of any effective UK borer controls at present.
And control of the macroeconomy, the value of the currency and the ability to deliver policy will all be lost as tax falls out of control.
Meanwhile, a criminogenic environment is created in which only cheats prosper, which is something our government appears too willing to promote already.
When I wrote The Joy of Tax I suggested that the joy in question was the ability that tax gave to a government to shape society in the way that the people of a country wanted. That ability is now being used to break the underpinnings of society in this country. And that is very worrying indeed.
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This is taking the shape of a death spiral – a tailspin to the ground. The disintegration of the tax system must also mean the disintegration of the legitimacy of the state. If the likes of Amazon aren’t obliged to pay tax why should anyone else? It is the breakdown of the “social contract” between sovereign and citizens. This of course also means the failure of the currency. One can only hope that the SNP are taking notice because if they aren’t and continue to insist on tying Scotland’s currency to sterling by either sterlingisation or “pegging” then they will be forcing us into the passenger seat of a nose diving aeroplane.
Maybe HMRC have scaled back on all compliance work for the past 8 months due to the pandemic…
It has
But that is still disastrous and a measure of wrong priorities
I’d say it demonstrates the chronic level of resources available. I doubt HMRC themselves are actively seeking to undermine the system.
There are now no HMRC offices east of Nottingham ( if you discount the Customs staff at Felixstowe and Ipswich) so East Anglia is a wide open area to tax fraudsters
Indeed
This is ,,, utterly shocking. They’re destroying businesses! Well, honest ones anyway.
There was a small cheese producer (manufacturer?) on the radio the other week (mostly the radio is fairly silent on devastating Brexit things) saying they have had to stop trading in NI because of brexit tariffs. First, because of Covid, they had to start selling direct to customers because all hospitality is shut down (so they’re being flexible), but that makes the orders quite small, and the tariffs on sending to NI were two or three times the price of cheese on these small orders. What are businesses meant to do?? Tories, the Party of business: I think not. Why do people vote for these things? (I know, it’s rhetorical, there’s not exactly any real choice)
The Tories are the political party of big business. They pretend to support small businesses. There are plenty of votes to gain if the correct stories are told.
Covid-19 is providing quite a smoke screen for this kind of activity, isn’t it?
As long as we stay collectively worried and locked down (as we should stay worried and locked down) because of Covid, we can blame Covid for the failure of our businesses and economy. It’s a misdirection that Boris & Co seem very willing to sustain.
If Covid wasn’t a factor, however, the havoc Brexit is wreaking would be much more visible. There would be nothing else TO blame for this sudden crisis.
It is good to see you raising this more clearly. For me the evidence was clear ten years ago and I now fear it is now too late to reverse the systematic undoing of the state. But well done anyway.
Grassroots Oban put on an interesting 2 part event recently: firstly Graeme McCormick outlining his plans for a land based tax system and secondly a debate/discussion between him and Kate Forbes, the Scottish Finance Minister. Graeme`s proposed system would potentially resolve some of the issues that you cover above. Worth the time to take a look, and easily discoverable if you search Grassroots Oban.