{"id":18419,"date":"2012-12-01T23:14:46","date_gmt":"2012-12-01T23:14:46","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=18419"},"modified":"2012-12-01T23:14:46","modified_gmt":"2012-12-01T23:14:46","slug":"there-is-no-moral-equivalence-between-tax-evasion-tax-avoidance-and-benefit-cheating","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/12\/01\/there-is-no-moral-equivalence-between-tax-evasion-tax-avoidance-and-benefit-cheating\/","title":{"rendered":"There is no moral equivalence between tax evasion, tax avoidance and benefit cheating"},"content":{"rendered":"

There are\u00a0occasions, I admit, when I wonder just how far apart people can be and still think they have some affinity for the same\u00a0political\u00a0ideas. Tonight has been one such\u00a0occasion. \u00a0The Fabian\u00a0Society\u00a0sent me their publication<\/a> to celebrate 70 years of Beveridge, and since this is\u00a0something\u00a0both well worth celebrating, and which I have been asked to\u00a0write\u00a0about\u00a0I gave it more than a scan.<\/p>\n

Having got to the end I came to an article by someone who I admit I had not heard of called\u00a0Nick Pecorelli<\/a>. The byline says he is Associate Director of The\u00a0Campaign Company<\/a>, but that seems a little confusing as it's clearly a\u00a0decidedly\u00a0part-time role, but let's leave that question\u00a0mark\u00a0aside and instead look at his argument.<\/p>\n

He says that the world fits into two types of people. The first sort, he says, are justice seekers embrace an all encompassing notion of fairness. I think it's fair to say he thinks they populate the left. Then, he says, there are responsibility seekers. These people, I think we can safely surmise, are on the right. They do, he says:<\/p>\n

hold a tougher\u00a0view of human nature. They emphasise that\u00a0our fate is in our own hands, and that, if \u00a0we are able-bodied, whatever our circumstances we can and must better ourselves.\u00a0For responsibility seekers, society is an\u00a0intangible notion but government welfare is\u00a0likely to be taken advantage of by \u2018shirkers.\u2019<\/p><\/blockquote>\n

There's an odd fact I hope I am not alone in noticing when reading the article. Having defined justice seekers Pecorelli then\u00a0proceeds\u00a0to ignore them. It's as if only responsibility seekers matter, for it is they, their\u00a0beliefs\u00a0and their policies to which he gives all his attention. We end up with the perverse fact that the final article in this Fabian paper on how Labour should tackle the welfare debate is dedicated solely to how to locate\u00a0debate\u00a0on the issue in terms the Tories will find\u00a0comfortable. Can I be alone in thinking\u00a0firstly\u00a0that Labour's been here before and secondly that this is not now, never has been and\u00a0never\u00a0will be the way in which one wins a debate? Conceding all ground to your opponent at the outset is a certain way to lose.<\/p>\n

I have to admit Pecorelli appears dedicated to that task of losing. Having devoted almost two thirds of his article to asserting that responsibility seekers both exist, and represent about one third of society (which, because of his dedication of space to them I can\u00a0only\u00a0presume he thinks the most important third of society) he then asks how Labour might win the\u00a0welfare\u00a0debate and says this:<\/p>\n

Quite simply it should focus on the war not the skirmishes, and to do this it must return to first principles and find the common ground between responsibility and justice seekers.<\/p>\n

Two principles underpinning Beveridge\u2019s case have been lost in the mists of time. The first is the contributory principle. If someone contributes more they should get more out in times of need than those who have not.<\/p>\n

A second Beveridge principle is the subsistence principle. Beveridge was very clear that unemployment benefit should be set at a subsistence level. To pay more is not only unaffordable in the current climate, but it prevents governments\u2019 shaping a welfare system that makes work pay.<\/p>\n

To these principles Labour should add the moral equivalence principle. Tax evasion may involve far greater sums than cheating the benefit system but that does not make it more abhorrent. Labour too often vocalises the case against the former, whilst meekly stating the case against the latter. By simply stating these three principles Labour can begin to re-engage responsibility seekers in a debate about the future of welfare.<\/p><\/blockquote>\n

I could spend the rest of my Saturday\u00a0evening\u00a0gasping at this\u00a0analysis, its\u00a0embrace\u00a0of the merit of\u00a0subsistence\u00a0(let's call it poverty for ease) and his willingness to believe that we should only look after those able to look after\u00a0themselves. I could, but I won't because I will instead turn to his third argument on moral\u00a0equivalence. Pecorelli uses the term in a way that I think purely analytically unusual, but I'm going to ignore that. I am simply going to look at his suggestion that Labour must embrace the idea that tax evasion is no different to and no more morally repugnant than\u00a0benefit\u00a0cheating.<\/p>\n

Where on earth did he get the idea that Labour has thought this? Did he look at the facts? I have, in a blog published in 2010<\/a> which\u00a0related\u00a0solely to the last three years of Labour's time in office. During that period Labour spent \u00a317.5 million on adverts tackling\u00a0benefit\u00a0fraud, as it called it. And it spent \u00a3633,000 on adverts tackling tax evasion. This was\u00a0despite\u00a0the fact that\u00a0benefit\u00a0fraud, at most, cost \u00a33.1 billion a year then (and I think that overstates the cost by\u00a0including\u00a0error as well as fraud) whilst tax evasion and avoidance was in HMRC's estimate over \u00a340 billion a year during that period, and as is well known, in my opinion dramatically more than that. As I noted in 2010, the effect was that\u00a0Labour\u00a0spent 624 more\u00a0proportionately\u00a0on adverts tackling benefit cheating than it did tax cheating. If anyone can suggest that means Labour treats these two as moral equivalents then I am, to be polite,\u00a0flabbergasted. The claim simply\u00a0does\u00a0not stack up.<\/p>\n

There are, however, good reasons for not treating them as equivalents. As I have also shown<\/a>, more\u00a0recently, of the 41,000 cases of deliberately marketed tax avoidance not yet addressed by\u00a0H M Revenue & Customs have a total cost of \u00a310.2 billion or an average of \u00a3248,780 each. On the other hand, the average case of local authority\u00a0benefit\u00a0cheating identified in a report, also in November 2012,\u00a0from the Audit Commission is \u00a32,166<\/a>. There were 54,000 such cases.<\/p>\n

Now, no one says that 54,000 cases of fraud should be ignored. I don't. But let's not for one minute suggest there is equivalence between these supposed activities. Or incidentally between\u00a0benefit\u00a0fraud\u00a0and tax evasion, of which the cost may be, in my estimate, more than twenty times greater. They are simply not in the same league.<\/p>\n

Tax avoidance, especially, and to no small degree large scale, high value tax\u00a0evasion, is highly\u00a0sophisticated activity that in the case of evasion is criminal. It is undertaken by those who have no need to commit it to ensure that they can meet their reasonable needs. This is a crime committed out of pure avarice. Its aim is to accumulate. Its object is to seek status, power, and no doubt control. It is perpetuated with considerable\u00a0aforethought. Amazingly there is a whole industry of lawyers, accountants and\u00a0bankers\u00a0who\u00a0are willing to facilitate tax avoidance and tax\u00a0evasion\u00a0for their clients (although many will deny evasion, and in some cases that will certainly be true). There are even whole states whose legislature has been effectively captured to facilitate this activity or crime. And the\u00a0consequence\u00a0is serious. Not only is the tax loss to the UK, at maybe \u00a395 billion, enough to\u00a0transform\u00a0the whole\u00a0approach\u00a0to our macro economic\u00a0management, and indeed our whole\u00a0approach\u00a0to the management of social need in this country, it is the dedication of this industry to the perpetuation of wealth inequality that creates the environment in\u00a0which\u00a0so much social injustice now exists.<\/p>\n

Benefit fraud is, on the other hand, with odd exceptions, petty crime. That's still important. But to pretend that shoplifting has the moral equivalence of pre-meditated\u00a0murder,\u00a0which\u00a0Pecorelli's argument would suggest, is ludicrous. We know that is not true. We rightly dedicate\u00a0different\u00a0resources to dealing\u00a0with each because their impact is very\u00a0different. We even know their motivation is different. I'm still not excusing crime, but there's not a shadow of doubt that some\u00a0benefit\u00a0cheating is motivated by a desire to simply provide the basics of life to a family. I don't excuse the way it is done, but I can\u00a0understand\u00a0the motive. I cannot say the same of tax avoidance and tax evasion. Morally they are\u00a0simply\u00a0not equivalents, and I am shocked that the\u00a0Fabians\u00a0have published an article suggesting that might be the case.<\/p>\n

Tax evasion and avoidance demand greater attention than\u00a0benefit\u00a0cheating and\u00a0have not had it.<\/p>\n

If tackled tax evasion and avoidance have the power to change the UK's economic narrative by providing, at least in part, an alternative means of tackling the deficit.<\/p>\n

And if those facilitating tax evasion and tax avoidance were tackled we would find that inequality would fall, a level playing field for UK\u00a0business\u00a0would be created where cheats cannot win over honest business, an environment in\u00a0which\u00a0investment could pay rewards which are at present only available to financial\u00a0manipulation could be created\u00a0and so\u00a0prosperity and employment\u00a0would rise, plus\u00a0many\u00a0of the\u00a0avenues\u00a0for crime would be\u00a0closed\u00a0 Again, there is simply no moral or economic equivalnce with\u00a0benefit\u00a0cheating.<\/p>\n

In that case it ill becomes the Fabians to even publish an article suggesting such equivalence exists. And it ill becomes them to suggest that the only way to tackle these issues is to suggest that\u00a0benefit\u00a0cheating\u00a0is as significant as\u00a0benefit\u00a0fraud when that is so obviously untrue.<\/p>\n

Yes,\u00a0benefit\u00a0cheating has to be tackled, I agree.<\/p>\n

But any wise\u00a0political\u00a0party\u00a0knows you tackle\u00a0priorities\u00a0that achieve your\u00a0goals\u00a0and\u00a0transform\u00a0real lives first. Tackling\u00a0tax\u00a0avoidance\u00a0and tax evasion\u00a0can\u00a0do that. Labour should be saying so. And it should at the same time be saying in a way it has never done before that of the two tax crime is much the more serious, and the one demanding of most attention. Only then can it\u00a0shift\u00a0this debate onto its own territory. And right now that\u00a0opportunity\u00a0exists. Labour has to grab that with\u00a0both\u00a0hands.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

There are\u00a0occasions, I admit, when I wonder just how far apart people can be and still think they have some affinity for the same\u00a0political\u00a0ideas. Tonight
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