A NEW report, sponsored by the TUC, accuses companies and rich individuals of using accounting tricks, loopholes and plain tax avoidance to get out of paying a cool £25 billion of tax each year. That is equivalent to £1,000 a year for every worker in Britain.
Britain’s top 50 companies paid an effective corporation tax rate of 22.5% instead of the 30% it was at the time of the TUC survey. The Labour government has now brought the official figure down to 28% and big business will undoubtedly have reduced the true figure even further since.
In all, the report concludes that wealthy individuals avoided £13 billion tax and big corporations avoided £12 billion. The TUC, quite rightly, calls for an end to the government’s threats to HM Revenue and Customs staff jobs ie tax inspectors. But it has no real solution to the problem of how to gain more equality.
As ‘Old Labour’ MP Austin Mitchell and accounting expert Prem Sikka point out in a recent article, the wealth of the super-rich has trebled in the past decade. Meanwhile, half of the adult population now owns less than 1% of the wealth, if you exclude the value of dwellings. 23% of adults have wealth of less than £5,000.
But the poorest 20% of households have the highest tax burden, paying 36.4% of their total income in tax, 9.5% of it direct tax, 26.9% indirect tax. The average (median) wage is £23,764 so most workers are living on very little except personal debt.
In 2006, 54 billionaires had a combined fortune of £126 billion but only paid £14.7 million in income tax – that is 0.01% of their total wealth! With a new recession approaching, such inequalities will become even more intolerable.
Socialists would certainly support Mitchell and Sikka’s proposals for lower or even no taxation for the low-paid and their call for a more aggressive response to organised tax avoidance by the super-rich.
We would link it with a call for a campaign to take these powerful, irresponsible firms into public ownership. That is the best way to ensure the fat cats and their accountants do not fiddle their way out of paying for such services as health and education. Now if the TUC could start campaigning on that basis…!