How the rich beat the taxman

TV review

How the rich beat the taxman

A worker in Revenue and Customs (HMRC) and PCS union member comments on the recent Channel 4 Dispatches programme.

THE EVIDENCE revealed by the Dispatches programme challenges government claims that “we’re all in it together.” It counterposes the proposed government clampdown on tax havens to the personal tax affairs of key government ministers who themselves use tax havens or creative tax measures, basically to avoid paying tax.

The Tax Justice Network, set up by people like accountant Richard Murphy, working with unions like the PCS, has done excellent work to expose these tax dodges. The Network’s international director John Christensen said: “Tax havens function for the sole purpose of allowing people and companies to avoid and evade tax law and other regulations in the countries where they live or work.”

The amount of funds held ‘offshore’ by individuals is about $11.5 trillion – so the amount lost every year in tax revenue on the income from these assets adds up to about $250 billion – five times what the World Bank estimated was needed to halve world poverty by 2015!

PCS is campaigning to close this tax gap – currently estimated at £120 billion. And a ‘Robin Hood’ (Tobin) tax could raise some £300 billion through charging just 0.5% on sterling currency transactions by banks between countries, although the companies involved will also strive to avoid those measures!

Tax avoidance seriously undermines public services and the development of a more equal society, both in Britain and globally. But swingeing cuts in HMRC, responsible for bringing in tax revenue, have already destroyed over 20,000 jobs with a further 5,000 job cuts and 200 office closures expected by 2011.

The coalition is reinvesting £900 million over four years for work against tax avoidance. HMRC is expected to bring in an extra £7 billion in revenue by 2014/15. But the money is being reinvested from cuts elsewhere, from other areas where HMRC is already struggling to provide basic customer service for people who can’t afford accountants to sort things out for them.

Danny Alexander, chief secretary to the Treasury, claims “we will be ruthless with tax avoiders”, but these examples in the Dispatches programme and elsewhere challenge this:

Andrew Mitchell, secretary of state for international development, is involved in a company, Ingenious, alongside Ryan Giggs and David Beckham, which was registered in the tax haven of the British Virgin Islands.

Sir Phillip Green, owner of Top Shop and BHS and now government adviser, transferred ownership of his companies to his wife who is based in Monaco, a tax haven with no income tax.

Transport secretary Phillip Hammond is paid dividends instead of wages from his company Castlemead Ltd so doesn’t have to pay national insurance on this payment. Chancellor George Osborne’s father has set up a trust fund which means 40% inheritance tax will not have to be paid on his millions.

A recent article on This is Money financial website says that HMRC’s permanent secretary for tax David Hartnett let phone giant Vodafone avoid paying vast sums of tax (stated as £6 billion) on profits racked up by a subsidiary based in a tax haven.

For ordinary working people it’s time to come together to change the system. Nationalise these financial institutions under democratic workers’ control with compensation paid on the basis of proven need. Close all tax loopholes and reinvest profits in the interests of the majority and not those of the minority super-rich.