Tax Avoidance And Evasion: The Biggest Issue Facing Us Today

There are several slogans currently being pushed by the coalition government. These range from the spurious 'There is no alternative' (there always is, it's just that you think the alternative is not as good, others may not agree.) to the faintly patronising 'We're all in this together' and its corollary 'Together in the national interest.' . The main point of these slogans and the arguments they try and put across is fairly obvious. These are that unpopular decisions asking citizens to give up state help, services and tax have to be made and are on the whole fair, responsible and the right thing to do. Juxtaposed to this is the deficit figure, the national debt and the spectres of Greek style crises as well as images of benefit scrounging layabouts who are spending our money on mansions in Kensington. There is however another figure we could juxtapose with the cuts: that of avoided and evaded tax contributions.

There is an important distinction between avoidance and evasion, one that sometimes lost amidst the rhetoric, even amongst experts on the issue such as Danny Alexander Chief Secretary to the Treasury who gave a speech promising to clam down on both at the Lib Dem conference despite his own run in on his own Capital Gains Tax arrangements. Evasion the government shouldn't need to discover any great moral purpose to crack down on, it's illegal as well as immoral. Estimates by Richard Murphy of Tax Research UK put this cost to the UK as high as £70 bn a year. Others dispute this figure but what is not under question by definition is that the UK is legally entitled to this money. Obviously it would not be possible to recoup every penny both due to the sophistication of the crime and the sheer scale of it but just as we believe that the police should investigate every murder no matter how difficult and whatever the crime rate, our government has a moral duty to go after those who perpertrate this crime. Especially given the 'There is no alternative' and 'Together in the national interest' rhetoric. Recouping 1/10th of this sum, which is legally ours as taxpayers would remove the need for the most painful cuts to the poorest. Or if the government was differently inclined, a whacking great tax cut or £7bn more of the deficit. Your political hue decides the alternative. I would also say that pursuing this money would be very much in the national interest.

It is this first point that most angers the protesters I joined in shutting a Vodafone store last week. It is a well covered story but in short George Osborne went over to India to promote Vodafone in India (a country with whom they are also in dispute over taxes) days after writing off a tax bill which HMRC was in dispute with Vodafone over for an estimated £6bn, with Vodafone agreeing to pay roughly £1bn. A senior HMRC official described this as 'a spectacular cave in.' and Vodafone was also reported to have set aside at least £2.5bn to settle the claim. The UK government was legally entitled to this money, or thought it was, so why did it not try to recoup it? Especially at a time when 'there is no alternative.' £200m extra gained would have stopped cuts to the Disability Mobility Allowance which will leave disabled people in care homes stranded. £80m extra a loan to Sheffield Forgemasters, a business aiming to lead the UK's industrial recovery. One can dispute whether the amount gained would have been the full £6bn but every pound not gained is an extra cut that has to be made according to the coalition's own highly dubious position that the alternative would be bankruptcy.

Imagine my shock then to discover that the UK government and George Osborne in particular has now signed a deal with Switzerland, the Tom Hagen to the tax evaders Vito Corleone, to enable it to maintain secrecy for UK nationals' assets that sit in Swiss banks allowing the Swiss to effectively operate as an encouraged tax haven which the government are effectively promoting. UK nationals hold $61.5bn in undeclared assets in these banks, assets which in many cases will be the proceeds of tax evasion. Due to the anonymity of the individuals who own these assets they will go untaxed. Even though in many cases they legally should be. Effectively then the government is promoting criminality. Compare this with the lack of encoragement for benefit claimants to claim what they are legally entitled to. This could be linked to the appointment as a trade minister of Stephen Green, a former boss of the Swiss division of HSBC. Nice to know some of us are in this together, even if it excludes the majority of us.

Tax avoidance is a more difficult issue. It is legal but morally dubious, especially at a time of government imposed austerity. Tax avoidance mostly stems from the fact that the rich can sidestep the tax system in a way that an ordinary person, charged PAYE can't. In the case of Phillip Hammond he had what most of us would take as salary paid as a dividend so avoiding paying a higher rate of income tax. Perfectly legal but given the governments rhetoric morally dubious. All kinds of tax avoidance schemes exist, from Tesco's dubious holding companies to Topshop head honcho Phillip Green transferring ownership of his company to his wife before it paid one of the biggest dividends in corporate history. Our revulsion at this type of behaviour should be political. How can Nick Clegg, David Cameron and George Osborne be said to be promoting fairness and a 'progressive' system when it is one that legally allows the richest opportunities that are denied to the poorest? Nick Clegg was vehement in his defence of the Comprehensive Spending Review as being 'progressive and fair' even when the IFS said the opposite, apparently as we should put it into perspective: cuts in benefits would get people in work, despite the laying off of 490,000 public sector workers, and other such unproven though theoretically possible claims. However perhaps we should put the cuts into a greater perspective. We live in a society which affords great priveliges to the richest and in times of hardship attacks the poorest. Forcing a JSA claimant to pay 10% of his rent from his £65.70 a week dole if after a year he is still out of work while a multi millionaire can legally pay under 20% tax is not a fair and progressive response to a budgetary crisis. It is a gargantuan moral failure of our politicians not to tackle this issue. If society continues like this then then the next time a budgetary crisis occurs it will again be the poor that pay.

These two issues are I think two of the biggest facing us today. How can our self styled 'fair and progressive' government claim that these cuts are fair when it isn't even prepared to enforce its own tax code and is promoting criminality on a huge scale? This issue is non-negotiable. Every tax cheat needs to be chased fully and until there is an attempt to do this any cut can be decried as 'avoidable' 'unfair' on the grounds that it puts criminals above law abiding members of society, even before we get to the fact that these criminals can well afford to pay for their crimes, and those who are paying for them can't. Secondly if we want to build a fairer society we need a debate about tax avoidance and its costs and be asking why we afford these priveliges to the super rich like royals of old, free to decide how much of their taxable income is spent on the good of their fellow citizens and how much on yachting and diamond encrusted cocktails while the rest of us, from those at the bottom to the upper-middle class are left without much of a stake in wealth creation in our society. Unless tax avoidance is made much more difficult then we will never be all in this together, no matter how much the coalition wish it to be the case. Unless tax evasion is tackled fully the government do not even have a case to say so and are lying or more naive than a believer in Simon Cowell's love of music when they use any talk of 'fairness' 'togetherness' or any justification of their actions other than their own idological antipathy to the most vulnerable.

Go Ed!

With the election of Ed, rather than David Miliband the Labour Party has obviously taken a risk. This risk has many Tories either professing themselves to be laughing over their Notting Hill gastro-pub lunches or bizarrely flinging vitriol about ‘Red Ed’ or ‘Brown Ed’ or whatever smear it is they think it is particularly opportune to use at that moment in time. This may seem strange, how can Ed Milliband be an unreconstructed Brownite and a Leftist usurper ? After all the Labour left and Gordon Brown’s version are about as close together as the ideologies of Vince Cable and George Osbor… oh hang on. Seriously though the cheers and the jeers do represent the two sides of the Ed Milliband gamble. Those cheers come about because Ed is not David, he doesn’t pose the obvious problems that David would pose the Tories. However the jeers come about because of the opportunity. In the eyes of the public, if not politicos, Ed is a blank canvas. Similar to Cameron he can be associated with past failures, in fact they are very similar in that respect, both had a hand in a failed manifesto that lost the election before the next they will fight, both could be tangentially associated with past policies (ERM, Golden Rules etc) but neither are fatally tied to them. This is why the right jeer, they want to paint him as an inevitable failure, a union man and an indecisive dullard. One should in this respect remember Labour’s taunts at Cameron: toff, lightweight, unable to take the right of his party with him, etc. That went well.

So Ed represents a risk but also a great opportunity: a chance for new policy, new thinking and in the shameless words of Cameron and Clegg a new way of doing politics. In this respect Ed Milliband should copy some (but not all) of David Cameron’s manoeuvres. By this I don’t mean triangulate in ‘the heir to Blair’ mode Cameron, tough political times call for tougher politics. One must have a look at Cameron’s end destination: 25-40% cuts, free schools, a half privatised NHS. Cameron reached this point by dodging needless battles, identifying the government’s weak spot and convincing people he is on their side while not fighting needless battles where and when the coalition is strong, even when you think you may have a case, the political weather is likely to change and this is when to strike. When Cameron and co. did strike, boy did they strike, here is where public opinion may be won for measures of the left: where Cameron and co. have failed.

Which policies would do this? Ones that capture the divisions and contradictions in the coalition (both Tory-Tory and LD-Tory) as well as setting out a quite different direction where the coalition can be characterised as wrong. In order to do this he should

1. Agree with the coalition (in general) on Civil Liberties. With the proviso that, as Labour did it will come up against the compromises of power in this area. The continuation of ASBOs and reductions in police should be seen as dividing lines.

2. Support a similar, though distinct version of IDS welfare reform. The biggest disincentive to getting off benefits is not that benefits are astronomically high but the fact that taking low paid work means that one loses all of one’s benefits rather than it being incrementally reduced as one works more. Labour should praise IDS for realising this and back him and the Lib Dem’s consciences against Osborne and Cameron’s urge to plunder this budget.

3. Back the Lib Dems in their opposition to Free Schools program making the argument that it is a centralisation of power rather than representing localism, and that it is a waste of money that could be better spent improving schools for all, without resiling completely from the original idea of academies which was to direct much needed funds and expertise into failing schools.

4. Flesh out his statement that Alistair Darling’s deficit reduction plan is a ‘starting point’ keep the bulk of the plan but introduce a policy of an ‘escape hatch’ if growth struggles and state that more would be done to raise money from tax rises rather than spending cuts. A Tobin tax should be strongly considered as well as Andy Burnham’s proposal for a LVT replacing council tax, focus on this in the second half of the parliament.

5. Shame the coalition on their green record. Not only is this an important issue and source of division amongst the coalition, it exposes the completely shameless difference between their PR and their policy. Promote green industries as the centre of the campaign to cut the country’s energy use, the people’s bills and create new skilled manufacturing jobs. The aborted ‘Green New Deal’ perhaps?

6. Don’t jump the gun on trident. State that it should be a part of the Defence Review.

7. Don’t get caught ought on immigration: one of the oldest wars of attrition in politics. Let it be seen in the context of the government’s failings rather than as a moral crusade, an immigration cap rather than points system will likely provide ample examples of unfairness while giving the coalition a chance to fail on its own terms.

8. Get tough on the NHS: supposedly protected but facing real cuts and a top down reorganisation when the NHS is a great achievement of New Labour. A bad case of coalition hyperactivity could well result in a trump card for Labour.

9. Get some goodies ready for 2015. Labour will think that George Osborne will not manage to reduce the deficit entirely by 2015. If this is the case Labour will have a ready made argument that they need to promote growth. If he does manage it, the argument will be about how much destruction has been wrought on the country by the cuts and how to improve slashed public services and improve the lives of those hurt by the cuts. Either way this can’t just be done by spending promises, but by targeted tax cuts to the poor and middle class, such as lowering VAT

10. Keep calm and bide your time!

Coulson & Tory Defences of him.

I don't have a clue about what went on in the Andy Coulson case. He may be an innocent know-nothing who miraculously rose to edit one of the nation's newspapers and subsequently be talented enough to be appointed as the main press advisor to the PM whilst not knowing the reprehensible tactics that his reporters were using in his newsroom. Inquiries into the matter so far (from the police, the PCC, and parliament) haven't proved this, nor have they proved the opposite, that Coulson was and is the unscrupulous ogre many people imagine him to be. (He has some form on this with an £800,000 bullying claim accepted against him.) Quite rightly people like Iain Dale point out that he hasn't been formally charged with any wrongdoing, a perfectly legitimate defence, one which until the NY Times article on this sorry business came out was perfectly acceptable. One might call it the 'You hate him anyway defence' which in the absence of proof or significant suggestion of wrongdoing invites the unbiased observer to view the accuser's bias towards the accused. It works well with Coulson. People on the left have every reason not to like him, he works for a Tory PM, he worked for Rupert Murdoch, specifically the NOTW and doesn't seem a pleasant chap. Added to this is the accusation of mischief making by those with nothing personal against Coulson and you have potent reasons for questioning the motives of those calling for his head.

The reason the NY Times Article challenges this point is that it isn't about Coulson. Coulson may be the focal point, and the claims against him are damning if true, but central to the point is the idea that the original investigations were either lied to or were given inadequate evidence. In the case of the CPS there is a prosecutor who claims not to have been given the correct evidence from the Met, a very serious allegation. The PCC are exposed as the supine press apologists that they are and the article accused Coulson of lying to a parliamentary inquiry that already accused him and the News International of 'obfuscation'. Add to this the fact that a huge number of people had their phones hacked, many with no connection to the work of the 'lone bad apple' who has been imprisoned, the massive payouts to those who looked like getting their day in court and accusations of excessive closeness between the news organisation and the police, as well as those who may not have been told by police that a crime was committed against them having their day in court if this is the case there is a need for an inquiry. The daft ad hominem attacks of Alan Duncan and Iain Dale merely express worry about the political cost such an inquiry would incur. Since when was it the role of a member of a government to trash the testimony of a prospective witness to a possible crime committed by a News Organisation? Really it shouldn't be a political issue. It should be a case of finding out whether initial investigations were told the truth, whether it was hidden or whether they were lied to. This is what the NY times alleges, with witnesses to back this up. The veracity of what these witnesses say should be determined by a judge, not a member of HM Government with a vested interest in them being untrue. Really an inquiry into this matter should be a no-brainer, it should be non-political. Tory attacks, their ad-hominem nature and deliberate ignoring of the real issue show that their closeness not just to Coulson but Murdoch mean that it isn't.

Oh Nick... A Foolish Cunt Art Thou.

The Iraq war is an emotive, and important issue. However after Nick Clegg's ludicrous performance at the despatch box today it took on a bizarre hue. He took the time, amidst answering important questions on government policy to declare it illegal. Two things spring to mind, firstly the speciousness of the legallity argument when used in certain contexts and secondly whatthis wasn't government what the fuck? On the first point after declaring the war illegay, most people's next step is to quote the number of civillian dead and to highlight individal cases of suffering. These have little to do with legality and more to do with morality. My own instinct is that the war may well be legal but was quite immoral. Resolution 1441 was interpretable as it was thrashed out between leaders who fundamentally disagreed with each other, to me it was a typical UN fudge in that it allowed both sides to interpret it and make their case. Whether the war was immoral is another question for which politicians quite rightly have to answer for. Secondly what the fuck? PMQs is a forum for asking questions on government policy, not for the expressing of ill informed personal views. Nick Clegg was there to put the case for the government's policy. Unless I'm very much mistaken this wasn't government policy, nor did it have anything to do with Jack Straw's question. In fact by using it to escape from a corner in which he was trapped over lies made by the coalition (the Sheff forgemasters money is a loan, of what is a tiny amount of money, which would be paid back, so 'no money left doesn't cut it as a defence.) he belittled what is a very important issue, it goes to show that Clegg is a mere opportunist prepared to use the most serious issues for political football and trivialities. Tony Blair may be a war criminal, people may have cases to answer, and above all many have perhaps suffered unneccessary. To Nick though they didn't die in vsin, they got him out of a sticky one on PMQs.

David Cameron's bizarre (but expected) use of language.

It's nothing new to hear politicians use bizarre language, they often seem to inhabhit a realm stalked by dizzying words and expressions such as 'empowerment' and 'choice agendas', not to mention the most terrifying of all: 'reform'. However I was struck by two David Cameron uses of language by their utter concealment of truth a nd how a marketing man may twist language to suit his ends. Firstly their was a seemingly innocuous aside after being asked about the shielding of charities from a VAT rise
'I will certainly have those conversations with the Treasury, and we will want to do everything we can to help what used to be called, rather condescendingly, the third sector but I believe is the first sector: the excellent charities, voluntary organisations and social enterprises that do so much for our country…so often these first sector organisations have the right answers to the social problems in our country.'
Aside from the clunkiness of his turn of phrase it is astonishing how utterly vacuous his point is and misleading its implications are. Firstly the term 'third sector' is not condescending in any way. The turn of phrase simply reflects the fact that the bulk of GDP is spent and earned in the private or public sector. Would Mr Cameron wish otherwise? Of course not as charities are reliant on private and government contributions to make ends meet, they could never be 'the first sector' in any meaningful sense. So how is it the 'first' sector? Because it is the most important to our welfare? Because it 'so often has the right answers...' ?Well even if these were true, the 'first sector' would still be reliant on government or private money to operate. Of course the other two points are nonsense too. Most great advancements or changes have come about either through private endeavour (Cars, advances in computing) or government (NHS, Welfare, universal schooling.) with volunteers sometimes playing an important role in stepping in when there is both state and market failure to provide a service (often where there is no renumeration on offer for private investors, and either for historical, current reasons or because it's seen as frivolous, the state doesn't want to get involved.) The lable 'the third sector' in fact is far from condescending, it places an importance on charity work that places it alongside the public and private sector as a provider of services: one that is certainly greater than the percentage of GDP it takes up. Mr Cameron here is calling an apple an orange, then saying that the apple is a better orange because it's an apple. Only a PR man could do this.

Second of all there was his characterisation of the Labour front bench as 'deficit deniers'. This is a more pernicious rebranding. Firstly of course because it is directed at his opponents. Secondly because it was a pre prepared line trotted out in response to a question about protecting research grants (?!?!) and lastly because of the term itself. Its ludicrousness is most easily seen if compared with the term 'climate change deniers'. People who deny firstly that man made climate change exists, and secondly assert that anything done to combat it is a dreadful (in some cases a tyrranical plot) waste of money. Do the Labour front bench deny that the deficit exists? Nope, they agree broadly on the figures, although they believe that their policies would leave a slightly smaller structural deficit due to increased growth. Do they assert that we should do nothing about the deficit? Nope. They want it cut, but think that a better way to do this is to cut slowly but surely in order to both save pain and avoid a double dip recession which would derail any plans for cutting the deficit anyone might have. So deniers Dave? Really? You could fairly plausibly say we need to go faster in cutting public expenditure but that? One has a feeling that Mr Cameron, were it not for his connections to Tory central office, would be the type of person who thinks he can call a yoghurt 'natural' because it has been dyed the right colour and has a couple of dried fruit bits in. Activia doesn't occur naturally, growing in a lightly swaying hedgerow, nor are Labour 'deficit deniers', nor I would venture is Mr Cameron a man who would even regard the truth as acceptable when a concealed falsehood helps him to market himself and his worse than advertised product.

The unbearable shiteness of being... a world cup advert

It is not original to point out the ridicule that one can engender by basing a marketing strategy around the world cup. In fact Private Eye has pointed out the curse of tying oneself to major sporting events such as these for years. Michael Owen's knee knack and Brazil's spectacular failure to live up to 'Joga Bonito' being two of the last competition's finest. This year though has perhaps been the toughest competition in years. Here are a few of the best, or worst marketing failures of 2010.

Carlsberg, If Carlsberg gave team talks...: Aside from the fact that if Carlsberg gave teamtalks they'd be in Danish (or rather they would be silent bubbles of carbon dioxide given that Carlsberg is a beer and as such incapable of speech.) this ad manages to be cringe worthy and in poor taste at the same time. First of all there is the dubious ethics of invoking the dead Sir Bobby Robson and a ghostly Bobby Moore in order to sell beer, a strategy one can only hope they repeat when Thatcher dies, sparking an 'if Carlsberg made destroyers of Britain's manufacturing base...' tagline. Secondly a teamtalk given by a collecion of British champions in minority sports... and Ian Botham. Is not one likely to tactically outwit a slug, let alone the likes of Marcelo Biesla and his contemporaries. Although it is rather apt considering 'our boys' have played like drunken sailors so far.

Anything associated with FIFA: Millions are spent by various companies in the run up to WCs in order to become 'the official FIFA World Cup (tm)' tampon or spreadable cheese or toilet cleaner. How many people buy their domestic products on the basis of Sepp Blatter's advice is dubious in the first place, but this wheeze has been arguably made a little toxic by FIFA's hijacking of South African law for corporate purposes. Meaning that those caught selling anything other than McDonalds', Gillette, Budweiser or other FIFA endorsed products in certain designated areas faces jail or a fine. Not good PR when the victims of this policy so far have been impoverished Africans and 30 Dutch women in miniskirts.

Nike, Write the Future: Nike adverts are always the lavish setpiece ads of any World Cup, beautifully put together, containing all the stars and often containing what passes for wit amongst sportswear manufacturers. However the ad urging it's participants to 'Write the Future' through their brilliant play (in Nike boots of course) has been one magnificent curses in sporting history, even by Nike standards. (Their 98 campaign centred around a Brazil team which descended into farce around Nike's golden boy Ronaldo and 2006's Joga Bonito Brazil were anything but.) The fortunes of those featured is as follows:
Ronaldinho: Not selected for tournament
Wayne Rooney: Currently playing like his useless ginger bearded alter ego from the advert in an abject England side.
Franck Ribery: Threatening to go on strike in a French side in turmoil.
Fabio Cannavaro: Last seen blaming anyone but himself for Italy's dismal draw with New Zeland.
Cristiano Ronaldo: Fared okay by others standards but has looked average, petulant and far from the movie material the ad would like us to believe.
Didier Drogba: Playing in a Cote D'Ivoire side going out of the tournament with a broken arm.
Roger Federer: Almost lost to a player ranked outside the world's top50 at wimbledon 2010.

ITV: This is a special mention, first for their HD England goal gaffe, which may have stressed jazzed up telly execs a little blue in the face, second for their pundit Robbie Earle being involved in aformentioned mini skirted women scandal, third for their sponsor Hyundai's advert being a parody of their commentary teams inadequacies and lastly for the inexplicable horror (my eyes! My ears! My sense of human progress!) that is James Corden.

Mars: Forgetting a huge reason for football fans' love of the 1990 England World Cup song World in Motion is that it represents a more innocent time when footballers didn't flog chocolate bars Mars have enlisted the now ludicrously overweight John Barnes to reprise his rap for a chocolate bar. I think they may have paid him in them.

Special mentions: Kitkat's 'fingers crossed' campaign, released when England fans are far more likely to be using their fingers to signal different things to their team, the Adidas Jabulani, Betting companies for encouraging morons to give us the kind of tips that make you realise that this gambling lark is a tax on the stupid who think they know about football.

Treble (Carlsbergs) all round!

What To Make of The Weak Pound

A weak pound is alarming isn't it? After all Gordon Brown said 'A weak Pound is a sign of a weak economy'. Well that much is true, but misses the point. The reason a weak pound is a sign of a weak economy is because it is necessary to engender a recovery in that economy, especially when that economy's major trading partners are in a poor position too. To quote Mr Brown again 'This is a global recession' - also very true, and this is at the centre of why we need a weak pound. It is essential that we have an export driven recovery, and at that one that is based on goods and genuine services rather than financial tomfoolery. Our major trading partners (the EU, the US) are also struggling dreadfully in the current economic climate, therefore in order to stimulate demand that actually contributes to improving the balance of payments and the current account we need a competitive currency that will make it cheap to trade in British goods. Obviously we do not want the pound to go through the floor, due to the costs this will incurr upon our national debt, but this is to be paid off in the long term and if a weak pound helps encourage investment and expansion in industry the short term losses will easily be wiped out by longer term gains. My guess on the current movement of the pound is that it is simple currency specullation - traders know that it needs to fall to a certain, artificially low level in order to help us reorganise labour in our country, thus traders sell at what was a 'high' and will buy again once they feel it has reached the level that we need. To quote a certain Lance Corporal "Don't Panic".