You are against tax avoidance (which is legal). So when you get a pay slip do you voulantarily give more than the tax man asks for ? When you buy something do you insist on paying 20% VAT ?

*No one* wants to pay more tax than they have to. The well worn left wing argument about “rich people hiring accountants to avoid paying tax” is cobblers. If you want to stop tax avoidance then you have to change the law. And every time you do that, you create compexity and another potential loophole. The more complex the tax system the easier avoidance becomes. This is why our tax system is such a complicated mess today.
Obviously the richer you are the more scope you potentially have for avoidance, but the avoidance principle is exactly the same as my VAT example.
Would it surprise you to know that the biggest users of tax planning are not rich individuals but global corporations, and that if you “crack down” then they will simply move their business somewhere else.

If the Coalition reversed the obscene decision by HMRC to let Vodafone off the hook for £6bn in attempted (now succesful) tax evasion they would only need to find another £1bn.

Notable facts: George Osbourne went out of his way to promote Vodafone during his recent visit to Germany (IIRC).

The tories have done quite well out of Vodafone donations.

The tax write-off was decided upon by Dave Hartnett despite the likely success of legal action against Vodafone. That’s the same Dave Hartnett who apologised, onion in hand, that he was having to demand back-taxes from underpaid PAYE due to a New Labour outsourcing cock-up. Of course, only little people pay taxes.

The ‘they’ll go elsewhere’ argument is starting to look a bit thin, given how many times it’s been wheeled out lately and how few rich people have actually done it.

If a global company maintains a UK office it’s because it benefits them to do so. I suspect their tax burden could grow quite a bit before having a UK office stopped being beneficial overall, but I don’t have any stats to back up that suspicion. Do you have any numbers to back up your claim that they would ‘simply’ move? As far as I’m aware, the evidence (i.e. number of companies that have relocated so far) isn’t particularly worrying.

Let me ask you a few questions, Matt Munro.

Are you happy to pay more tax to cover the government’s expenditure so that the tax evaders/lawbreakers can pay less?

Does it occur to you that the law, as a whole, loses its authority if certain groups are seen to be able to break the law with impunity/get round it?

Are you at all familiar with the concept of “Tax compliance” which means paying the right amount of tax (no more) in the right place at the right time?

Do you in fact know anything about the shady world of tax avoidance and offshore secrecy?

Are you familiar with the concept of a GAAR? General Anti-Avoidance rule to spell it out. This, while not without its own problems, would enable us avoid the creation of vast amounts of detailed anti-avoidance law and maybe even enable simplification of what is one of the longest tax codes in the world.

Looks like Vodafone will dodge another £billion in tax, this time over the sale of China Mobile by using a Jersey company to transfer the profits to Luxembourg and Switzerland. Among the group of businessmen on George Osborne’s Tax And Competetiveness group advising the Treasury is Andy Halford, Vodafone’s Finance Director.

And don’t forget the role to which tax dodger Sir Philip Greed has been appointed.

Sounds like an empty attempt at crowd pleasing from the Yellow Tories

Dear James from Durham,

I haven’t seen you post here very often, well, ever, really. Our good friend Matt Munro is a known controversialist, a believer that no-one that is rich can be caught – well, just because. That is Matt Munro’s shtick here and you nor I nor anyone else will dissuade him of just what a self serving nincompoop he is.

It is the ‘whoop de do’ bit of his story that drives me up the wall. It is pretty obvious that rich people can employ rich lawyers to find loopholes, and that poor folk can’t. Who does Matt bleeding Munro side with?

The rich fuckers, that’s who.

@ 3 A global corporation doesn’t have to physically move anything to change tax juristiction , just relocate it’s head office – I don’t have any numbers but a number of multi nationals moved moved their head offices to Ireland when tax there was low compared to UK. The broader point I was making is that the “rich individuals who hire accountants” narrative ignores the fact that there aren’t that many rich individuals and no mater how much you tax them, even if they stay put, you will still need to tax/cut something else significantly.

And what the heck is the point of arguing with someone that differentiates between ‘individuals’ and ‘global corporations’.

As if they were not one and the same thing. As if corporations were owned by robots.

The man is an idiot.

@ 4 “Let me ask you a few questions, Matt Munro.

“Are you happy to pay more tax to cover the government’s expenditure so that the tax evaders/lawbreakers can pay less?”

No but nor am I happy to pay taxes to cover lots of things – bone idle chavs sitting on their pile ridden arses eating KFC and watching Trish springs to mind

“Does it occur to you that the law, as a whole, loses its authority if certain groups are seen to be able to break the law with impunity/get round it?”

Yes – tax *avoidance* is not breaking the law.

“Are you at all familiar with the concept of “Tax compliance” which means paying the right amount of tax (no more) in the right place at the right time?”

Yes – more so than most people I would imagine

“Do you in fact know anything about the shady world of tax avoidance and offshore secrecy?”

Er a bit more than average, but if it’s secret then who really knows thant much about it ?

“Are you familiar with the concept of a GAAR? General Anti-Avoidance rule to spell it out. This, while not without its own problems, would enable us avoid the creation of vast amounts of detailed anti-avoidance law and maybe even enable simplification of what is one of the longest tax codes in the world.”

I’ve never heard of it before. It’s been the aim of countless chancellors to simplify the tax system, they generally acheive the opposite effect precisely because they try and use the tax system as a instrument of social/economic policy (as the OP is proposing) rather than primarily as a means of raising the necessary monies to fund necessary public services.

I take it you’ve heard of the concept of fiscal neutrality ?

Yes, Matt but Ireland which is heading perilously close to the Greek economic model is hardly an example the UK should follow, is it.

You rightly say that a company can very easily shift its head office. It is less easy to move substantial economic activity. You tax the economic activity in the UK even if the head office is in Hong Kong. You might want to research “Country by Country reporting”, an idea which is steadily gaining traction.

Matt Munro,

A global corporation doesn’t have to physically move anything to change tax juristiction , just relocate it’s head office – I don’t have any numbers but a number of multi nationals moved moved their head offices to Ireland when tax there was low compared to UK. The broader point I was making is that the “rich individuals who hire accountants” narrative ignores the fact that there aren’t that many rich individuals and no mater how much you tax them, even if they stay put, you will still need to tax/cut something else significantly.

Och, it’s all just down to cheats and liars then, and there ain’t a thing to be done? You are an apologist for ‘smart money’, probably their best apologist.

It is pretty obvious that an apologist for global corruption – for that is what it is, no matter how you care to dress it up – would fail to see why any added value in a country should not be taxed in that country.

If you are rubbing the evil end of a capitalist’s dick in our collective faces, then, perhaps you do us a favour. For then we know just how fucked up their values actually are.

@11 “It is pretty obvious that an apologist for global corruption – for that is what it is, no matter how you care to dress it up – would fail to see why any added value in a country should not be taxed in that country”.

What you don’t seem to understand is the difference between tax *avoidance* which is legal and tax *evasion* which isn’t. If you are making an argument that “rich” people have a moral/ethical duty not to minimise their tax bills, then why not simply base the whole tax system on trust – rather than, for example, unavoidable taxes like VAT and PAYE ? Your argument makes no sense – one group who you deem be rich (defined by “adding value”) should voulantarily pay what amounts to uncharged tax, while everyone else should just pay what they owe ? In other words a completely arbitrary system of legal extortion.

Closing tax loopholes is obviously a good idea. However, people will always game the system if it is possible to avoid tax. How reasonable is it to expect individuals and firms not to use any means at their disposal to legally avoid tax? Not very likely in my opinion.

Therefore, the best system is a Land Value Tax where the government collects the economic rent from where the activity occurred. The beauty of the system is the tax is unavoidable and can’t be offshored. Capital is easy to move around but land is impossible to move. Firms can move their head office wherever they like and it will make no difference. Income and corporation taxes can then fall to where they should be and that is zero. The House of Lords revolted against Lloyd George because they understood the unavoidable nature of a LVT in the 1909 budget leading to the Parliament Act 1911.

A number of the LibDems favour such a tax so they should be pushing the idea. The Tories will squeal because although the tax is super efficient they know it is unavoidable.

Compare these are recent news items:

Sutton Council’s benefit fraud investigation team have retrieved almost half a million pounds from benefit cheats in the last 12 months. This is the result of around 150 penalties ranging from small fines to arrests and prison sentences between March 2009 and April 2010. The team has prosecuted, cautioned or fined more offenders in the last year than the other five boroughs in south west London.
http://www.sutton.gov.uk/index.aspx?articleid=9221

Sutton’s fraud investigators and benefits team have been nominated for two national awards for their work fighting crime and helping the needy. Sutton Council’s staff have been shortlisted for the ‘Excellence in Anti-Fraud’ and ‘Most Improved Team of the Year’ categories in the Institute of Revenues Rating and Valuation Performance awards 2010. Following the recession benefits claims increased by 20 per cent since April 2008 and the team is recognised for continuing to provide an excellent service despite the increase in workload.
http://www.sutton.gov.uk/index.aspx?articleid=10896

The Lib-Dem controlled Sutton Council is one of four councils selected to pilot the government’s Big Society initiative.

If one relatively small London borough – in population terms, that is – can claw back £500,000 lost through benefits fraud, there must surely be good prospects for substantial savings if the same zealous efforts are applied with sufficient diligence in other places as well.

Back to “Lie Detectors”, these are actually Voice Stress Analysers and whatever the companies trying to sell them say, they’re useless. In trials for the American government they average no better than 50%, the same as guessing or tossing a coin. All they detect (when they work) is stress and, guess what, someone on the phone for hours trying to negotiate labyrinthine rules with a call-centre zombie might just be feeling not entirely relaxed. Its nothing like a Polygraph which requires skilled operatives and can still be beaten by some people. I’d certainly like to see a few prominent businessmen and politicians wired up to Polygraphs, Mohammed Fayed would probably make one explode. The Voight-Kampff machine would probably be more approriate for George Osborne

As best I can tell from the local news, they didn’t use or need to use lie-detectors in Sutton to recover £500,000 lost in benefits fraud.

Bob mate how many time have you used this now mate, I take it your a Liberal

Bob B

While you’re right that savings from catching benefit fraudsters might be worthwhile I hope you don’t feel that its not necessary to make wealthy people and organisations pay their share?

Its all about the kind of society we want. Despite the rhetoric we’re soaked in there is in fact a choice. Some of us feel that people and organisations are getting away without putting their fair share back. Isn’t that as bad as benefit cheats, or is there something special about people on benefits that they should be persecuted while wealthier people aren’t?

Oh goody, can we look forward to lie detectors for the rich.

“Have you now or have you ever fiddled your tax?”

Remember folks, if you have nothing to hide you have nothing to fear.

@18: “While you’re right that savings from catching benefit fraudsters might be worthwhile I hope you don’t feel that its not necessary to make wealthy people and organisations pay their share?”

I’m not only all in favour of clamping down on tax avoidance by the rich, I’m also in favour of clamping down on those ridiculous souped-up public sector salaries too – especially BBC salaries paid for by the TV licence fee.

Over 9,000 in public sector earn more than David Cameron, survey claims. According to a survey for BBC Panorama, more than 9,000 public sector workers earn more than the PM’s £142,500
http://www.guardian.co.uk/society/2010/sep/19/public-sector-pay-davidcameron

Public Sector pay: The numbers
http://www.bbc.co.uk/news/uk-11333472

Excel data file:
http://downloads.bbc.co.uk/news/nol/shared/spl/hi/uk/10/public_sector_pay/inc/xls/public_pay_database2.csv

@1 When you have people like Mr Green who avoid paying £300 million pounds on income earned in the UK then yes it is wrong and should be stopped. The principle is that people should all pay a fair share of tax on their income – someone claiming back stationary costs is reasonable. Living in the UK, making most of your money in the UK, while, by exploiting a legal loophole, paying less tax as a proportion of your income than your cleaner ddoes is not.

RE: MattMunro@1 OK, so tax avoidance is legal. I can understand this.

Why not make it illegal?

@Bob B

I find your specific targeting of certain sectors questionable. You sound like a disgruntled Daily Mail reader who doesn’t bother to take a broader view, simply being happy to be grumpy at some or other supposed beneficiary of your taxes.

The point about taxes is that we are all beneficiaries. Its all about common goods and benefits. Therefore the point about wealthy people and corporations is that they should pay their share too.

I note you have voided the question I asked. I’ll try it another way. Why is it that it’s OK for anyone other than the poorest to want more?

Anyone got a link to Unity’s *superb* article on ‘lie detectors’ published here a year or so back?

Lie detectors are an affront to the liberal presumption of innocence; they fundamentally rewrite the relationship between the individual and the state. They aim to eradicate the ‘suspect’s (ie anyone who wishes to avail themselves of public services they have already paid for in taxation) protection from self-incrimination.

And it’s no use looking to the ‘opposition’ for support in a campaign against them though – those fuckers introduced them in the first place.

@23: “I find your specific targeting of certain sectors questionable. You sound like a disgruntled Daily Mail reader who doesn’t bother to take a broader view, simply being happy to be grumpy at some or other supposed beneficiary of your taxes.”

There’s nothing like a bit of ad hominem to deflect attention from the argument put, is there?

I suspect many folks here will find it sickening to reflect on local government officials paid well over £100,000 a year zealously pursuing benefit fraudsters with or without lie detector equipment to facilitate their investigations.

Nevertheless, there is a problem with benefit fraud just as there’s an issue over incapacity benefit entitlements. But then there’s also a scandal about the waste of public money spent on paying hugely inflated salaries to public sector officials – regardless of whether you personally find that questionable or consider me grumpy for raising it. Btw the Mail is isn’t my regular paper and I only get to see its content online.

@ Bob B

My question wasn’t an ad hominem attack, I explained how I thought you came over in your postings.

I wonder why you see fit to single out public sector pay though? For me the amounts some people get paid is astonishing, but not just those in the public sector. Surely there is an issue about how pay relates to the value of each individual’s work? How can a banker or a footballer be worth millions? I know economists will say its what markets have decided but it’s worth taking a step back and examining the whole mad situation.

@ 13 “Therefore, the best system is a Land Value Tax where the government collects the economic rent from where the activity occurred”.

How do you define “economic activity” though – where something is produced, where is is sold, or where the profit ends up ? It’s not unusual for say, a car, to be designed in country A, assembled in country B, from parts produced in countries X, Y and Z, and then sold in countries C and D. All of these are economic activities, so which would you tax ?

@ 22 – To make tax avoidance illegal you need to define it in law as evasion BUT, you have then created a loophole. I remember the 80s when some comapnies in the city were paying bonuses with gold bars and cases of vintage wine to get around income tax (on cash bonuses) so you make those taxable and they’ll start handing out works of art or luxury cars, and so it goes on. You have to simplify in the long term, otherwise the only winners are the tax lawyers.

Matt Munro,

A LVT is based on economic rent. If you want to learn what is meant by economic rent you could check here.
http://www.landvaluetax.org/

This thread was a really interesting and well-informed discussion on economic rent.

http://blogs.ft.com/martin-wolf-exchange/2010/07/12/why-were-resources-expunged-from-neo-classical-economics/#more-456