First it was Jimmy Carr, then it was Gary Barlow of Take That (a curiously appropriate name), then Chris Hoy (Olympic cyclist), and now footballers like Wayne Rooney. The trouble with the media is all they’re interested in is wealth, celebrity and bling. Tax avoidance on 6 or 7-figure pay deals makes a good story, complete with pictures, gawping and moralising (thank you, Cameron), but that’s missing the real point. What it’s actually all about is big business multi-national corporations and ultra-rich individuals cheating taxpayers out of £42bn a year (HMRC’s figure) which is then recouped by cutting benefits (£81bn) for those on the lowest incomes plus cutting public spending (£81bn) for those using public services. What it really amounts to is a gigantic swindle redistributing money on the grand scale from poor to rich.
Nor is it a matter of just blocking Trackstars (Hoy), Icebreaker 2 (Barlow), or K2 (Carr) – the circuitous tax avoidance devices dreamt up by City accountants and lawyers whose huge fees for breaching the public interest anomalously count towards the GDP instead of being a subtraction from it. What is needed is systematic action attacking the problem at root and eliminating it.
First, there should be a General Anti-Avoidance Principle that any transaction the primary purpose of which is tax avoidance/evasion rather than any genuine economic purpose can be automatically declared null and void by HMRC. I am currently promoting a Private Members Bill in the Commons to do just that.
Second, there should be a new international financial standard which requires mandatory country-by-country reporting by trans-national companies to block the colossal tax loophole they constantly use of transfer pricing.
Third, the EU’s Savings Tax Directive, which the UK government in response to lobbying from the City of London has repeatedly sought to water down, should be strengthened to include offshore trusts which are a favourite tool of the tax-cheating industry.
Fourth, Britain’s non-domicile rule should be abolished. It has attracted many dubious characters to the UK whose contribution to the real economy is zilch and might well be negative since these people typically invest in property and similar rentier investments which inflate prices without adding value.
Fifth, Britain’s tax havens should be closed down. The British Virgin Islands absurdly are home to 30,000 inhabitants and 457,000 shell companies with nameplates. Britain’s Crown Colonies hold over $7 trillion deposits accorind to the US Senate. Unless such tax havens provide full and automatic information on all such funds which can then be subject to tax in the proper way, they should be blacklisted and the funds outlawed.