The New Worker
The Weekly paper of the New Communist Party of Britain
Week commencing 19th November 2010
NEW RESEARCH on how the rich and big business in Britain avoid paying their taxes provides clear evidence — if any were needed — that the Con-Dem coalition’s attack on the public sector and vital services is not due to economic necessity but is an all-out political assault on the working class.
We all know that the current budget deficit is overwhelmingly caused by the bail-out of banks, which gambled with working people’s hard-earned money, and not, as Cameron and Clegg would have us to believe, by the Labour government’s “over-spending”.
But now research shows that three-quarters of the current budget deficit could be wiped out if big businesses and the rich paid their share of taxes just like everybody else, and both New Labour and the Con-Dem coalition share the blame.
According to a recent article by George Monbiot in The Guardian, over £120 billion a year in taxes is being lost through avoidance, evasion and debts as business and the wealthy employ accountants to run rings around the system.
This is equal to 80 per cent of total income taxes, and three-quarters of the budget deficit, which the government is using to justify slashing spending and cutting tens of thousands of public sector jobs.
Twenty-five billion pounds is being lost through tax avoidance, £70 billion through tax evasion, and uncollected debts amount to £28 billion a year, according to Richard Murphy of Tax Research UK. In comparison losses due to benefit fraud — estimates range from £1.1 billion a year to £5 billion (Ian Duncan-Smith’s figure) — pale into insignificance.
But the real class politics behind the government’s plans are exposed in that far from trying to recoup these losses — as they are loudly proclaiming to do with benefit fraud — staff and funding to close these loopholes are being slashed.
Since the merger of the Inland Revenue and Customs and Excise in 2005 (to create HM Revenue and Customs), staff number have fallen from 99,000 to 68,000 and will fall another 12,000 in the next four years, while spending on tax avoidance been cut by half since 2006 (£3.6 billion to £1.9 billion).
This is no accident — it is a deliberate policy. Dave Hartnett, Permanent Secretary, has told the Financial Times that the tax service plans to “adopt a less combative approach to resolving tax disputes with businesses in order to chime with the coalition’s ‘open for business’ message”.
While the wealthy and big business employ top accountants and use every scam in the book to avoid paying their share to the society that they are part of, small businesses and individuals are still being chased for every penny of tax, and the minority of corrupt benefit claimants are hounded by the tabloids.
Britain is already the most unequal society in Western Europe: it has the lowest Corporation tax of any major industrialised country, and since 1979 taxes on the rich have been slashed. Yet these very groups, much of whose wealth comes from Britain itself, are managing to escape their legal tax obligations and in many cases paying less than the basic rate of income tax.
Just two examples are Vodafone, which according to Private Eye has saved a cool £6 billion by using a Luxembourg subsidiary, and Boots, which avoided paying £86 million by relocating to a post office box in Switzerland. In Vodafone’s case the HMRC agreed to let this scam go unchallenged.
Meanwhile thousands of small businesses that cannot afford specialist accountants still have to pay their full share in taxes. These are the very companies which David Cameron expects to generate the jobs to fill the huge hole that will be created by his government’s cuts.
Monbiot describes the Con-Dem coalition’s actions as “another application of the shock doctrine... to free corporations and the very rich from their obligations to society,” and says “we are living in a country where the poor bail out the banks, while the rich keep their billions intact”.
This is the real political battle in Britain today — to expose the Con-Dem coalition’s all-out class offensive against working people and to take forward the fight to make the rich and big business pay their fair share. It affects the lives of every working person in Britain — in other words everyone not wealthy enough to live without a job or benefits.