The sudden withdrawal of the Guernsey tax exile, David Rowland, from taking up his appointment as Tory Party treasurer shows there is just a glimmer of political concern in the Tory High Command about the iniquities of massive tax avoidance. Not much, though. The appointment of Sir Philip Green, that greasy barrowboy of jackpot capitalism, whose tax affairs are so hugely complex to evade the attentions of the taxman, to undertake a review of public spending suggests the natural instincts of the Tory Party in support of tax avoiders/evaders run very deep. And in case there’s any doubt about it, the Tories have now just made clear they’re not going to do a thing about tax avoidance.
To give them credit, they’ve done it cleverly. The LibDems had stated in their election manifesto that they would “tackle tax avoidance and evasion, with new poers for HMRC” and that they would “crack down on tax havens”. Nick Clegg, as Ed Miliband reminded him in a letter yesterday, repeatedly trumpeted during the election campaign that LibDems would raise £2.4bn by attacking income tax avoidance, £1.4bn by stopping abuse of corporation tax, and £0.7bn from stamp duty through tackling offshore registration by non-doms. For the Tories, no way.
To save Clegg’s face they’ve got Dave Hartnett, permanent secretary for tax at HMRC, to announce yesterday in the FT that his staff have “sometimes been too black and white about the law”! So that’s that then. No toughening up on tax cheats at all, rather a general softening up all round. Like the New York billionaire tax avoider Leonora Helmsley, the Tories think tax is just for the little people.
But this is not just a matter of tax morality. Economically it matters hugely too. The acclaimed tax expert, Richard Murphy, Director of Tax Research LLP, calculates that £25bn a year is lost to the Exchequer from tax avoidance, plus some £70bn a year from tax evasion, plus a further £26bn a year in unpaid and late-paid tax according to HMRC. That’s altogether about £125bn, and when the Budget deficit this year (which the Tories use as the excuse for draconian public spending cuts) is £155bn, it’s clear that making rich tax cheats pay up would go a long way to plugging the entire deficit.
Politically however it’s clear cut. The Tory Right will have nothing to do with all this nonsense about tackling tax avoidance. The only issue is whether Philip Green is the kind of person they would wish to hob-know with in one of their London clubs. Now that’s a real question.
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