Balancing the budget: welfare fraud and tax cheats
Today, work and pensions secretary Smith announced much tighter regulation of welfare, a streamlining of benefits and harsher penalties for fraud. Simplification may be a good thing; I'm not familiar enough with the system to know. Fraud ought to be penalised. But there seems to be something deeply disturbing about chasing benefit fraud that costs £1.1 billion annually (and making other severe cuts such as university funding dropping by 40%), while tax evasion, avoidance and debt in the UK amounts to £120 billion annually, more than three quarters of the budget deficit. Of course not all this can easily recovered, but some can, and focusing political attention and government funds on the recovery of these monies repays £60 for every £1 spent on it. For comparison, clamping down on benefit fraud is more like £3 for each £1.
Why then, would a government make a further 15% funding cut to its tax office in such a situation?
Perhaps these figures are incorrect (the sources are all recorded here if anyone wants to chase them down), but there seems to be a decent prima facie case for making tax avoidance and evasion a major plank in responding to the budget deficit. This isn't about penalising the wealthy or large corporations, but simply upholding existing laws. If it is replied that cracking down on tax evasion would send these wealthy people and companies elsewhere, then perhaps the UK needs to ask itself whether it wants to provide sanctuary for such criminals.
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18 comments:
The short answer is that chasing welfare benefit fraud is not actually designed to balance the budget, but to give the perception that the Government is seeking to balance the budget.
Going after white collar tax avoidance or fraud doesn't win votes, but putting the boot into "dole-bludgers" does.
Sad but true.
Sadly, I think you're correct. And perhaps worse things could be suggested by this pattern (the Tories are no strangers to being accused of mainly interested in protecting the interests of the rich). I avoided saying so directly in the post, but I'm sure people can draw their own conclusions.
It's not isolated to one side of politics either. In Australia at least this kind of approach has been adopted by both Labor and conservative governments.
If you haven't already seem it, there was a great episode in The Hollowmen tv show about exactly this topic.
I didn't see it (I've only seen a couple of episodes).
But your right and it's also not just confined to the Tories here. While Labour will make noise about those on welfare, they are not (on the whole) joining this up to tax evasion/avoidance.
UK following Ireland's playbook.
Uncut movement to target stores during Christmas shopping over tax avoidance.
More on Uncut protests.
The idea that wealthy people will move abroad if a government is perceived to be uncompetitive against others reveals a very low opinion of the wealthy. What it amounts to saying is that the rich are more loyal to their own dosh than to the country in which they are citizens, which provides them with the legal framework, police protection, stable market, and assorted infrastructure that enables them to make money in their first place. This well be true, but it is quite a damning critique of the rich's greed.
38 Degrees make tax evasion ads.
Monbiot: City's tax heist of the century.
Barclays Bank forced to admit to paying 1% tax in a year it made £11.6b profit.
Some things are easier to balance than others. :-)
US tax cuts and budget cuts compared. Of course this is only a partial picture, but I think it as a piece of communication it is pretty effective.
2/3rds of US companies pay no federal income tax. Why is there a deficit again?
Forbes: 400 richest Americans pay some of the lowest tax levels, about 18%.
The Conversation: Tax evasion vs avoidance, and why the distinction matters, which is not because they are both repellent, but because they have different solutions. Fair point.
MWH: Jeremy muses on the 2012 UK budget.
A fascinating piece in which top Tories (including Cameron) are highly critical of a comedian tax avoider. Fair enough, he's avoiding tax and ought to be held morally (and if possible legally) accountable. But it sets an excellent precedent...
The final paragraph also made my jaw drop. Imagine the carbon footprint required to execute that little tax dodge! (Literally, dodging, in this case).
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