If Osborne is opposed to tax avoidance, why did he reward it?

The Chancellor says he's "shocked" by tax avoidance. So why did he cut the 50p rate?

George Osborne's claim that he is "shocked" by the level of tax avoidance in the UK is evidence of either extreme naïveté or extreme cynicism. Are we really to believe that it was only after studying millionaires' tax returns that the Chancellor realised that some of them pay "virtually no" income tax? And does he really think the voters will believe him? 

He told the Daily Telegraph

I was shocked to see that some of the very wealthiest people in the country have organised their tax affairs, and to be fair it’s within the tax laws, so that they were regularly paying virtually no income tax. And I don’t think that’s right.

Admirable words, but if Osborne is opposed to tax avoidance, which he has described as "morally repugnant", why did his Budget reward it? The principal reason for the abolition of the 50p tax rate was that high-earners are avoiding it. As Osborne stated in the Budget

HMRC find that an astonishing £16 billion of income was deliberately shifted [emphasis mine] into the previous tax year - at a cost to the taxpayer of £1 billion, something that the previous Government's figures made no allowance for.

But this is an argument for reducing tax avoidance, not for cutting taxes for the top one per cent. While the rich could avoid the 50p rate in the first year of its existence [by bringing forward income from 2010/11 to 2009/10 in order to pay the 40p rate], this is not a trick they could have repeated. Yet Osborne has cut the rate all the same. It is as if he has rewarded welfare cheats by increasing their benefits.

Osborne's insistence, then, that he is "going after" tax avoiders is simply an attempt to change the subject. If the Chancellor really wants to ensure the rich pay their fair share, he should reinstate the 50p rate. 

Chancellor George Osborne: "shocked" by tax avoidance? Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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PMQs review: Theresa May shows how her confidence has grown

After her Brexit speech, the PM declared of Jeremy Corbyn: "I've got a plan - he doesn't have a clue". 

The woman derided as “Theresa Maybe” believes she has neutralised that charge. Following her Brexit speech, Theresa May cut a far more confident figure at today's PMQs. Jeremy Corbyn inevitably devoted all six of his questions to Europe but failed to land a definitive blow.

He began by denouncing May for “sidelining parliament” at the very moment the UK was supposedly reclaiming sovereignty (though he yesterday praised her for guaranteeing MPs would get a vote). “It’s not so much the Iron Lady as the irony lady,” he quipped. But May, who has sometimes faltered against Corbyn, had a ready retort. The Labour leader, she noted, had denounced the government for planning to leave the single market while simultaneously seeking “access” to it. Yet “access”, she went on, was precisely what Corbyn had demanded (seemingly having confused it with full membership). "I've got a plan - he doesn't have a clue,” she declared.

When Corbyn recalled May’s economic warnings during the referendum (“Does she now disagree with herself?”), the PM was able to reply: “I said if we voted to leave the EU the sky would not fall in and look at what has happened to our economic situation since we voted to leave the EU”.

Corbyn’s subsequent question on whether May would pay for single market access was less wounding than it might have been because she has consistently refused to rule out budget contributions (though yesterday emphasised that the days of “vast” payments were over).

When the Labour leader ended by rightly hailing the contribution immigrants made to public services (“The real pressure on public services comes from a government that slashed billions”), May took full opportunity of the chance to have the last word, launching a full-frontal attack on his leadership and a defence of hers. “There is indeed a difference - when I look at the issue of Brexit or any other issues like the NHS or social care, I consider the issue, I set out my plan and I stick to it. It's called leadership, he should try it some time.”

For May, life will soon get harder. Once Article 50 is triggered, it is the EU 27, not the UK, that will take back control (the withdrawal agreement must be approved by at least 72 per cent of member states). With MPs now guaranteed a vote on the final outcome, parliament will also reassert itself. But for now, May can reflect with satisfaction on her strengthened position.

George Eaton is political editor of the New Statesman.