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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Ukrainians now have more freedom of travel - but less freedom of thought

Ukraine's government is rightly concerned about Russian cyber aggression. But does that merit online censorship?

Ukrainians have sacrificed so much in their bid to be recognised as fellow Europeans. Their struggle to extricate themselves from Russian domination is written in the blood of the Euromaidan protestors and the toll of its military dead.

The slow progress of Ukraine’s emergence, into something resembling normality, passed another milestone on 17 May, when President Petro Poroshenko signed an agreement with the EU allowing for visa-free travel in 34 European countries. 

From Sunday 11 June Ukrainians with biometric passports will be able to travel in Europe and stay for 90 days within a 180 period. There are obvious economic benefits to the new agreement. Ukrainians will be free to travel and conduct business with much more efficacy. The new agreement will also reduce the insularity of Ukrainians, many of whom yearn for the cosmopolitanism they see in Western Europe. President Poroshenko was mindful of the symbolism of the agreement. He declared: "Ukraine is returning to the European family. Ukraine says a final farewell to the Soviet and Russian empire."

Perched on the periphery, Ukraine is now set to become more woven into the European mainstream. Ukrainians sense that the western door is slowly but inexorably opening, and that both recognition, and validation beckons. In this respect, it seems that there is much to celebrate.

However, as ever, Ukraine hangs uneasily in the balance between the old ways and the new. On 16 May, Poroshenko signed a decree blocking access to Russian social media websites Yandex, VKontakte and Odnoklassniki. Millions of Ukrainians sign in to these websites every day. Even Poroshenko himself uses them. Five Russian TV stations are already banned in Ukraine. Poroshenko says that "Ukrainians can live without Russian networks". And it is certainly a fact that Ukrainians have responded to the decree by turning away from the Russian platforms in great numbers. Ukrainian Facebook is growing by some 35 percent a day.

In the context of Ukraine’s continuing conflict with Russia, it is perhaps understandable that the government in Kiev wishes to limit Russian trolls, together with Russian state influence and misinformation. This is certainly also the case across the whole western world, which is keenly aware of Russian cyber aggression. Nevertheless, one must ask why countries such as Britain, France and Germany continue to allow their citizens to access Russian media platforms, when Ukraine does not. 

While the new travel freedoms for Ukrainians has unleashed optimism, the latest decree has indicated something a little darker about the future. President Poroshenko would do well to consider the actions of other European governments that he so ardently wishes to emulate. Closing down social networks is usually done by authoritarian regimes like North Korea, China and Saudi Arabia. But Poroshenko advocates democracy, and in democracy there is no place for such acts. It is surely a mark of a nation’s maturity to encourage freedom of thought, as well travel.

Mohammad Zahoor is the publisher of Ukrainian newspaper The Kyiv Post.

 

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