Rather than "shaming" tax avoiders, the coalition should stop them

The latest "crackdown" on tax avoidance is nothing of the sort.

In these austere times, tax avoidance, as Ken Livingstone and Jimmy Carr learned to their cost, is a toxic practice. In view of this, the government is preparing to announce a new "crackdown" on avoiders today. Treasury minister David Gauke will tell Policy Exchange that scheme operators may be forced to hand over client lists to inspectors, and will be "named and shamed" for not sticking to the rules.

Gauke will say:

We are building on the work we have already done to make life difficult for those who artificially and aggressively reduce their tax bill.

These schemes damage our ability to fund public services and provide support to those who need it.

They harm businesses by distorting competition. They damage public confidence.

And they undermine the actions of the vast majority of taxpayers, who pay more in tax as a consequence of others enjoying a free ride.

Laudable words, you may think. But Gauke's suggestion that "naming and shaming" tax avoiders will reduce the practice is either extremely optimistic or extremely disingenuous. Were negative publicity enough to dissuade avoidance, men like Philip Green, hired by the government to advise on its spending cuts (the need them for them partly derived from his and others' avoidance) would have paid up long ago. Rather than merely "shaming" avoiders, the government needs to stop them. Yet there is nothing in today's announcement to suggest it will do so.

As Richard Murphy noted on The Staggers last month, the coalition's much-vaunted "anti-avoidance rule" will do little to end the cat-and-mouse game between HM Revenue and avoiders. As the government closes one scheme, another opens. Only an anti-avoidance principle, which looks at intent as well as practice, would significantly reduce avoidance. As Murphy explained:

A principle is something quite different. It looks at intent. It is not about box ticking, as rules are (which is why they are so easy to get round - general anti-avoidance rules included). It is about looking at what you did and using that evidence to assess on the balance of probabilities what your intentions were.

On this point, George Osborne, who memorably described tax avoidance as "morally repugnant", and his Treasury colleagues remain mute.

Finally, one might ask why, if the coalition is so opposed to avoidance, its Budget rewarded it. The stated reason for the abolition of the 50p tax rate was that high-earners were 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 was an argument for reducing tax avoidance, not for cutting taxes for the one per cent. While the rich avoided 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 was not a trick they could have repeated. Yet Osborne cut the rate all the same. It was as if he had rewarded welfare cheats by increasing their benefits. Seen in this light, the government's new fondness for moralising against avoiders is merely an attempt to change the subject. We should ensure it cannot.

Jimmy Carr recently said he made a "terrible error of judgment" in using a tax avoidance scheme. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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The Prevent strategy needs a rethink, not a rebrand

A bad policy by any other name is still a bad policy.

Yesterday the Home Affairs Select Committee published its report on radicalization in the UK. While the focus of the coverage has been on its claim that social media companies like Facebook, Twitter and YouTube are “consciously failing” to combat the promotion of terrorism and extremism, it also reported on Prevent. The report rightly engages with criticism of Prevent, acknowledging how it has affected the Muslim community and calling for it to become more transparent:

“The concerns about Prevent amongst the communities most affected by it must be addressed. Otherwise it will continue to be viewed with suspicion by many, and by some as “toxic”… The government must be more transparent about what it is doing on the Prevent strategy, including by publicising its engagement activities, and providing updates on outcomes, through an easily accessible online portal.”

While this acknowledgement is good news, it is hard to see how real change will occur. As I have written previously, as Prevent has become more entrenched in British society, it has also become more secretive. For example, in August 2013, I lodged FOI requests to designated Prevent priority areas, asking for the most up-to-date Prevent funding information, including what projects received funding and details of any project engaging specifically with far-right extremism. I lodged almost identical requests between 2008 and 2009, all of which were successful. All but one of the 2013 requests were denied.

This denial is significant. Before the 2011 review, the Prevent strategy distributed money to help local authorities fight violent extremism and in doing so identified priority areas based solely on demographics. Any local authority with a Muslim population of at least five per cent was automatically given Prevent funding. The 2011 review pledged to end this. It further promised to expand Prevent to include far-right extremism and stop its use in community cohesion projects. Through these FOI requests I was trying to find out whether or not the 2011 pledges had been met. But with the blanket denial of information, I was left in the dark.

It is telling that the report’s concerns with Prevent are not new and have in fact been highlighted in several reports by the same Home Affairs Select Committee, as well as numerous reports by NGOs. But nothing has changed. In fact, the only change proposed by the report is to give Prevent a new name: Engage. But the problem was never the name. Prevent relies on the premise that terrorism and extremism are inherently connected with Islam, and until this is changed, it will continue to be at best counter-productive, and at worst, deeply discriminatory.

In his evidence to the committee, David Anderson, the independent ombudsman of terrorism legislation, has called for an independent review of the Prevent strategy. This would be a start. However, more is required. What is needed is a radical new approach to counter-terrorism and counter-extremism, one that targets all forms of extremism and that does not stigmatise or stereotype those affected.

Such an approach has been pioneered in the Danish town of Aarhus. Faced with increased numbers of youngsters leaving Aarhus for Syria, police officers made it clear that those who had travelled to Syria were welcome to come home, where they would receive help with going back to school, finding a place to live and whatever else was necessary for them to find their way back to Danish society.  Known as the ‘Aarhus model’, this approach focuses on inclusion, mentorship and non-criminalisation. It is the opposite of Prevent, which has from its very start framed British Muslims as a particularly deviant suspect community.

We need to change the narrative of counter-terrorism in the UK, but a narrative is not changed by a new title. Just as a rose by any other name would smell as sweet, a bad policy by any other name is still a bad policy. While the Home Affairs Select Committee concern about Prevent is welcomed, real action is needed. This will involve actually engaging with the Muslim community, listening to their concerns and not dismissing them as misunderstandings. It will require serious investigation of the damages caused by new Prevent statutory duty, something which the report does acknowledge as a concern.  Finally, real action on Prevent in particular, but extremism in general, will require developing a wide-ranging counter-extremism strategy that directly engages with far-right extremism. This has been notably absent from today’s report, even though far-right extremism is on the rise. After all, far-right extremists make up half of all counter-radicalization referrals in Yorkshire, and 30 per cent of the caseload in the east Midlands.

It will also require changing the way we think about those who are radicalized. The Aarhus model proves that such a change is possible. Radicalization is indeed a real problem, one imagines it will be even more so considering the country’s flagship counter-radicalization strategy remains problematic and ineffective. In the end, Prevent may be renamed a thousand times, but unless real effort is put in actually changing the strategy, it will remain toxic. 

Dr Maria Norris works at London School of Economics and Political Science. She tweets as @MariaWNorris.