Tax transparency treats the symptom not the cause

If we worry about politicians dodging taxes, attack the dodging, not the privacy, writes the TPA's M

Do we really want to live in a country where politicians have to hand out their tax returns, medical history and birth certificate to the press, like they do in the United States? I don’t think voters want to make disclosing all that a part of the price of running for office in Britain. But the legitimacy of the tax and benefit system has been undermined by its complexity and too many stories of people breaking the rules, or twisting them out of all recognition.

We could respond to that by demanding more and more intrusions on people’s privacy. Polly Toynbee is already talking about forcing everyone to make the same kind of disclosure that the mayoral candidates just have. That might mean some people who are in the public eye pay more.  Others will ignore it though, because they won’t be scrutinised or don’t care what we all think of them.  Do you really think Ryanair boss Michael O’Leary would care if anyone called him a tax dodger? (Just a hypothetical example, I don’t have any reason to think he doesn’t pay his taxes). We would have a tax system that discriminates against those who care if the Guardian calls them names.

It won’t just be an issue for the fortunate either.  If we all have to disclose the taxes we pay, then we’re one headline away from having to disclose any benefits we receive too. Benefit fraud upsets the median voter as much as tax dodging.

Instead of descending into an Athenian pit of mistrust, it would be much better to reform the tax and benefit system, so we can again trust that people will pay their fair share. That means simpler, lower taxes so that there are fewer loopholes and there is less of an incentive to spend time and money looking for them. It means treating income from capital and labour the same – taxing each stream of income once – so that we don’t have to care whether Ken Livingstone sets up a business or not. Hopefully, that’s the kind of tax system we will outline in the forthcoming report of the 2020 Tax Commission, which we have been working on at the TaxPayers’ Alliance with the Institute of Directors.

If Britain’s tax code remains as dysfunctional as it is now, then voters and the press will rightly demand that politicians prove they aren’t taking advantage of its idiosyncrasies. If they want their privacy, they need to stop putting sticking plasters on the gaping wound that is tax avoidance and evasion – inadvertently hitting charities in the process – and instead address the fundamental problems with a tax system that has lost its legitimacy.

A nightmarish future: Compelled to post your tax return on Instagram. (Getty)

Matthew is the director of the TaxPayers' Alliance

Photo: André Spicer
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“It’s scary to do it again”: the five-year-old fined £150 for running a lemonade stand

Enforcement officers penalised a child selling home-made lemonade in the street. Her father tells the full story. 

It was a lively Saturday afternoon in east London’s Mile End. Groups of people streamed through residential streets on their way to a music festival in the local park; booming bass could be heard from the surrounding houses.

One five-year-old girl who lived in the area had an idea. She had been to her school’s summer fête recently and looked longingly at the stalls. She loved the idea of setting up her own stall, and today was a good day for it.

“She eventually came round to the idea of selling lemonade,” her father André Spicer tells me. So he and his daughter went to their local shop to buy some lemons. They mixed a few jugs of lemonade, the girl made a fetching A4 sign with some lemons drawn on it – 50p for a small cup, £1 for a large – and they carried a table from home to the end of their road. 

“People suddenly started coming up and buying stuff, pretty quickly, and they were very happy,” Spicer recalls. “People looked overjoyed at this cute little girl on the side of the road – community feel and all that sort of stuff.”

But the heart-warming scene was soon interrupted. After about half an hour of what Spicer describes as “brisk” trade – his daughter’s recipe secret was some mint and a little bit of cucumber, for a “bit of a British touch” – four enforcement officers came striding up to the stand.

Three were in uniform, and one was in plain clothes. One uniformed officer turned the camera on his vest on, and began reciting a legal script at the weeping five-year-old.

“You’re trading without a licence, pursuant to x, y, z act and blah dah dah dah, really going through a script,” Spicer tells me, saying they showed no compassion for his daughter. “This is my job, I’m doing it and that’s it, basically.”

The girl burst into tears the moment they arrived.

“Officials have some degree of intimidation. I’m a grown adult, so I wasn’t super intimidated, but I was a bit shocked,” says Spicer. “But my daughter was intimidated. She started crying straight away.”

As they continued to recite their legalese, her father picked her up to try to comfort her – but that didn’t stop the officers giving her stall a £150 fine and handing them a penalty notice. “TRADING WITHOUT LICENCE,” it screamed.


Picture: André Spicer

“She was crying and repeating, ‘I’ve done a bad thing’,” says Spicer. “As we walked home, I had to try and convince her that it wasn’t her, it wasn’t her fault. It wasn’t her who had done something bad.”

She cried all the way home, and it wasn’t until she watched her favourite film, Brave, that she calmed down. It was then that Spicer suggested next time they would “do it all correctly”, get a permit, and set up another stand.

“No, I don’t want to, it’s a bit scary to do it again,” she replied. Her father hopes that “she’ll be able to get over it”, and that her enterprising spirit will return.

The Council has since apologised and cancelled the fine, and called on its officials to “show common sense and to use their powers sensibly”.

But Spicer felt “there’s a bigger principle here”, and wrote a piece for the Telegraph arguing that children in modern Britain are too restricted.

He would “absolutely” encourage his daughter to set up another stall, and “I’d encourage other people to go and do it as well. It’s a great way to spend a bit of time with the kids in the holidays, and they might learn something.”

A fitting reminder of the great life lesson: when life gives you a fixed penalty notice, make lemonade.

Anoosh Chakelian is senior writer at the New Statesman.