Cameron tells Pakistanis tax non-payment is unfair

David Cameron criticises Pakistan’s tax-dodging rich at a press conference in Islamabad.

In a speech at a press conference in Islamabad, David Cameron told Pakistan's elite that:

Many of your richest people are getting away without paying much tax at all – and that's not fair.

When considering Cameron's words, let's remember that the UK facilitates the very same actions through its sovereignty over 13 of the 24 biggest tax havens in the world, including Jersey, Guernsey, the Cayman Islands and the City of London.

First, it is important to note that the vast majority of people considered "rich" in the UK do pay their taxes. According to Her Majesty's Revenue and Customs (HMRC), there are roughly 327,000 people who earn more than £150,000 per year – the rate at which the 50p tax is introduced. HMRC predicts that by the end of this fiscal year, the richest 327,000 will be paying 26.7 per cent of the total tax collected in the country.

Nevertheless, a request filed by the London Evening Standard under the Freedom of Information Act in 2007 revealed that in 2004-2005 only 65 of the roughly 400 UK-based individuals who earn £10m per year or more actually paid income tax. The failure was estimated to have lost HMRC up to £2bn in revenues.

The related issue of companies in the UK not paying tax has been brought to mainstream attention by the recent UK Uncut protests – fingering Vodafone, Topshop and Boots, among others, as having allegedly "dodged" paying billions.

The chairman of Pakistan's Federal Bureau of Revenue (FBR), Salman Siddiqui, recently issued notices to the wealthiest 700,000 of Pakistan's 2.3 million rich to give up withheld taxes. Although the number of non-payers is far higher than estimates in the UK, Cameron would be better advised to clean up the UK's own mess first before preaching to other countries.

Surprisingly, Cameron did not make the distinction between tax evasion and tax avoidance in his speech. Whereas the latter is considered legal – when taxes are not paid, using the help of loopholes – the former is considered illegal: non-payment of taxes that breaks the law.

A committee was set up to investigate the costs and benefits of having a General Anti-Avoidance Rule for the UK earlier this year. It has until 31 October 2011 to come to a conclusion.

Liam McLaughlin is a freelance journalist who has also written for Prospect and the Huffington Post. He tweets irregularly @LiamMc108.

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There's nothing Luddite about banning zero-hours contracts

The TUC general secretary responds to the Taylor Review. 

Unions have been criticised over the past week for our lukewarm response to the Taylor Review. According to the report’s author we were wrong to expect “quick fixes”, when “gradual change” is the order of the day. “Why aren’t you celebrating the new ‘flexibility’ the gig economy has unleashed?” others have complained.

Our response to these arguments is clear. Unions are not Luddites, and we recognise that the world of work is changing. But to understand these changes, we need to recognise that we’ve seen shifts in the balance of power in the workplace that go well beyond the replacement of a paper schedule with an app.

Years of attacks on trade unions have reduced workers’ bargaining power. This is key to understanding today’s world of work. Economic theory says that the near full employment rates should enable workers to ask for higher pay – but we’re still in the middle of the longest pay squeeze for 150 years.

And while fears of mass unemployment didn’t materialise after the economic crisis, we saw working people increasingly forced to accept jobs with less security, be it zero-hours contracts, agency work, or low-paid self-employment.

The key test for us is not whether new laws respond to new technology. It’s whether they harness it to make the world of work better, and give working people the confidence they need to negotiate better rights.

Don’t get me wrong. Matthew Taylor’s review is not without merit. We support his call for the abolishment of the Swedish Derogation – a loophole that has allowed employers to get away with paying agency workers less, even when they are doing the same job as their permanent colleagues.

Guaranteeing all workers the right to sick pay would make a real difference, as would asking employers to pay a higher rate for non-contracted hours. Payment for when shifts are cancelled at the last minute, as is now increasingly the case in the United States, was a key ask in our submission to the review.

But where the report falls short is not taking power seriously. 

The proposed new "dependent contractor status" carries real risks of downgrading people’s ability to receive a fair day’s pay for a fair day’s work. Here new technology isn’t creating new risks – it’s exacerbating old ones that we have fought to eradicate.

It’s no surprise that we are nervous about the return of "piece rates" or payment for tasks completed, rather than hours worked. Our experience of these has been in sectors like contract cleaning and hotels, where they’re used to set unreasonable targets, and drive down pay. Forgive us for being sceptical about Uber’s record of following the letter of the law.

Taylor’s proposals on zero-hours contracts also miss the point. Those on zero hours contracts – working in low paid sectors like hospitality, caring, and retail - are dependent on their boss for the hours they need to pay their bills. A "right to request" guaranteed hours from an exploitative boss is no right at all for many workers. Those in insecure jobs are in constant fear of having their hours cut if they speak up at work. Will the "right to request" really change this?

Tilting the balance of power back towards workers is what the trade union movement exists for. But it’s also vital to delivering the better productivity and growth Britain so sorely needs.

There is plenty of evidence from across the UK and the wider world that workplaces with good terms and conditions, pay and worker voice are more productive. That’s why the OECD (hardly a left-wing mouth piece) has called for a new debate about how collective bargaining can deliver more equality, more inclusion and better jobs all round.

We know as a union movement that we have to up our game. And part of that thinking must include how trade unions can take advantage of new technologies to organise workers.

We are ready for this challenge. Our role isn’t to stop changes in technology. It’s to make sure technology is used to make working people’s lives better, and to make sure any gains are fairly shared.

Frances O'Grady is the General Secretary of the TUC.