Jules. what on earth are you saying? Why are all those people not productive? I think a system is deeply flawed if it regards those who contribute to the well being of society as a mere overhead.

@Jules Wright- Thanks for the full and reasoned response. It has raised a few more questions though.

Can you clarify where you got the facts and figures from (and what they are if they are readily availble) for the primary source of money to the treasury?

What line of work are you in? Would you say you work harder than a doctor? Do public sector workers not spend their earnings to help keep the economy moving? Is their contribution not as valid as yours?

@The Cup

Be glad to. But let's get our facts straight first. The primary source of money to the treasury comes from taxation on private capital, private labour, private business, plc business and private investment. The secondary source of money to government is through borrowing (in all its forms) as government has no money of its own.

Broadly speaking the public sector is, by definition, unproductive - it is a national overhead that is paid for by private sector taxation and government borrowing. Public sector employees are, by definition, economically unproductive and part of that overhead. The income tax they pay is simply money back to the government that has originally been extracted from the private sector or has been borrowed. The left always forgets this. Or perhaps never realised it.

A nurse, doctor, teacher, engineer, scientist, social worker, policeman, fireman, soldier, sailor, airman or binman are unproductive. But they are necessary. But such key frontline public sector roles form the minority percentage of the total public sector workforce of 7m+.

What we lack is any sensible balance of how government is funded. The apparatus of state is far too large, the civil service too bloated, the waste far too great, the borrowing too high and the inefficiencies far too entrenched to be funded sustainably out of taxation and borrowing.

I have no axe to grind about the things we need to run the country, protect the country, educate the country, care for the sick and look after those less fortunate than me. They are a given.

I do have an axe to grind with those who take the money I work hard to earn and then mismanage it grotesquely; who willfully forget the necessities of balancing income against expenditure as the vital prerequisite for long-term stability.

And in that, I am not alone. Far from it. Because I, and millions like me, are the people who actually bankroll the whole fucking machine.

Tax avoidance, despite the pure sophistry deployed by its sanctimonious defenders, is merely legalised tax evasion.

Contrast the feeble, half-hearted attempts to clamp down on both legal and illegal tax evasion with the wide-eyed zeal - bordering on monomania - employed by both the current administration and New Labour in tackling benefit fraud, which amounts to a mere fraction of what is lost to the exchequer by the fiddles of the super-rich tax cheats.

But then fraud is only considered a crime when the perpetrators are the "great unwashed".

'But then fraud is only considered a crime when the perpetrators are the "great unwashed".'

But then I would take this a step further and say that fraud is only a crime when it's a tabloid editor attacking his readership who clearly agree with him.

@Shinsei67 Tax evasion and tax avoidance are both mechanisms that allow the wealthy to "escape their responsibilities to the societies on which they and their wealth depend." Maybe it's time that the distinction between evasion and avoidance was a little blurred, then we might get to the route of the problem!

@mpj

Tax evasion isn't a mechanism; it's simply not paying your taxes and as Shinsei67 points out, is illegal. Tax avoidance is the legal minimising of one's tax liability, be that corporate or personal. And why not? Are the productive in society simply milchcow drones to be drained by the unproductive in society? No. Should there be a more effective balance of income vs taxation to administer the nation and provide the necessary social safety nets? Yes. Do we have that balance currently? No.

It is quite typical of the left to conflate avoidance and evasion as if they were the same thing, simply to support its dogmatic, 'soak everyone' Big State agenda. And it is quite natural for those who work to want to pay as little as is legally possible. It's called aspiration, which like individual freedom, is a potent idea that policy or compulsion cannot eradicate.

It is also an empirically proven fact that a lower tax regime makes the economy more productive, thereby generating more tax revenue through consumption and consumer spending. This effect provides more tax money to the Treasury for supporting the wholly unproductive public sector - without throttling the golden goose that fuels it. It's a virtuous circle - and the political/economic holy grail.

Until the left (that is labour and the liberal democrats) get a grip of basic economics, it will remain stuck in a juvenile rut of ignorance and envy that betrays the very people it claims to speak for.

And until the right rediscovers conviction, intellectual bravery, small government and economic common sense, then it will be unable to ameliorate the crushing socialist legacy it - and we all - are once again saddled with today.

Strip away the kant and the hysterical prejudice and the big picture is really quite simple. But then the left would have no point and no axe to grind. And that won't do.

Jules Wright- could you please clarify your position on what constitutes someone who is 'productive'?

Richard Murphy (who is well known for being a complete joke with HMRC and the tax profession) claims that if only countries had collected all the evaded tax then Italy, Greece etc would have perfectly balanced budgets. This is based on two wholly unwarranted assumptions. The first is that economic activity in the shadow economy would still exist if it were taxed in full. The second is that if all the tax had been collected in full then governments would have prudently used it to pay off their deficits and not spent it like crazy as they did with the revenue they did receive. Both assumptions are a nonsense. And this guy is the No 1 economics blogger in the UK. Jesus wept.

@mpj

Philip Green doesn't register Arcadia Group in his wife's name.

He has given Arcadia to his wife. It is now her company. She is the major (sole ?) shareholder.

She has personally chosen to move to Monaco so all her income (mainly Arcadia dividends) is now taxed at Monaco income tax rates.

I'm not really sure how you make this sort of thing illegal.

Philip Green remains a UK tax payer. And Arcadia itself is still a UK company and pays UK corporation tax.

To my mind the nature of avoiding something is about getting round it..with a view to what's most efficient and best for everyone who might otherwise become concerned.. It's good to avoid unnecessary or inappropriate conflicts for example - this is common sense really. In my view common sense is the most important freedom we are blessed with, in its true and correct sense.

@mpj

"A general anti-avoidance rule? Green's case seems pretty egregious to me!"

But what exactly would you make illegal ? Illegal for a husband to give his wife property ? Illegal for a British citizen to be able to go and live full time in a foreign country (and therefore pay your taxes in that country) ?

I agree that the Greens appear to be acting immorally, but I can't think how it can be made illegal without restricting everyday freedoms for the rest of us.

A salient feature about the Green case is how few other rich people do the same. Most rich Britons choose not to live in Monaco, especially if it means living apart from your partner and family, in a dull place, for most of the year.

And if Mrs Green runs off with the pool boy and divorces then Green loses Arcadia too.

It's a tax avoidance policy beset with risks.

@ Ian

I said it was immoral.

The difficulty is how do you stop it without making laws that are totally unreasonable - like preventing UK citizens from moving to other countries.

@ The Cup - " @Jules Wright- Thanks for the full and reasoned response. It has raised a few more questions though.

Can you clarify where you got the facts and figures from (and what they are if they are readily availble) for the primary source of money to the treasury?

What line of work are you in? Would you say you work harder than a doctor? Do public sector workers not spend their earnings to help keep the economy moving? Is their contribution not as valid as yours?"

All good and relevant The Cup. The problem is I get the impression that Mr Wright is a tub thumping Conservative, complete with "Corporations can do no wrong" rhetoric. The private industry, while necessary, is also completely disgusting. Tax "Avoidance" may be legal but it is still most definitely immoral. Why should these people be any different to a public sector worker? The Private Sector, up until the introduction of minimum wage, used to offer paltry hourly rates. One company in question would be C.B.F. In 1996 C.B.F was paying its warehouse and distribution staff £4.00 per hour? WHAT? Were they having an absolute laugh at the employees expense.

The private sector is nothing special. People who claim that the public sector is completely wasteful are quite simply deluded. Public Sector workers pay taxes last time I checked and thus, contribute. I spent 10 years with 42 Commando, Royal Marines post secondary education, and I seem to recall that there was a section headed as "Tax" on all of my pay slips. The private sector will no doubt be given complete and utter carte blance to do as they please under this failed government. Consider the NHS, if we are not seeing steps put in place for privatisation of the NHS then I must be a blind man. Unfortunately for the CON-servatives I am not. Cameron says it will amount to "competition" from the Private Sector which will, he claims, benefit us, the public, the result being more choice and a rise in the quality of healthcare. What a load of complete and utter HOGWASH. It, like the Public Sector/Private Sector pensions debate, equates to no more than a race to the bottom. In THIS case, turning the NHS into a business where profitibility comes before quality of care. Thats a fact.

Dr A Brown - BA (Hons) International Relations and Politics.

Nodbod:
"Surely the accounts are done in this country or at least have to be shown in this country, so why is it not taxed in this country?"

They are taxed in this country !!!

TopShop makes pre-tax profits of, say, £1bn in the UK.

They pay UK corporation tax at 28%. £280m to HMRC.

There is thus post tax profits of £720m.

These are paid out as dividends to shareholders.

The shareholders pay income tax on these dividends in the country in which they are domiciled.

I'm a UK resident. Let's assume I own shares in Coca Cola or Pfizer. I have to declare the dividends I get from Coca Cola or Pfizer to HMRC in my tax return. And I pay tax on the dividends to them, not to the American tax man.

Nodbod:

"I have one job and I pay PAYE. I do not have a choice. Why can't I decide to give a box number of my wife's bank account in Monaco and have all my wages paid there?"

Employees are on PAYE. Philip Green will be on PAYE for his salary. You can't transfer your salary to another person.

If you owned your own company (whether it is Arcadia or a corner shop) you could transfer it to your wife's name and she could move to Monaco. And could receive dividends tax free.

It's not worth doing financially unless the business is very profitable as it cost a lot to move to Monaco, but in theory this scheme is open to everyone who owns their own business.

Personally I think it is immoral (but that's easy to say if you aren't rich) but then everybody thinks avoiding tax is immoral until they find themselves earning millions and many then change their mind.

No doubt famous tax exiles like Sean Connery or Lewis Hamilton thought tax avoidance was immoral in the days before they were rich.

@Tim Worstall

Can you explain how the money is still flowing around the economy? Is it not languisihning in the bank accounts of the very rich and doing very little to help the wider economy? I really don't know. I was hoping you could provide an evidenced answer. Thanks.

@Shinsei67 Why are you spending your time defending what is, by your own admission, an immoral action? Is there not something to be said for identifying and cracking down on this behaviour?

Public sector workers pay tax and contribute to the economy with the wages they are paid. This fact seems to be brushed aside in much comment in the public domain at the moment. Go on, get it out there.

Tax avoidance does not cost anything to anyone. The only way in which you can hold that it COSTS the economy anything, is you believe that the government, its servants and employees in the HMRC, DSS, civil service courts service would spend the money more wisely, more beneficiently and more justly than those who want to keep their own money. All Green is trying to do is to keep as large a chunk of the REVENUES WHICH HE HAS GENERATED for himself. There is a massive difference between this and dole fraud (and frankly I regard a large chunk the public sector in this country as LEGAL dole fraudsters, cos they do sweet fa all day.

Did Ronnie Biggs Avoid or Evade getting caught by the Law??, If you commit benefit fraud and get away with it?, is that classed as Evasion/Avoid??, or is that evil and nasty because it`s breaking the law?, If you speed at 100mph on an empty motorway and don`t get caught?, is that OK because you Avoided/Evaded getting caught?, The point is why are these Loopholes allowed and excepted?, and they`re encouraged?, We`re talking about BILLIONS lost a year, but there isn`t any urgency to stop it, Why`s that?, The crackdown on benefit fraud is implemented to the point of persecution!!, legitimate claiments even losing out!, But TAX AVOID/EVADERS, both the same thing, are given a nudge and a wink!!, and you get apoligists who perversely justify it!!, SHAMEFUL!!.

the whole country is guilty from people filling up cars before the budget or going on booze cruises rather than pay higher UK tax. the job of an accountant is to reduce a tax bill, that's what there paid for.

the best way to reduce avoidance though is to simplify taxes root and branch!

scrap road tax and increase fuel duty, scrap national insurance and stick it on income tax, you get the picture it makes tax harder to avoid and less expensive to collect.

taxes on mobile productive resources should be reduced but increased on non-mobile unproductive resources (so reduce income and corporate taxes and make them flat but make property taxes very high - as you can't take houses and country piles with you).

we need to be radical go for 15% income and corporate tax but also go 15% a year property tax which would raise huge sums whilst also boosting the productive side of the economy and encouraging foreign investment in the UK and make the UK number one start-up location in the world for tech and new businesses.

Am i missing something here?, Avoidance/Evasion, both are just a play on words!, some of the Pathetic apoligists on here trying to justify it are probably the same people who would be saying 'String em up' if someone earned an extra £10 on the side whilst claiming benefits?, Us little people don`t have the choice to Evade/Avoid?, only the super rich have that option!!, So the moral of the story is commit 'so called' benefit fraud, you`re classed as scum, and should be shot!!, but, if your rich and you Evade/Avoid paying all of your taxes, it`s a Well Done!!!.