Tax avoidance costs UK economy £69.9 billion a year

New report from the Tax Justice Network highlights the staggering extent of global tax evasion.

In March earlier this year The Spectator published an article 'Debunking UK Uncut' over their campaign against tax avoidance. The author -- Nick Hayns from the Institute for Economic Affairs -- pleaded with readers not to let "UK Uncut get away with throwing all logic out of the window." But as nations across Europe feel the sting of reduced living standards, the true extent of global tax avoidance -- as revealed today by the Tax Justice Network -- will act to bolster feelings that such injustice can no longer be swept aside with the kind of insouciance Hayn displays.

The research, based on data from 145 countries, shows that tax evasion costs those nations $3.1 trillion annually. In the UK's case £69.9 billion is lost on a yearly basis in what the Tax Justice Network call the "shadow economy." That figure, they point out, "represents 56% of the country's total healthcare spend."

On the back of this report the Tax Justice Network has launched its campaign to Tackle Tax Havens. An initiative aimed at propelling tax avoidance up the political agenda by highlighting, in simple terms, the sheer scale of the sums involved and how they translate into increased cuts in public services for the rest of us.

But is tax avoidance immoral? Toby Young wrote for The Telegraph back in February that "Tax avoidance isn't morally wrong. It's perfectly sensible behaviour." While it might be true from a purely business point of view that tax avoidance is a great way to boost profits, Young conflates what is logical for a business to do, with what is the right thing to do from a societal or moral point of view.

Curiously while parts of the rightwing commentariat insist that deficit reduction is the number one task, they seem little interested in measures that might actually reduce the deficit, namely ensuring companies pay the tax they owe.

"Tax evasion is morally repugnant...It's stealing from law-abiding people, who face higher taxes to make good the lost revenue." This quote could well come from one of the much derided Occupy LSX group, but no, it's our very own Conservative chancellor. The Institute of Directors' have also supported proposals from QC Graham Aaronson to implement a general anti-avoidance rule that would "deter egregious tax-avoidance".

So could the tide finally be turning for those who cheat the system? Richard Murphy of Tax Research UK, that undertook the research for the Tax Justice Network, says: "If only more had been done to tackle rampant tax evasion, Europe would not be facing a crisis today." Adding that to compel both business and the tax havens themselves to be transparent in their dealings would "shatter the secrecy of tax havens for good." Nothing, he goes on, "could make a bigger contribution than this to solving the world's financial crisis".

In response in this article, Chief Executive of Jersey Finance Ltd, Geoff Cook, submitted the following letter:

"Tax evasion" is the illegal concealment of a taxable activity and, to be clear, is a criminal offence in Jersey. "Tax avoidance", on the other hand, is legal and refers to the prudent management of tax affairs to legitimately minimise a company or individual's tax liability within the law. Wide-reaching and thorough regulatory and compliance procedures are fundamental components of how a world-class International Financial Centre (IFC) like Jersey operates.

While the concept of tax avoidance, or perhaps as it may be better described, tax planning, is often discussed in relation to business, the exact same principle applies to individuals from all walks of life. Anyone who chooses to invest in an ISA or a pension could be accused of seeking to "avoid tax"; yet it is plain that such activity is not only legal, but also prudent and sensible.

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Labour is condemned to watch helplessly as Theresa May consolidates power

The Zombie Party is too weak to win and too strong to die. 

Labour’s defeat to the Tories in the Copeland by-election in Cumbria, which the party had held for more than 80 years, is a humiliation for Jeremy Corbyn and his moribund party. This is the first time a governing party had gained a seat in a by-election since Margaret Thatcher’s Conservatives won Mitchum and Morden in 1982. 
 
The victorious candidate Trudy Harrison, who increased the Tories’ share of the vote in this former Labour “stronghold" by more than 8 percentage points, hailed the victory as “truly historic”, while Labour MP John Woodcock called it a “disaster”, and even the shadow chancellor and Corbyn ally, John McDonnell, conceded it was a “profound disappointment”. 
 
At a time in the electoral cycle when a credible opposition should be winning by-elections and riding high in the polls, Labour is in disarray: rejected, humiliated, ridiculed. It has all but collapsed in Scotland, where the Tory leader Ruth Davidson has emerged as the popular, unapologetic leader of Unionism. And in England the danger now is not that it will lose seats to Ukip — whose leader Paul Nuttall was rejected yesterday in the Stoke-on-Trent Central by-election, which Labour held on a low turn-out after a dispiriting campaign — but to Theresa May’s Conservatives. 
 
The Copeland result was a vindication for Theresa May. When recently I interviewed her in Downing Street she had a simple message for Labour: we are coming after your voters – and she is. 
 
Because of its embrace of the radical left and internal divisions, May accused Labour of abandoning many of its traditional supporters. The party was not responding to their concerns on issues such as “the impact of immigration on lower income levels”.
 
True enough: Corbyn favours mass immigration and open borders yet is an economic protectionist – a classic Marxist position but electoral suicide in our new emerging post-liberal era in which populist movements are rising across Europe and an America First nationalist is in the White House.
 
“I hope there are Labour voters,” Theresa May told me, “out there who will now look at us afresh and say, ‘Labour hasn’t responded to our concerns, it hasn’t recognised what matters to us, but the Conservatives have seen that and are responding to it. I want our greater prosperity not to be confined to particular groups of people or a single part of the country.”
 
The polls suggest that more than simply disaffected Labour voters are looking at the Tories afresh, as we embark on the epic challenge of negotiating the Brexit settlement.
  
May believes that Brexit was not only a vote to leave the European Union but a demand for change from those people – many of them in places such as Copeland - who felt ignored and excluded from prosperity and greater opportunity.
 
Her vision is for a “Great Meritocracy” (whereas Corbyn’s is for a socialist republic) combining greater social justice with enhanced social mobility. It’s an intellectually fascinating and ambitious project and, if successful (and many doubt her, not least her own right wing), it has the potential to condemn Labour to electoral oblivion.
    
The collapse of the Labour party as a stable and credible political force is dismaying. Many of the party’s problems precede Corbyn, who is sincere and determined but is not a national leader. But then neither was Ed Miliband, who misunderstood the financial crisis, which he believed had created a “social democratic moment”, and misread the country he sought to govern. Miliband treated politics like an elevated Oxbridge PPE seminar and introduced the new rules by which the party elected its leader, disempowering MPs.
 
The distinguished Cambridge historian Robert Tombs has called the European Union a system of “managed discontents”. Something similar could be said of Corbyn’s Labour, except that its discontents are scarcely managed at all.

Most Labour MPs despise or are embarrassed by their leader. The MPs are divided and demoralised, with some pondering whether to follow Tristram Hunt and Jamie Reed (whose resignations created respectively the Stoke Central and Copeland by-elections) out of politics. The Corbynites are breaking up into factions (one hears talk of “hard” and “soft” Corbynites), and Corbyn himself is incapable of appealing to those who do not share his ideological convictions.
 
For now, the Labour leader retains the support of activists and members and, crucially, of Unite, Britain’s biggest union and the party’s paymaster. But even his friends must accept that he is leading the party in only one direction – into the abyss.
 
On the eve of the two by-elections, Corbyn posted a message on Facebook: “Whatever the results, the Labour Party – and our mass membership – must go further to break the failed political consensus, and win power to rebuild and transform Britain.”
 
The statement was received with derision on social media. The idea that Labour can win power any time soon (notwithstanding some black swan event) is magical thinking. Corbyn’s personal ratings among traditional working class semi-skilled and unskilled Labour voters are catastrophically poor. He appeals to students, affluent metropolitans with degrees, and minority groups. As for the majority of the electorate, forget it.
 
MPs are reluctant to challenge Jeremy Corbyn because they know any leadership contest would revitalize his leadership, as happened last summer when the Welsh MP Owen Smith mounted an ill-considered and doomed “coup”. Nor is there a pre-eminent candidate waiting in the shadows to strike, as Michael Heseltine was in the last years of the Thatcher administration.
 
So Labour will continue to be the Zombie Party: too weak to win but too strong to die. Its founding mission was to defend the labour interest and to create a fairer, more ethical society. But Labour has lost its role, its confidence and sense of purpose. Obsessed by identity liberalism, bewildered by Brexit and led by a radical socialist, Labour can only look on helplessly as the Tories start to win seats in its former heartlands and hunker down for another decade or more in power.

This column was originally published in the London Evening Standard.

Jason Cowley is editor of the New Statesman. He has been the editor of Granta, a senior editor at the Observer and a staff writer at the Times.