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.
Tags: tax havens