Robin Hood in reverse: Why tax avoidance costs us all

Whilst the Treasury continues with its programme of unprecedented spending cuts – many at the expense of the poorest and most vulnerable in the UK – it quietly slipped out proposals yesterday (30 June), which will hand out £840 million a year to multinational businesses.

Hidden under the bland title of ‘proposals on Controlled Foreign Companies’, the plans amount to a big relaxation of anti-tax avoidance rules.   Advocates of the policies say that it will increase the UK’s ‘business competitiveness,’ but what it actually offers is big incentives for companies to shift their financial operations ‘off-shore’ – to tax havens such as Jersey, Guernsey or the Cayman Islands – as a means of avoiding paying UK taxes.

Even on the Treasury’s own estimates, this will cost £840 million in lost taxes a year.  And this is on top of the estimated £25 billion a year that is already lost through tax avoidance by wealthy individuals and businesses.

Every pound avoided in tax is a pound less to spend on childcare, social care, health or education.  At a time when spending cuts are having a real and damaging impact on the lives of some of the poorest and most vulnerable people in the country, it is morally indefensible for some of Britain’s richest companies to be avoiding paying their fair share of UK taxes.

Next week, the Methodist Conference will be debating a report on Poverty and Inequality in the UK, which call for – amongst other things – action to shine a light on how companies use tax havens to avoid paying taxes.

Tax avoidance is big business, and as we’re constantly re-assured, is ‘entirely legal.’ But its hardly moral.

If we are going to make any progress in Closing the Gap between rich and poor in the UK (or indeed, globally), we must surely take action not only to close the tax avoidance gap, but shift the public mood to make tax avoidance as morally unacceptable as drink driving – or stealing from the poor.

3 thoughts on “Robin Hood in reverse: Why tax avoidance costs us all

  1. Companies do not pay tax people do
    http://www.forbes.com/sites/timworstall/2011/09/22/corporations-do-not-pay-taxes-they-cant-theyre-not-people/

    “Every pound avoided in tax is a pound less to spend on childcare, social care, health or education.”
    A strange arguement. You could say the reverse
    “Every pound avoided in tax is a pound less to spend on the stupid war in Afghanistan, on the EU, giving foreign aid to the repulsive government in Pakistan, giving single mums luxury housing.” (BTW the single mums I know DO live in a more expensive home than I do.

  2. Thanks for your comment David, but I don’t follow your logic on two grounds.
    Firstly, the whole point of limited companies is that they exist as legal entities and economic actors in their own right (for good or ill). They make profits in their own right and they can therefore pay taxes in their own right.
    Secondly, the whole point of paying taxes – at least in a democracy – is that decisions are made collectively (or at least on our behalf by the Government we elect) about how taxes are raised and how they are spent in furtherance of the common good. Tax is a social compact, not a matter of personal choice. We will all have our personal preferences for how we might want our taxes spent (or not spent), but that’s not a good enough reason for avoiding paying them.
    If you’d prefer to live in a society where (allegedly) no one pays their taxes, and public services collapse as a result, give Greece a try!

  3. Pingback: Immoral businesses? « the life of an ibman

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