Osborne discovers that the rich avoid paying tax

[ahinton]

I suppose that if there is anything to be said in mitigation of George Osborne's astonishingly inept remark, it is perhaps that, while he might at least be reasonably well aware of the various tax loopholes that currently exist, he may not actually have realised that these were so useful to some very wealthy people that they could get away with paying little or no tax at all; whilst, as Chancellor of the Exchequer, he ought to be expected to know a fair bit about the economy, taxation and the place of people at all income levels within such an economy and taxation régime, he could not be expected to have precise details of how much tax any and every wealthy individual actually pays. That's not any sort of excuse, of course - just a balancing observation.

As I've said before, the taxation system is in desperate need of radical and fundamental reform by simplification. The simpler the tax régime, the harder it becomes (and the less incentive there is) to create viable loopholes in the first place; the costs of inspection and collection would plummet, as would the margin for errors in assessment and collection. The only possible losers would be the accountants and tax lawyers, because they'd have far less work to do. To what extent has Mr Osborne seized the opportunity that is open only to him to address this overwhelming problem? None, as far as I can see.

[handsomefortune]

some interesting comments below bell's cartoon too, i like these two observations (because they restore some perspective and sanity rather than being 'funny').

The expert on R4 Today programme pointed out how it's slighly odd that the Revenue approve various tax avoidance investment schemes (which encourage the rich to speculate in, inter alia, high risk companies) and then complain when the rich DO actually invest in these schemes and thereby avoid tax!

ie make some new loopholes on getting elected, strip funding from more specialised hm r&c and then act shocked when the rich appear to be taxfree.

"PM's spokesman claims some charities may be bogus to avoid taxation."

Never attended Atlantic Bridge, then Dave?

pot, kettle, sick ... in view of mr werrety & mr fox, (remember them)? and a london 'community cntre' 'my generation', with trustees widely perceived to be 'far too banky', rather than 'grass roots' knowledge of the uk voluntary sector.

[ahinton]

Yes, of course some "charities" are bordering on the bogus (although plenty are not), but then so is so very much else where tax law and its application is concerned - it's a battleground, always has been and always will be. Someone recently observed that the greatest tax dodge of all in Europe is the very existence of the Isle of Man - part of the UK up to a point but not part of the EU or EEA and in which no one may pay more than £100,000 p.a. in all taxes irrespective of circumstance. As I''ll hopefuly never get tired of saying (at least until it's a fact of life), simplify the British tax régime and then let's see who can and wants to try to fiddle stuff.

[teamsaint]

Yes, of course some "charities" are bordering on the bogus (although plenty are not), but then so is so very much else where tax law and its application is concerned - it's a battleground, always has been and always will be. Someone recently observed that the greatest tax dodge of all in Europe is the very existence of the Isle of Man - part of the UK up to a point but not part of the EU or EEA and in which no one may pay more than £100,000 p.a. in all taxes irrespective of circumstance. As I''ll hopefuly never get tired of saying (at least until it's a fact of life), simplify the British tax régime and then let's see who can and wants to try to fiddle stuff.

as we both know AH, if you and I agree on little else, we do agree on the desirability of a simpler tax system.
Quite why retaining such a complicated, expensive, and inefficient system seems to be so popular with both politicians and public is an utter mystery.
perhaps we get the politicians and tax system that we deserve.
Well maybe not. nobody really deserves gideon. Not even dave. Well, perhaps dave does, actually.

[Flosshilde]

"PM's spokesman claims some charities may be bogus to avoid taxation."

Well, sure there are, but surely the answer to the problem Dave has discovered is not to make it more difficult for charities to collect large donations by limiting tax relief on them, but to deal with the dodgy charities - stricter enforcement by the Charities Commission.

(I wonder if the dodgy charities Dave is thinking of include places like Eton? & are some - or all - of the Oxbridge colleges charities? )

[Serial_Apologist]

As one who had the misfortune to go to one, I've never understood the basis on which public schools are classed as charities.

[ahinton]

Well, sure there are, but surely the answer to the problem Dave has discovered is not to make it more difficult for charities to collect large donations by limiting tax relief on them, but to deal with the dodgy charities - stricter enforcement by the Charities Commission.

That's indeed very true - although the charities to which donations can attract tax relief include some based outside Britain but within EEA over which the Charities Commission has no direct jurisdiction as they are regulated by equivalent organisations in the coutries in which they are located.

(I wonder if the dodgy charities Dave is thinking of include places like Eton? & are some - or all - of the Oxbridge colleges charities? )

I cannot imagine that there is any credible and viable way in which one could ever get away from the notion that one man's (or woman's) legitimate charity is another man's (or woman's) "dodgy" one; taxpayers no more believe in the same causes en masse than they agree on the proportions of any government's spending allocations, because they all have different personal interests and balances between interests.

Furthermore, questions over charities' "legitimacy" need embrace not only questions of possible or actual "dodginess" but also those of efficiency in the distribution of funds received and, as with any government, there will always be shortcomings in this from time to time among the various registered charities (this, of course, is something with the policing of which the Charities Commission is charged).

[ahinton]

as we both know AH, if you and I agree on little else, we do agree on the desirability of a simpler tax system.
Quite why retaining such a complicated, expensive, and inefficient system seems to be so popular with both politicians and public is an utter mystery.
perhaps we get the politicians and tax system that we deserve.

I simply do not know and, like you, cannot figure out why governments always fall short of taking this crucial step, particularly given that governments always court electoral popularity and this would be a very popular measure to propose.

Incidentally, when I wrote above that the only losers from its implementation would be the accountants and tax lawyers, I made the mistake of omitting the thousands of employees of HMRC and DWP who would face redundancy as a direct consequence; it's a tough sacrifice, I know, but the benefits paid out to them until they can find alternative work would be a small price to pay for it and, in any case, as I mentioned previously, the abolition of employers' NIC liabilities (i.e. taxes on jobs) would very soon result in more jobs being available, thereby easing the burden of redundancy on at least some of these people.

[amateur51]

I wonder if the list of Dave's Dodgy Charities includes the one that Maude, Hague, Fox et al set up (Atlantic Bridge was it?) to promote British right-wing links with those in USA? Just the one 'employee', a Mr Werrity I think

They decided to close that when the Charity Commission began to notice that not much charitable work was being done, if I recall correctly

Apols if this has already been mentioned

[cloughie]

Perhaps he'll 'discover' how little tax he pays; he's admitted he doesn't pay top whack.

Does he advise his wife in tax matters?

[Serial_Apologist]

Does he advise his wife in tax matters?

"Advise" could be an interesting choice of word there. Speaking "advisedly", of course...

[ahinton]

Does he advise his wife in tax matters?

I don't know or care but I rather doubt it. In any case, he's apparently as "relaxed" as Dave claims to be about having his tax returns published (though why anyone should publish such things and who'd care about it if they did I know not, but I do know who would pay for such publication and maintenance of the ever-increasing amounts of data available for public inspection - that poor long-suffering taxpayer!)...

That said, I suspect that those few people who would really seek to lay claim to an interest in the tax affairs of such wealthy people are principally motivated by the desire to obtain data on their actual wealth, not just on how much tax they pay on what levels of income - and this would not be possible simply by publishing their tax returns; income from ISAs and insurance bonds, for example, does not have to be declared, is not usually taxable and should not be included on tax returns, so I don't see what publishing anyone's tax return would achieve to satisfy such inquisitive people.

[Serial_Apologist]

I don't know or care but I rather doubt it. In any case, he's apparently as "relaxed" as Dave claims to be about having his tax returns published (though why anyone should publish such things and who'd care about it if they did I know not , but I do know who would pay for such publication and maintenance of the ever-increasing amounts of data available for public inspection - that poor long-suffering taxpayer!)...

That said, I suspect that those few people who would really seek to lay claim to an interest in the tax affairs of such wealthy people are principally motivated by the desire to obtain data on their actual wealth, not just on how much tax they pay on what levels of income - and this would not be possible simply by publishing their tax returns; income from ISAs and insurance bonds, for example, does not have to be declared, is not usually taxable and should not be included on tax returns, so I don't see what publishing anyone's tax return would achieve to satisfy such inquisitive people.

Perhaps such inquisitiveness is motivated by a desire to ascertain that such tax affairs are as "above board" as your lack of interest in them implies, ahinton?

[ahinton]

Perhaps such inquisitiveness is motivated by a desire to ascertain that such tax affairs are as "above board" as your lack of interest in them implies, ahinton?

I have no idea but, in any case, how would it be possible for the lay person to ascertain any such thing merely by perusing the tax returns of wealthy individuals? The data on them might not even be accurately returned, for starters - but, far more importantly, anyone looking through such documents would need ample technical knowledge of taxation before being able even to begin to arrive at intelligent and meaningful conclusions about what he/she had read.

[Serial_Apologist]

far more importantly, anyone looking through such documents would need ample technical knowledge of taxation before being able even to begin to arrive at intelligent and meaningful conclusions about what he/she had read.

Come the time, we're all going to need to be scrupulous in gaining accurate information on all this if accountability in the revelation is to be matched by honesty in the reception. For now, verification by INLR that said returns are all present and correct will have to suffice. First things first. THEN we need a government to simplify the tax systems, as you say.