Where is the tax justice in our economy?

by Amanda Ramsay

When it comes to the economy, George Osborne has failed this country on all levels. He’s failed on debt reduction, on deficit reduction and failed to bring growth or jobs. The price we pay is cuts to our services, employment rights and employment prospects.

The Autumn financial statement poured more cold water on Keynesian hopes, eager for a “do something government,” not a laissez-faire-do-nothing-but-cut-government. Yet in the morass of commentary and analysis since the chancellor sat down last Wednesday, I am still asking myself: why is it acceptable that tax payers end-up subsidising low wages by means of tax credits, housing benefit and all manner of other fiscal instruments to supplement people on poverty pay?

I ask this not because the recipients don’t deserve the help they need to make ends meet, of course they do, but they are only necessary because employers and companies are not paying adequate salaries and wages in the first place.

Someone who has the gumption to start a company and create jobs should be congratulated and supported but without a mandatory living wage, companies are allowed to let profit win over decency in how they pay their staff.

Low pay is forcing people into the arms of the nanny state; to house, feed, clothe and pay for transport to get themselves to work, let alone heat their homes.

Where’s the fairness in that?

With cuts to benefits (a 1% rise is a cut in real terms with inflation at 2.6%), painful and dreary austerity for years to come and a shrinking economy, with no growth in sight, when is tax and pay justice going to be a real public expectation and demand from the government?

Fair and decent wages should come out of profits rather than tax payers coughing-up via the treasury, through income tax and council tax revenue. 40% of those in receipt of housing benefit in Bristol alone are working. Many people resorting to food banks are also in work.

While the right-wing bemoan benefit scroungers and rightly so for the downright workshy, evidence suggests such people are a tiny minority. I want our government to focus on the biggest swindlers, however legal the practices, the likes of Starbucks, Amazon, Vodafone and ebay.

These firms are so besotted with profit over all else they deliberately avoid paying corporation tax, on such a huge scale that UK Uncut says the exchequer is missing an eye-watering £95billion in lost revenue.

Employing more staff at HMRC would be a step in the right direction, more tax could be collected, more investigations take place and evasion reduced. Compliance officers in HMRC bring in over £658,000 in revenue per employee, yet 15,000 HRMC tax inspectors are losing their jobs.

It’s galling that the cruel and brutal cuts which are hurting people and lacerating the very fabric of our society could be avoided if these tax justice issues were dealt with internationally; meanwhile campaigners like myself struggle to secure a living wage for the hardworking public, which should guarantee workers earning at least £7.45 per hour outside of London, £8.55 in the capital.

Getting out of the downturn we find ourselves will be achieved by stimulating the economic heartbeat of the nation, not depriving it of the very fuel needed for the engine to work, that of more disposable income and tax receipts from happy earning and spending consumers.

The public need hope and reassurance. There must be the political will to deliver a realistic alternative to the savage cuts and a shrinking economy.

Any credible plan for a real recovery must include investment in social infrastructure, housing, social care and childcare. Banks must start lending again and government schemes to help create proper, paid jobs in areas of long-term unemployment are needed.

Britain must strive to be fair to consumers and employees alike, whilst remaining clearly open for business, not an overly punitive place to trade, these things are not mutually exclusive. Being pro-business does not have to mean letting corporations run wild, exploiting our workforce, society and taxation system.

UK Uncut may not be everyone’s cup of tea but their campaigning vigour and direct action over this week alone has prompted Starbucks to announce it was volunteering a £20million deposit to HM Treasury, as a financial mea culpa. It’s not everything, but it is a start, and that this is even on the corporate agenda in companies across the FTSE is testament, in part, to the power of UK Uncut’s efforts.

Amanda Ramsay is an executive officer of Bristol South Labour party and community campaigner


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7 Responses to “Where is the tax justice in our economy?”

  1. Nick says:

    http://www.ons.gov.uk/ons/dcp171766_263808.pdf

    Where’s the justice for the victims of fraud?

    4,700 billion of debts hidden off the books.

    http://www.legislation.gov.uk/ukpga/2006/35/section/2

    Fraud by false representation

    (1)A person is in breach of this section if he—

    (a)dishonestly makes a false representation, and

    (b)intends, by making the representation—

    (i)to make a gain for himself or another, or

    (ii)to cause loss to another or to expose another to a risk of loss.

    (2)A representation is false if—

    (a)it is untrue or misleading, and

    (b)the person making it knows that it is, or might be, untrue or misleading.

    (3)“Representation” means any representation as to fact or law, including a representation as to the state of mind of—

    (a)the person making the representation, or

    (b)any other person.

    (4)A representation may be express or implied.

    (5)For the purposes of this section a representation may be regarded as made if it (or anything implying it) is submitted in any form to any system or device designed to receive, convey or respond to communications (with or without human intervention).

    ===========

    So lets hide the state pension off the books. Lets send people letters asking them to play catch up with their contributions, knowing full well that the state can’t afford to pay out.

    Remember too because you’ve redistributed people’s pension money, that a 26K a year earner has lots 420,000 pounds of pensions.

    Ho hum, lets see. I know. Lets pass an act saying that when MPs commit fraud, its legal. Solves the expenses problem too.

  2. There are two things our benighted government doesn’t understand:

    1. Jobs pay wages, wages buy things, wages pay taxes, taxes pay government expenses. So they fire 600,000 civil servants….

    2. In a business, the customers should come first, then the employees and then the shareholders. Tough education job, there.

    And here’s something else – not one of them has been in the real world. Now, that’s a problem. In future, candidates for election should only be chosen from people who have 5 years’ experience of work – outside of PR of course.

    Sorry. Ranting. Must go.

  3. Robert says:

    I agree with most of this Amanda, but I do get a bit worried when Labour people do not mention cutting the deficit. The double-dip recession and small rise in the deficit were caused by the government cutting too far and too fast, but some cutting is actually necessary. Borrowing to cut borrowing is not a credible economic strategy.

  4. The stupid it hurts so much.

    “Employing more staff at HMRC would be a step in the right direction, more tax could be collected, more investigations take place and evasion reduced. Compliance officers in HMRC bring in over £658,000 in revenue per employee, yet 15,000 HRMC tax inspectors are losing their jobs.”

    More tax could only be collected if it existed. There is a limit to how much tax you can collect before people start really avoiding it – like cash in hand deals, smuggling, black markets, etc. Go read some proper economics lessons first. The Laffer curve should be one of your first topics.

    Compliance officers might bring in over £1/2m each, but they aren’t 100% of the HMRC. They are only a tiny minority. Employing loads more staff who aren’t trained in the complex task of investigation would actually waste money, not bring it in. 15K staff might be losing their jobs but that’s because of Gordon Brown who merged IR and C&E meaning that many were redundant.

    If UKUnCut really wanted all companies to pay the “right amount” of tax, then they would be going after Margaret Hodge’s StemCor. If UKUcut really wanted more money to be spent on social benefits and women’s rights and libraries and crèches they would call for DfID’s splurging of billions of aid to space faring nations to be stopped immediately.

    That UKUnCut are doing neither shows that they are just a noisy group who are lashing out without any thought and understanding.

  5. So Amanda, you say that wages come from profit. But then you cheer when Starbucks are forced to use £20m of their “profit” to pay HMRC. That means that Starbucks staff will have lower wages. Or rather fewer staff will be hired because of the actions you welcome. So, considering that the economy grows because of businesses growing why are you doing your damnest to stop them?

    “I want our government to focus on the biggest swindlers, however legal the practices, the likes of Starbucks, Amazon, Vodafone and ebay.” makes you sound like you prefer mob rule rather than the law. If something is legal, then it is right. If you want companies to pay more tax, change the law – do not get the mob to embarrass them into paying “hush money”.

  6. Ex-Labour says:

    “With cuts to benefits (a 1% rise is a cut in real terms with inflation at 2.6%)”

    Last year they got 5% and I had no pay rise for 3 years, yet you are happy for me to cough up more to benefit claimants ??

    “While the right-wing bemoan benefit scroungers and rightly so for the downright workshy, evidence suggests such people are a tiny minority”

    You want to come and live near me and see if they are a “tiny minority” !

    Good grief I cant really be arsed to comment further on this drivel. Labour is pandering to the looney left again – Militant, Derek Hatton anyone ?? Quoting UKUncut ?? FFS do some real research.

  7. Evidently some of the hidden wealth is used to finance such institutions and academics who are employed to persuade the rest of us that’s it a good thing if all this wealth stays in private hands so it can be continued to be used to finance their obsencly extravigant lifestyles and more such acadmeics.

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