History is made as Vox Political agrees with David Cameron

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avoid, Bernard Madoff, corporate, David Cameron, dodge, evade, evasion, Glaxo, haven, Jean-Claude Juncker, Luxembourg, Mike Sivier, mikesivier, Pearson, ponzi scheme, Private Eye, tax, Tesco, Vodafone, Vox Political

 

Jean-Claude Juncker, tax avoidance mastermind and now President of the European Commission.

Believe it or not, David Cameron was right to oppose the appointment of Jean-Claude Juncker as President of the European Commission.

If Private Eye is to be believed, Juncker has a record of wreaking fiscal havoc across the continent, thanks to his behaviour embracing corporate tax dodgers as finance minister and prime minister of Luxembourg.

Anti-EU readers will be interested to note that he was chair of the EU’s council of economic and financial affairs, in which role he played a key part in shaping the economic and monetary aspects of the 1992 Maastricht Treaty.

Eye 1368 (June 13-26) states that Luxembourg has turned itself into a tax haven, “but, crucially, one at the heart of Europe entitled to tax-free flows of money in and out of its borders in a way traditional sunny island havens… could only dream of.

“The Grand Duchy became the member of the economic club that pilfered from the club’s funds.”

Let’s look at examples: “An especially fruitful line has been multi-billion-pound corporate tax avoidance at its neighbours’ expense. In the most infamous case, Vodafone still routes more than £50bn worth of loans through Luxembourg for no purpose other than taking advantage of tax laws and administrative rulings carefully tailored by Juncker’s governments to facilitate large-scale tax avoidance… The company is sitting on a £17.4 billion “tax asset”, ie reduction in future tax bills around the world, courtesy of [Mr] Juncker.

“Hundreds of other multinationals, including the UK’s Glaxo, Tesco and Financial Times publisher Pearson, use Luxembourg in similar ways at enormous cost to Europe’s economies.”

And the buck doesn’t stop rolling with tax, either: “Juncker pursued an aggressive regime of financial deregulation, especially in the area of investment fund administration. So it was no surprise that when Bernard Madoff’s ponzi scheme collapsed in 2008, a large chunk of the money had come through loosely-regulated Luxembourg funds set up by Swiss banks.”

The man responsible for the above is now in charge of the European Union. David Cameron was right to oppose his appointment.

Be afraid.

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Tax credit debt collection is a double-edged attack on the poor

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There’s more than a little of the piscine about the fact that our Conservative-led has set debt collection agencies onto poor families who have been overpaid tax credit due to errors made by HM Revenue and Customs.

Firstly, the move undermines the principle behind the tax credit system – that it is there to ensure that poorly-paid families may still enjoy a reasonable living standard. Tax credits are paid on an estimate of a person’s – or family’s – income over a tax year and the last Labour government, knowing that small variances could cause problems for Britain’s poorest, set a wide buffer of £25,000 before households had to pay anything back.

By cutting this buffer back to £5,000, the Conservatives have turned this safety net into a trap. Suddenly the tiniest overpayment can push households into a debt spiral, because their low incomes mean it is impossible to pay back what the government has arbitrarily decided they now owe.

And the sharks are circling. Instead of collecting the debt on its own behalf, HMRC has sold it on to around a dozen debt collection agencies who are harassing the families involved with constant telephone calls, mobile phone messages and letters to their homes.

In total, HMRC made 215,144 referrals to debt collectors in 2013-14. Of the working families involved, 118,000 earned less than £5,000 per year.

This takes us to our second area of concern. Remember how the Department for Work and Pensions has been encouraging people – particularly the disabled – to declare themselves as self-employed in order to avoid the hassle and harassment that now go hand in hand with any benefit claim? You know – the refusal of benefits based on arbitrary ‘descriptors’ that were originally devised by a criminal insurance company as a means to minimise payouts, and the constant threat of sanctions that would cut off access to benefits for up to three years unless claimants manage to clear increasingly difficult obstacles.

And do you remember how the DWP reported earlier this year that more than 3,000 people who were subjected to the government’s benefit cap have now found work? This blog suggested at the time that many of them may have been encouraged to declare themselves self-employed in order to escape the hardship that the cap would cause them.

Both of these circumstances are likely to lead to a verdict of overpayment by HMRC, as the self-employment reported by these people is likely to be fictional, or to provide less than required by the rules – either in terms of hours worked or income earned.

Suddenly their debt is sold to a collection agency and they are suffering government-sponsored harassment, alarm and distress (which is in fact illegal) far beyond anything they received from the DWP; debt collection agencies are not part of the government and, as Dame Anne Begg pointed out in the Independent article on this subject, “The tactics they use to collect the debt are not tactics a government should use.”

Maybe not. So why employ such tactics?

Let’s move on to our third, and final, worry. By setting sharks on the hundreds of thousands of minnows caught in the government’s trawler-net (that was formerly a safety net – and I apologise for the mixed metaphor), the Tory-led administration is creating a handy distraction from the huge, bloated, offshore-banking whales who donate heavily into Conservative Party funds and who are therefore never likely to be pursued for the billions of pounds in unpaid taxes that they owe.

The government has promised to clamp down on tax evasion and avoidance, but ministers would have to be out of their minds to attack the bankers and businesspeople who pay for their bread and butter.

George Osborne suffered huge – and entirely justified – derision last year when HMRC published a list of its top 10 tax dodgers, which revealed that public enemy number one was a hairdresser from Liverpool who had failed to pay a total of £17,000.

It seems likely that the Conservatives have decided that future announcements will involve the reclamation of far larger amounts, and from far more people…

Innocent people who were either cheated by Tory-instigated changes to the system or by Tory-instigated misleading benefit advice.

Meanwhile the guilty parties continue to go unhindered. Their only payouts will continue to be made to – who was it again?

Oh yes…

To the Conservative Party.

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Divisions in Coalition as MPs demand independent inquiry on poverty

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Calls for a ‘commission of inquiry’ into the impact of the government’s changes to social security entitlements on poverty have won overwhelming support from Parliament.

The motion by Labour’s Michael Meacher was passed with a massive majority of 123 votes; only two people – David Nuttall and Jacob Rees-Mogg – voted against it.

The debate enjoyed cross-party support, having been secured by Mr Meacher with Sir Peter Bottomley (Conservative) and John Hemming (Liberal Democrat).

Introducing the motion, Mr Meacher said: “It is clear that something terrible is happening across the face of Britain. We are seeing the return of absolute poverty, which has not existed in this country since the Victorian age more than a century ago. Absolute poverty is when people do not have the money to pay for even their most basic needs.”

He said the evidence was all around:

• There are at least 345 food banks and, according to the Trussell Trust, emergency food aid was given to 350,000 households for at least three days in the last year.
• The Red Cross is setting up centres to help the destitute, just as it does in developing countries.
• Even in prosperous areas like London, more than a quarter of the population is living in poverty.
• According to the Joseph Rowntree Foundation, for the first time, the number of people in working families who are living in poverty, at 6.7 million, is greater than the number of people in workless and retired families who are living in poverty, at 6.3 million.
• Child poverty will rise from 2.5 million to 3.2 million during this Parliament, around 24 per cent of children in the UK. By 2020, if the rise is not stopped, it will increase to four million – around 30 per cent of children in the UK.
• The use of sanctions depriving people of all their benefits for several weeks at a time, had increased by 126 per cent since 2010 and 120 disabled people who had been receiving jobseeker’s allowance had been given a three-year fixed duration sanction in the previous year.
• There are now more than 2,000 families who have been placed in emergency bed-and-breakfast accommodation after losing their homes.
• The per cent rise in the overall homelessness figures last year included nearly 9,000 families with children, which is the equivalent of one family losing their home every 15 minutes.
• A third of families spent less than £20 a week on food and that the average spend on food per person per day was precisely £2.10. That is a third less than those families were able to afford three months before that.
• The proportion of households that had to make debt repayments of more than £40 a week had doubled and the average level of debt was £2,250.
• A third of families had council tax debt.
• 2.7 million people had lost out through the Government’s changes to council tax benefit – many of them disabled people, veterans and some of the most vulnerable in our communities.
• Households were having to spend 16 per cent more on gas and electricity.
• There are 2.5 million people who have been unemployed for the best part of two years, and there were 562,000 vacancies when the debate took place (Monday), so four out of five of those who are unemployed simply cannot get a job whatever they do.
• Cuts to local authorities mean many home care visits are limited to 15 minutes.
• The 10 per cent of local authorities that are the most deprived in the country face cuts six times higher than those faced by the 10 per cent that are the most affluent.
• 60 per cent of benefit cuts fall on those who are in work.

Mr Meacher said the biggest cause of absolute poverty was the huge rise in sanctioning, often for trivial reasons such as turning up five minutes late for a job interview or the Work Programme:

• A dyslexic person lost his Jobseekers Allowance because his condition meant that in one fortnightly period he applied for nine jobs, not 10. He was trying to pay his way and already had work, but it provided only an extremely low income.
• The jobcentre didn’t record that a claimant had informed them that he was in hospital when he was due to attend an appointment and he was sanctioned.
• A claimant went to a job interview instead of signing on at the jobcentre because the appointments clashed – and was sanctioned.
• A claimant had to look after their mother who was severely disabled and very ill – and was sanctioned.
• A Job Centre sent the letter informing a claimant of an interview to their previous address, despite having been told about the move. The claimant was sanctioned.
• A claimant was refused a job because she was in a women’s refuge, fleeing domestic violence and in the process of relocating, but I was still sanctioned.

Mr Meacher also quoted what he called a classic: “I didn’t do enough to find work in between finding work and starting the job.”

The latest DWP figures suggest that more than one million people have been sanctioned in the past 15 months and deprived of all benefit and all income. “Given that the penalties are out of all proportion to the triviality of many of the infringements, and given that, as I have said, four out of five people cannot get a job whatever they do, the use of sanctioning on this scale, with the result of utter destitution, is — one struggles for words — brutalising and profoundly unjust,” said Mr Meacher.

Other reasons for the rise in absolute poverty included:

• Delays in benefit payments.
• The fact that it is impossible for many poor and vulnerable people to comply with new rules – for example a jobseeker who asked to downsize to a smaller flat who was told he must pay two weeks’ full rent upfront before getting housing benefit. He does not have the funds to do so and is stuck in a situation where his benefits will not cover his outgoings due to the Bedroom Tax.
• The Bedroom Tax, which applies to around 667,000 households, and two-thirds of those affected are disabled. More than 90 per cent of those affected do not have smaller social housing to move into.
• The Benefit Cap, imposed on a further 33,000 households.
• Mistakes by the authorities; up to 40,000 working-age tenants in social housing may have been improperly subjected to the Bedroom Tax because of DWP error (although Iain Duncan Smith claims a maximum of 5,000).

Mr Meacher said: “The Chancellor’s policy of keeping 2.5 million people unemployed makes it impossible for them to find work, even if there were employers who would be willing to take them, and the 40 per cent success rate of appeals shows how unfair the whole process is.”

Responding to a comment from David TC Davies (Conservative) that those who are not looking for work must realise there will be consequences, particularly when a million people have been able to come to the UK from eastern Europe and find work, Mr Meacher said, “Those who come to this country are more likely to be employed and take out less in benefits than many of the indigenous population.”

He asked: “Is all this brutality towards the poor really necessary? Is there any justification in intensifying the misery, as the Chancellor clearly intends, by winding up the social fund and, particularly, by imposing another £25 billion of cuts in the next Parliament, half of that from working-age benefits?

“After £80 billion of public spending cuts, with about £23 billion of cuts in this Parliament so far, the deficit has been reduced only at a glacial pace, from £118 billion in 2011 to £115 billion in 2012 and £111 billion in 2013. Frankly, the Chancellor is like one of those first world war generals who urged his men forward, over the top, in order to recover 300 yards of bombed-out ground, but lost 20,000 men in the process. How can it be justified to carry on imposing abject and unnecessary destitution on such a huge scale when the benefits in terms of deficit reduction are so small as to be almost derisory?”

Suggested alternatives to the punitive austerity programme of cuts came thick and fast during the debate. Challenged to explain what Labour’s Front Bench meant by saying they would be tougher on welfare than the Tories, Mr Meacher said: “As the shadow Chancellor has made clear on many occasions, is that we need public investment. We need to get jobs and growth. That is the alternative way: public investment in jobs, industry, infrastructure and exports to grow the real economy, not the financial froth, because that would cut the deficit far faster than the Chancellor’s beloved austerity.”

He asked: “How about the ultra-rich — Britain’s 1,000 richest citizens — contributing just a bit? Their current remuneration — I am talking about a fraction of the top 1 per cent — is £86,000 a week, which is 185 times the average wage. They received a windfall of more than £2,000 a week from the five per cent cut in the higher rate of income tax, and their wealth was recently estimated by The Sunday Times at nearly half a trillion pounds. Let us remember that we are talking about 1,000 people. Their asset gains since the 2009 crash have been calculated by the same source at about £190 billion.

“These persons, loaded with the riches of Midas, might perhaps be prevailed upon to contribute a minute fraction of their wealth in an acute national emergency, when one-sixth of the workforce earns less than the living wage and when one million people who cannot get a job are being deprived of all income by sanctioning and thereby being left utterly destitute.

“Charging the ultra-rich’s asset gains since 2009 to capital gains tax would raise more than the £25 billion that the Chancellor purports to need. I submit that it would introduce some semblance of democracy and social justice in this country if the Chancellor paid attention to this debate and thought deeply about what he is doing to our country and its people.”

Ronnie Campbell (Blyth Valley, Lab) suggested that the Government might save a lot more if its members “showed the same energy and enthusiasm for getting those who evade their taxes and run to tax havens as they do for going after the poor, the sick and people on the dole”.

Against this, David TC Davies offered insults and distortions of the facts, quoting the Daily Mail as though it provided an accurate account of current events: “Members of the shadow Cabinet might need a boxing referee to sort out their disputes at the moment, as we read today in the Daily Mail.”

He said: “We took office with a deficit of £160 billion and a debt that was rising rapidly to £1 trillion. That was after years of overspending in good times, as well as in bad, by Labour, a cheap money supply and lax banking regulation under the former Government.” Labour’s spending, up until the financial crisis, was always less than that of the previous Conservative administration; Gordon Brown and Tony Blair both ran a lower deficit than John Major and Margaret Thatcher, and at one point actually achieved a surplus, which is something that the Conservatives had not managed in the previous 18 years. While Mr Davies here complained about the “lax banking regulation”, Conservatives supported it at the time and in fact demanded more DE-regulation, which would have made the financial crisis worse when it happened.

“We had disastrous economic decisions, such as that to sell gold at a fraction of its real rate,” said Mr Davies. Yes – the UK lost around £9 billion. But compare that with the disastrous economic decision by George Osborne to impose more than £80 billion worth of cuts to achieve a £7 billion cut in the national deficit. The UK has lost £73 billion there, over a three-year period.

And Mr Davies said: “Worst of all and most seriously, we had a welfare system that allowed people to get into a trap of welfare dependency, leaving them on the dole for many years, but at the same time filling the consequent gap in employment by allowing mass and uncontrolled immigration into this country, which completely undercut British workers.” The first assertion is simply untrue; the second is a legacy of previous Conservative administrations that agreed to the free movement of EU member citizens, meaning that, when the eastern European countries joined in 2004, citizens migrated to the UK in the hope of a better life. Labour has admitted it should have negotiated for a delay in free movement until the economies of those countries had improved, making such migration less likely, but the situation was created before Labour took office.

Challenged on the Coalition’s record, Mr Davies fell back on the Tories’ current trick question, which is to counter any criticism by asking: “Is he suggesting that we are not doing enough to pay down the national debt? Is he suggesting that we should cut further and faster? If so, and if we had the support of other Opposition Members, that is exactly what the Government could do and, indeed, possibly should do. I look forward to seeing that support for getting the deficit down.” This disingenuous nonsense was batted away by Labour’s Hugh Bayley, who said “investing in the economy, creating jobs and thereby getting people off welfare and into work” was the way forward.

Mr Davies’ Conservative colleague Jeremy Lefroy took a different view, agreeing that increasing numbers of people are finding it impossible to make ends meet, and that job creation and apprenticeships were a better way out of poverty than changing the social security system alone. He agreed that sanctions were applied to his constituents “in a rather arbitrary manner”. He spoke against George Osborne’s suggested plan to remove housing benefits from people aged under 25, saying this “would have a drastic impact on young people who need to live away from home and who have no support from their families”. He spoke in favour of councils increasing their housing stock. And he admitted that disabled people faced severe problems when unfairly transferred from ESA to JSA: “A lady in my constituency says, ‘I am simply not fit for work, but by signing on for JSA I have to say that I am available and fit for work.’ She does not want to tell a lie.”

Steve Rotheram (Liverpool Walton, Labour) spoke powerfully about the effect of being on benefits: “Lots of people in my city are on benefits for the very first time. Far from being in clover — it beggars belief what we read in the right-wing press — they are struggling to make ends meet, and the problem that thousands of Liverpudlians are facing is new to them. For many, the idea that they might miss a rent payment is totally alien. They have not done that in the past 20 years, but since May 2010, their individual household incomes have been on such a downward trajectory that they now find themselves in rent arrears, seeking advice on debt management and unable to afford the daily cost of travel, food and energy. Figures suggest that 40 per cent of the adult population in Liverpool are struggling with serious debt problems.”

And he said poverty had health implications, too: “David Taylor-Robinson of the University of Liverpool and his fellow academics have highlighted the doubling of malnutrition-related hospital admissions nationally since 2008.”

John Hemming (Birmingham Yardley, LD) raised concerns about “the interrelationship between the welfare cap and victims of domestic violence, and whether there are situations that need more attention. I believe that people can get discretionary housing payment to leave a violent home, but it is important that we ensure that there is a route out of domestic violence for women. I am worried about that issue, just as I am about some wrongful sanctioning that I have seen. That does not help at all, because it undermines the whole process.” He also called for “a substantial increase in the minimum wage, because as the economy is improving the Government should look at that, rather than maintain things as they are”.

The vote gave huge endorsement to the call for an independent inquiry into poverty under the Coalition.

But with an election just 15 months away, how long will we have to wait for it to report?

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The State of Osborne: a visitor’s guide

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A moment of crisis for David Cameron as he realises it is unlikely that George Osborne has the faintest idea what the Autumn Statement means.

If anybody else had prattled on for 50 minutes while hardly uttering a single sensible word, they would have been consigned to a mental hospital forthwith.

But this is Coalition Britain, and the speaker was George Osborne, the man who likes to tell us all that he is in charge of the nation’s finances. Thanks to his government’s Department for Work and Pensions, nobody is allowed to have mental illnesses anymore; after this speech, it seems likely we all have an idea about the reason for that.

A 50-minute speech is a lot of verbiage, and it is certain that worthier journalists across Britain – if not the world – have already analysed it to exhaustion. Allow me to let you into a secret:

They’re probably trying too hard.

Most of the speech was about putting Labour down. The Opposition has made all the headway over the past few weeks, and we all knew Osborne was under orders to change the mood music of the nation in time for Christmas.

Did he manage it? Not really. His speeches always come across as strained events, where he’s making an effort to be clever without ever achieving it. As a result, the message gets lost. We can therefore discount the Labour-bashing.

That leaves us with what he actually said. Even here, his meaning was at times opaque. What follows is an attempt to provide a handy guide to George-speak, for anyone unfortunate enough to have heard him yesterday.

Osborne: “We have held our nerve while those who predicted there would be no growth until we turned the spending taps back on have been proved comprehensively wrong.”/Meaning: “I am lying. Austerity failed miserably and the economy flatlined. A few months ago I realised that we would have nothing to show at election time so I turned the spending taps back on, with Help To Buy and Funding For Lending. I know that these are exactly the sort of Keynesian economic levers that I preached against for three years but I’m hoping that nobody noticed.”

The hard work of the British people is paying off, and we will not squander their efforts./Osborne appears to be celebrating his three years of stagnation. He inherited growth and decided to trash it. (MagsNews on Twitter)

There was no double-dip recession./“Phew! Lucky escape there!”

At the time of the Budget in March, the Office of Budget Responsibility forecast that growth this year would be 0.6 per cent. Today, it more than doubles that forecast and the estimate for growth will be 1.4 per cent./“Please God don’t let anybody remember that three years ago, the forecast for this year was 2.9 per cent.”

Today in Britain, employment is at an all-time high… We have the lowest proportion of workless households for 17 years./These jobs have increased the numbers of the working poor. Too few are full-time; too many are part-time, zero-hours or self-employed, serving up no National Insurance contributions from employers, no holiday or sick pay, or making contractors work long hours for less than the minimum wage.

The number of people claiming unemployment benefit has fallen by more than 200,000 in the past six months—the largest such fall for 16 years./“And we have imposed sanctions on more people on Jobseekers’ Allowance than ever before, in order to produce that figure.”

By 2018-19, on this measure, the OBR does not expect a deficit at all. Instead, it expects Britain to run a small surplus. These numbers mean that the Government will meet their fiscal mandate to bring the structural current budget into balance and meet it one year early./Although of course the books were initially supposed to be balanced by 2015. (Huffington Post live blog)

This year, we will borrow £111 billion, which is £9 billion less than was feared in March./…and £41 billion more than forecast in 2010.

We will cap overall welfare spending./But this will not include the state pension (half the social security budget) or the most cyclical jobseeker benefits./”A living wage would mean less dosh on in-work benefits; letting councils build would mean less subsidies for private landlords.” (Owen Jones on Twitter)

Pensioners will be more than £800 better off every year./But as usual he’s ignoring the VAT elephant in the room. (Mark Ferguson on Twitter)

We think that a fair principle is that, as now, people should expect to spend up to a third of their adult lives in retirement. Based on the latest life expectancy figures, applying that principle would mean an increase in the state pension age to 68 in the mid-2030s and to 69 in the late 2040s./But life expectancy depends on where you live and how much money you have, meaning the poor continue to pay more towards the pensions of the rich./”Current pensioners better off – future pensioners paying for it. What was that about “making our kids pay for current spending” George?” (Mark Ferguson of LabourList on Twitter)

Most wealthy people pay their taxes and make a huge contribution to funding our public services; the latest figures show that 30 per cent of all income tax is paid by just one per cent of taxpayers./Estimates of the amount of tax that is not collected range between £25-£120 billion per year and it is not the poor who aren’t paying up.

This year the rich pay a greater share of the nation’s income taxes than was the case in any year under the last Labour Government./Because they now have more income. Simple really. (Tom Clark of The Guardian, on Twitter)

Today we set out in detail the largest package of measures to tackle tax avoidance, tax evasion, fraud and error so far this Parliament. Together it will raise over £9 billion over the next five years./Including capital gains tax for foreign investors on sales of UK property, which has nothing to do with tax avoidance/evasion, fraud or error.

We must confront this simple truth: if we want more people to own a home, we have to build more homes… The latest survey data showed residential construction growing at its fastest rate for a decade./The rate of house building is at its lowest peacetime level since the 1920s

This autumn statement has found the financial resources to fund the expansion of free school meals to all school children in reception, year 1 and year 2, announced by the Deputy Prime Minister and supported by me./On Wednesday, the Lib Dems and Michael Gove’s education department argued over who had to pay for it.

Extra funding will be provided to science, technology, and engineering courses [in universities]. The new loans will be financed by selling the old student loan book, allowing thousands more to achieve their potential./And pushing thousands into the hands of debt collectors.

The best way to help business is by lowering the burden of tax. KPMG’s report last week confirmed for the second year running that Britain has the most competitive business tax system in the world./KPMG would know – it writes the tax system and also runs some of the larger tax avoidance schemes.

From April 2015 we will introduce a new transferable tax allowance for married couples… Four million families will benefit, many of them among the poorest working families in our country./Osborne says the Tories are backing British Families – but only ones who are married it seems. (Mark Ferguson on Twitter)/While the new tax arrangements bribe families to marry, the benefit cap will bribe big families to split up. (Tom Clark on Twitter)

We are all in this together./The biggest lie of this Parliament.

We are also helping families with their energy bills./Commence the cutting of the “green crap”. This from the “Greenest government ever”. (Mark Ferguson on Twitter)

Next year’s fuel duty rise will be cancelled./This is a cut in a tax that was never imposed in the first place.

We are going to abolish the jobs tax on young people under the age of 21. Employer national insurance contributions will be removed altogether on a million and a half jobs for young people./Young people will therefore have less chance to get contribution-based benefit. National Insurance assures people their pension contributions – except when it isn’t paid. So they will have no contributions to show for any years they worked before 21 and will have to work until their late 60s.

The cost for a business of employing a young person on a salary of £12,000 will fall by over £500./This is a bonus for businesses, not employees.

“Jobs tax” – it’s ludicrous, isn’t it? National Insurance has been a respected part of British life for more than 100 years but Osborne, living as he does in a mythical Victorian-era golden age that never actually existed, thinks it is a “jobs tax”. Either that or he’s still bruised by the fact that Labour’s labelling of the under-occupation charge as a Bedroom Tax caught on with the public.

Shadow Chancellor Ed Balls got on his feet and immediately attacked Osborne’s “breathtaking complacency” for denying the drop in living standards faced by everyone in the country, with families already £1,600 per year worse off. Osborne laughed. He thought that was funny.

The Shadow Chancellor pointed out that we are enduring the slowest recovery in a century, and that average real wages will have dropped by 5.8 per cent by the end of the Parliament (except for fatcat business bosses).

He was having a hard time getting his points across, however, because Tory MPs were heckling him very loudly. Owen Jones tweeted, appositely, “Do the Tories think that a bunch of braying MPs dripping with privilege, while ordinary people’s living standards crash, is good TV?”

Maybe they did. Maybe they thought they had the public on their side.

Let’s have a look at a few comments from the public – courtesy of the Huffington Post:

“Planning to kill more people, George?” (Robin Stacey)

“Spend more you wet lipped monkey.” (Will Moriarty)

“No one has an ounce of faith in anything you say, you parasitic pool of curdled warthog’s puke.” (Anthony Nicholas)

And finally: “Hope you end the speech with your resignation x” (Joanne Wood – and yes, she did mean to end with a kiss).

What a shame Osborne did not follow her advice.

 

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Sort out the tax dodgers, Labour, then the benefit bill won’t be a problem

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Off-message: If Rachel Reeves had promised to get as tough on tax avoidance in her previous job as she is promising to be on benefits now, Labour might have had more credibility.

A lot of people have been getting their knickers in a knot about Rachel Reeves’ interview in today’s Observer – and rightly so.

In it, she tells us (wrongly), “We are not in an environment where there is more money around,” and says that Labour will be tougher than the Tories when it comes to slashing the benefits bill. She stressed that she wanted to explode the “myth” that Labour is soft on benefit costs.

There are a few myths feeding into these statements. Firstly, the myth that millions upon millions of British citizens are living a life of luxury on benefits, which is, quite frankly, infantile nonsense. Benefits do not pay the ordinary claimant enough to afford huge luxuries and never did. They were always intended to cover the cost of survival while the recipient looked for something better. Anything else is a lie concocted by unscrupulous politicians, that you would be a fool to believe.

Then there’s the myth that the British taxpayer is being defrauded out of a fortune by benefit cheats who are (again) living a life of luxury at our expense. One look at the figures dispels that idea! The fact is that only seven people in every thousand commit benefit fraud – at a consequently small cost to the overall budget – and the amount they receive simply would not support the lifestyle our politicians are suggesting for them.

Let’s move up to a bigger myth – that people prefer to live on benefits than get a job. We’ve now moved from infantile nonsense to dangerous nonsense. The current situation, engineered by the conservatives in both Coalition parties, means there are very few jobs available – around 500,000 at any one time, with 2.5 million people chasing them.

And what kind of jobs are they? How many are zero-hours contracts? How many are part-time? These jobs do not pay more than benefits (“Making Work Pay” – another Tory lie) so anyone taking them will be out-of-pocket.

Meanwhile, the Tories in power have rigged the system so that anyone who does not spend the entire working week pestering local businesses for jobs that they aren’t offering will be sanctioned and will lose their benefit for a period of up to three years! It is entirely disproportionate, considering the state of the economy, and may cost jobseekers a lot more than a few quid a week in the long run.

But this is how the benefits bill will be slashed – by the Conservatives and by Labour, if Rachel Reeves is to be believed. Ministers of any party, living in the la-la land of made-up statistics, will sanction people for failing to work hard enough at securing jobs that don’t exist!

Ms Reeves says Labour’s jobs guarantee will ensure that those jobs do exist but we don’t know that for sure. We do know that she intends to continue Tory policy on sanctions – blindly.

Finally, we have the biggest myth of all – that there isn’t enough money. HM Revenue and Customs just released estimates for the last-but-one tax year (2011-12), suggesting that it failed to collect £35 billion in evaded or avoided tax during that year.

That’s seven times more than the national bill for JSA, and more than 29 times the estimated cost of all benefit fraud. But wait – it gets better! This is only an estimate and it has long been believed that the true cost of the so-called “tax gap” is £120 billion – equal to each year’s national deficit, 24 times the cost of JSA or 100 times the cost of benefit fraud.

Why isn’t our government going after these criminals? Why hasn’t Labour promised to go after them if the Tories won’t?

Simple: Both main parties have been re-writing tax law to make it easier for rich individuals and large corporations to avoid paying tax, and ignoring flaws in tax laws that make avoidance possible.

So for example: In the late 1990s, the then-Labour government removed the tax on dividends that meant companies had to pay tax on profits if they wanted to pay them out to the owners. So for example Arcadia boss Philip Green’s wife Tina, who is technically the owner of the company and lives in Monaco, received a tax-free £1.2 billion dividend in 2005; if this tax had been in place, £300 million of that would have gone to the UK Treasury.

Gordon Brown slashed Capital Gains Tax from 40 per cent to 10 per cent in 2000, meaning income that his friends in private equity managed to engineer into capital gains would be taxed at a lower rate than was paid by their cleaners. Not the finest hour for the Party of the Worker!

And towards the end of its term, New Labour started dismantling the rules that guarded against industrial-scale tax avoidance by British multinationals, meaning profits returned to the UK from overseas subsidiaries would be exempt from tax. This created a substantial incentive for firms to send their income offshore.

Before the 2010 election, our old friend David Gauke made a lot of noise about stopping the limitless tax deductibility of interest payments, that had been used by Boots (the chemist) to slash its tax bill. Six months after the election, when he was in a position to do something about it, he was telling everybody the rules would not be altered because business considered them a competitive advantage.

The Coalition brought in tax exemptions for companies’ tax haven branches and for profits parked in tax haven subsidiary companies. Meanwhile, tax breaks for the cost of funding these offshore set-ups, from the UK, are also provided.

Corporation Tax will drop to 21 per cent by 2014, even though there is no evidence that cutting the rate will make the UK any more competitive in world business.

The Treasury’s mission is now to adjust the framework of tax laws to suit big business. The ‘Big Four’ accountancy firms are now well-entrenched in writing our tax laws for us – and they run the most popular tax avoidance schemes. Consultations have descended into a process of agreeing laws demanded by big businesses.

There are clear and irrefutable arguments that reversing these legislative idiocies and closing every other tax avoidance loophole will do far more for the economy than flogging the unemployed to death, looking for jobs that don’t exist.

But I don’t think former Bank of England economist Rachel Reeves will be interested in that. In 1975, an appalled taxpayer wrote to then-Chancellor Denis Healey, complaining that an employee of the Bank (which is supposed to work on preventing tax avoidance) had been giving advice on how to avoid tax. “I wonder if this is really part of the Bank of England’s duties,” the correspondent wrote.

The behaviour of Ms Reeves, the former Shadow Chief Secretary to the Treasury, suggests that she believes it is.

New attempt to demean benefit claimants launched by right-wing loonies

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avoidance, BBC, benefit, benefits, community service, Customs, dodging, economy, evasion, Exchequer, government, hmrc, living wage, Matthew Sinclair, Mike Sivier, mikesivier, people, politics, Revenue, social security, tax, Taxpayers Alliance, TPA, Treasury, unemployment, Universal Credit, unpaid work, Vox Political, welfare, work, Workfare

Bin it: We don’t need the Taxpayers’ Alliance or its rubbish ideas.

For a change, it isn’t the government!

The Taxpayers’ Alliance, an organisation of right-wingers determined to turn the UK into a low-tax economy by any possible means, has decided that Universal Credit claimants need to do community service-style unpaid work – or they shouldn’t receive a penny.

According to the BBC, the group reckons people should do 30 hours’ unpaid activity every week, and has suggested this could save £3.5 billion in social security payments every year.

Is that because it has worked so well in the past?

Schemes like this are already in place for jobseekers and, guess what, they don’t work. It costs more money to employ the private firms that administer them than they ever succeed in saving, and their success rate in getting people into jobs is so bad that benefit claimants would have a better chance of success if they just go and look for work by themselves.

In addition, Universal Credit will be paid to working people who claim, for example, tax credits and/or housing benefit. They have to claim these benefits because their employers do not pay them enough money to cover all their necessary outgoings – food, rent, electricity and so on. That is a result of right-wing government policy that aims to keep wages low. How are these low-paid working people supposed to fit another 30 hours’ work into their already-busy week?

Also: Community service? That’s what convicted criminals do. Unemployment is not a criminal offence and every TPA member should be ashamed that their leaders have conflated the two.

Finally, for every person carrying out unpaid work, a paid job is removed from the economy. Has it not occurred to the Taxpayers’ Alliance that the amount HMRC collects from them might drop, if more people were actually paying taxes?

Probably not, but then – oh, look – it seems the TPA is being investigated for, don’t laugh, dodging tax.

“Taxpayers rightly expect something back for the enormous amount they pay for out-of-work benefits, at the very least a real commitment to find a job as soon as possible,” said TPA chief executive Matthew Sinclair, proving in a single sentence that he understands neither Universal Credit nor the fact that people who claim it are also taxpayers.

No – this is not about helping anybody. It won’t save government money; it won’t help businesses and it certainly won’t help people on Universal Credit.

This is about demeaning people who are already in a very difficult place through no fault of their own. It is about pretending that they are a burden on society when it is the government’s own schemes – and the schemes that the TPA wants brought in – that are creating the burden.

Still, today’s misguided and wholly wrong-headed outburst does allow us to clarify what is needed.

People in work need to be paid a living wage, and should be respected by their employers for the work that they do.

And firms currently taking part in unpaid ‘workfare’ schemes need to be told that enough is enough; they’ve had the benefit of free workers for many years, and now it’s time to give something back by turning those positions into paid jobs – again at the living wage.

People in paid work pay taxes – and those earning enough that they don’t need any benefits at all are a double boon to the Exchequer because they pay into the Treasury but do not take anything out.

That is the way forward.

Another Tory ‘bait-and-switch’ scam – shares-for-rights scheme is employers’ tax dodge

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'Starve the Beast', Another Angry Voice, avoidance, bait and switch, budget, capital gains, Coalition, congress, Conservative, Corporation Tax, debt, deficit, dodge, economy, employee owner, employee shareholder, evasion, flexible working, George Osborne, government, Mike Sivier, mikesivier, Mirror, OBR, observer, office, people, politics, redundancy pay, responsibility, rights, shares, social security, statutory, tax, Tories, Tory, trade, training, TUC, unemployment, unfair dismissal, union, Vox Political, welfare, work, workers

“This government is taking action domestically on [tax] avoidance and evasion,” wrote George Osborne in an article for The Observer, back in February. How right he was.

The Tory-led Coalition has done everything in its power to facilitate tax avoidance and ignore evasion, it seems, including the latest wheeze, which is to link it with a feeble attempt to get working people to throw away their rights in exchange for a few shares.

The BBC has reported that the new status of “employee shareholder” has come into force, allowing working people to claim shares in the company that employs them, if they give up the rights to claim unfair dismissal and statutory redundancy pay, the right to request flexible working (except in the case of two weeks’ parental leave), and some rights to request time off for training.

Nobody in their right mind would do this and expert opinion is that take-up will be small. So why do it?

Well, it’s not about the workers at all. It’s about helping company bosses avoid paying their taxes. Even the right-wing-leaning BBC was unable to cover up the facts (although it left them until the end of the article):

“Companies can also claim some corporation tax deductions on the issuance of shares to employees.”

Yes – it’s a tax dodge!

Here’s how it works, according to the Mirror: “New analysis show[s] it could also allow executives to avoid paying revenue on company shares. Tax experts commissioned by the TUC believe ruthless bosses could classify themselves as ’employee owners’ to escape Capital Gains Tax. And the Office for Budget Responsibility estimates the scheme could cost up to £1 billion, mainly due to tax avoidance.”

This will, of course, involve a drop in tax income to the Treasury, meaning increases in the national debt and deficit, which the Tories will no doubt use to justify further cuts to public service budgets as part of their ‘Starve The Beast’ agenda. Remember, this country has a chancellor who, for ideological purposes, actually wants to harm the British economy.

Meanwhile, as our friend at Another Angry Voice has put it: “If you’re thick enough to cash in your labour rights for a few grand worth of shares in the company you work for, then in a couple of years time when people are calling you ‘feckless’ for being unemployed, you’ll be one of the minority that actually deserve it (and your shares might well be worth only pennies in the pound compared to the value they had when you scrapped your labour rights to get them).”

Government talks tough on tax-dodging – while helping corporations cut bills

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avoidance, Chancellor, Coalition, Conservative, corporation, debt, deficit, economy, evasion, Exchequer, George Osborne, government, haven, intellectual property, mailbox, Mike Sivier, mikesivier, multinational, patent, people, politics, sales, tax, territorial, Tories, Tory, Treasury, VAT, Vox Political, Yvette Hodgson

Public unrest: Thousands of people across the UK have demonstrated against government decisions that have increasingly burdened poor people with higher taxes while the rich, and fabulously wealthy corporations, have received tax breaks. The government’s response has been to order water cannons from Germany. Think about that.

How long does George Osborne expect us to believe his blather about cracking down on corporate tax avoidance when we have evidence all around us that he is helping multinational firms to get out of paying the tax they owe this country.

This is taking place at a time when the UK tax take should be maximised, in order to get borrowing down and help the country pay its bills.

And it is being organised by the Chancellor of the Exchequer – the government member whose principle job is to ensure that those bills can be paid.

All this doubletalk suggests he has a personal agenda that is different from what he’s been telling us, doesn’t it?

Vox Political has already dealt – at length – with the fact that the Coalition government has legislated to make it easier for UK-based multinationals to shift their income into ‘mailboxes’ in tax havens, in order to avoid paying tax in this country.

Why is Osborne doing this, when he knows we need the money?

We know that Osborne has cut Corporation Tax by a quarter – from 28 per cent to 21 per cent – during the course of this Parliament, even though changes in the rate of this particular tax have been proven to have no effect on economic improvement. Look at the USA, where a Corporation Tax rate of 40 per cent has done nothing to hinder the resurgence of that country’s economy.

Why is Osborne doing this, when he knows we need the money?

Meanwhile, we have been hit with a large increase in sales tax (VAT) which hits poor people hardest. As a result, they have to reconsider their purchases and buy fewer items, meaning the Exchequer takes less money, with this tax, than it should.

Why is Osborne doing this, when he knows we need the money?

The European Commission reckons it has declared war on tax evasion and avoidance – but has instructed member nations to single out only non-EU countries as havens, even though member states including Luxembourg, the Netherlands, Ireland and Belgium are known to have engaged in potentially harmful tax behaviour.

Why are these countries doing this, when they know they need the money?

Beginning in 2009 (meaning we started this under a Labour administration, please note), the UK began switching from taxing worldwide income to solely taxing profit that companies claim is earned within the country, a so-called “territorial” system. It eliminated taxes on dividends paid to a UK company, even if coming from a subsidiary in a tax haven.

Why is Osborne continuing with this, when he knows we need the money?

Beginning last month, the UK slashed the tax rate to 10 per cent from the regular 23 per cent rate on profit attributed to patents and intellectual property.

Why is Osborne doing this, when he knows we need the money?

Here’s why, according to Yvette Hodgson, a spokeswoman for the Treasury. She said the government is “committed to creating the most competitive corporate tax system in the G20.

“Global tax rules have stood still for almost a century. Britain is leading the international effort to bring them into the 21st century.”

So 21st century taxation means beggaring not only populations but governments as well, while allowing multinational corporations to make off with all the cash?

No wonder people in Britain are so angry. We have every right to be.

Further humiliation for Osborne and HMRC over tax avoidance

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Amazon, Arcadia, avoidance, Conservative, Customs, dodger, economy, evasion, George Osborne, government, hmrc, Mike Sivier, mikesivier, politics, Revenue, Starbucks, tax, Tories, Tory, Vox Political

0sborne has every reason to be red-raced with embarrassment over his pitiful record regarding tax avoidance. Parliament’s public accounts committee has done all the hard work for him and he still can’t put it into practice!

Revenue and Customs bosses, reeling from the broadside they took for claiming the UK’s tax-dodging public enemy number one was a hairdresser from Liverpool, can take no solace from the attitude of Parliament’s own public accounts committee.

Three days before HMRC published its silly little list, the committee called on it to “publically name and shame” all organisations and individuals who sell or use tax avoidance schemes, in order to discourage such activity.

The fact that the organisation has not taken the opportunity to do so serious undermines its position.

Let’s have a look at what the UK Parliament’s website – www.parliament.uk – has to say about the government’s stance, because the criticism is so heavy it’s almost funny:

Tax avoidance—using tax law to gain a tax advantage not intended by Parliament—reduces the money available to fund public services and is completely unfair to the majority who pay the tax due. HM Revenue & Customs (HMRC) estimates that in 2010-11 the tax gap due to avoidance was £5 billion. HMRC further estimates that the present total tax at risk from avoidance over time is £10.2 billion.

In Australia, promoters have to get clearance for schemes before they introduce them. An advance ruling system of this type could deter contrived avoidance schemes and increase certainty in the tax system. Australia has also introduced powers to fine those who promote schemes that could not reasonably be expected to work or comply with the advance ruling system.

“Promoters of ‘boutique’ tax avoidance schemes like the one brought to our attention by the case of Jimmy Carr, are running rings around HMRC,” said Margaret Hodge, chair of the public accounts committee.

“They create schemes which exploit loopholes in legislation or abuse available tax reliefs, such as those intended to encourage investment in British films, and then sign up as many clients as possible, knowing that it will take time for HMRC to change the law and shut the scheme down.

“Their clients can then take advantage of this window of opportunity to make a lot of money at the expense of the taxpayer, while the promoter simply moves on to a new scheme and repeats the process. It is a game of cat and mouse and HMRC is losing.

“It has allowed a system to evolve where the die are loaded in favour of the promoters of tax avoidance schemes. The complexity of tax law creates opportunities for avoidance, there are no penalties to stop people promoting these schemes, and HMRC is ineffective in challenging promoters who are deliberately obstructive or deliberately sell schemes they know do not work. Promoters pocket their fees whether their schemes work or not.

“There is also a lack of transparency that makes it very hard to find out who is involved in marketing or using these schemes. HMRC publicises details of schemes that do not work but does not name the promoters or the clients. We have seen how public anger and consumer pressure can influence large companies, such as Starbucks, to behave more responsibly.

“HMRC should publically name and shame those who sell or use tax avoidance schemes in order to discourage such activity. With at least £5 billion lost to tax avoidance each year, HMRC has got to get much more robust in its approach.

“The requirement that promoters give early notification to HMRC of new schemes has resulted in the swift closure of some. But the Department does not know how many promoters simply choose to ignore the requirement. We are also alarmed to hear that promoters are getting off paying fines for not disclosing their schemes by pleading that, in the opinion of a QC, they have a ‘reasonable excuse’ for non-disclosure. HMRC is right to explore how to make it more difficult for this tactic to work.

“The number of cases HMRC takes to court is tiny compared to the overall caseload. It must make use of the additional resources it has been given to act much more urgently to investigate and close down new schemes and to bring more cases to court.

“Since our hearing, the Government has announced that it is consulting on draft rules designed to allow departments to ban tax-avoiding businesses from being awarded government contracts. This is a welcome move but we will want to monitor closely how any such rules are applied in practice.”

I wonder if the rules on banning tax-avoiding businesses from taking up government contracts will ever see the light of day?

No wonder Osborne can’t pay his debts – he’s chasing hairdressers for tax-dodging!

Tags

accountancy, accountant, Amazon, Arcadia, avoidance, Big 4, Conservative, Customs, debt, deficit, dodger, economy, evasion, George Osborne, government, hmrc, Mike Sivier, mikesivier, Moody's, politics, Revenue, Starbucks, tax, Tories, Tory, Vodafone, Vox Political

It is no surprise at all that the UK has lost its triple-A credit rating from make-it-up-as-you-go Moody’s.

The change has been expected since before Christmas, but that doesn’t make it any less significant. Gideon George Osborne spent the first years of this Parliament using it as a stick to beat Labour – that the UK’s credit rating was the best it could be, thanks to his policies, not theirs.

That was a lie, of course. Others who know more about such matters can better explain the reasons but they have more to do with the value of bonds and savings than anything he did to improve the economy.

Like all credit rating agencies, Moody’s is a group of people who meet every so often and decide on particular countries’ scores, based on nothing more concrete than their own personal opinions. They can’t predict the future; they can only react to the present. That’s why they’re dubbed “make-it-up-as-you-go” at the top of this article.

But you can work out what that means, at this moment in time: 0sborne can’t pay his debts.

That’s astonishing. This is the world’s sixth largest economy, according to the International Monetary Fund. We make staggering amounts of money every year, so the operative question now is: Why the blazes can’t he pay his debts?

The answer lies in another story that broke last week – HM Revenue and Customs’ list of tax dodgers.

This is the list compiled by HMRC in response to public outrage against the tax-dodging schemes of large corporations like Starbucks, Amazon, the water companies mentioned in this blog before Christmas, Vodafone, Arcadia group and so on.

Who do you think this list marks out as public enemy number one?

A hairdresser from Liverpool.

Apparently this person was scalped of £17,000 for deliberate default. Others include a knitwear firm, a wine firm and a pipe fitter.

Meanwhile the amount of cash seeded away in offshore tax havens by the UK’s super-rich is estimated at £21 trillion. That’s 21 TRILLION – more than enough to pay all of our debts and put us back into surplus.

0sborne continues to use the ‘Big 4’ accountancy firms – all of whom operate many tax avoidance schemes for clients – to write the law on tax avoidance; and he changed the law to allow large companies great opportunities to avoid paying tax in the UK.

0sborne himself, remember, was identified as having profited from tax avoidance himself, and in fact offered advice on tax avoidance in a TV interview, while David Cameron’s family made a fortune on tax avoidance schemes.

There is only one conclusion to be reached: The Chancellor is using the HMRC list to laugh at us. He’s mocking the poor, who have to pay tax no matter what. He’s not going to level the playing field because that would harm his own profits and those of his friends.

The Chancellor of the Exchequer is deliberately harming the UK economy.