The ugly face of New Labour rears up again: Chris Leslie and Nita Clarke

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austerity, Blair, Blairite, Chris Leslie, Coalition, Conservative, crisis, Customs, cut, economic, economy, George Osborne, hm, hmrc, Huffington Post, Labour, Margaret Thatcher, National Health Service, neoliberal, New, NHS, Nita Clarke, pension, privatisation, Progress, recession, Revenue, right-wing, thinktank, welfare state

 

It seems the neoliberal Blairites of New Labour are coming out of the woodwork in an effort to ensure that nobody in their right mind supports the modern Labour Party next year.

According to the Huffington Post, shadow chief secretary to the Treasury Chris Leslie reckons that a future Labour government will not undo the Coalition’s hugely unpopular cuts but will continue to impose the austerity that has kept our economy in crisis for the last four years.

In that case, why bother voting for Labour? We’ve already got one lot of Conservatives in power; there’s no need for any more.

Just to recap what we all know already, austerity is no way out of a recession. Economies grow when an increased money supply travels through the system, making profits for businesses and creating the fiscal multiplier effect. This means more tax comes to the government and it is able to pay down its debts. Austerity cuts off that money supply, making it much more difficult for money to circulated, profit to be made and tax to be taken. Evidence shows that the only people who profit from it are those who were rich already.

Indeed, the current economic miracle (if you believe George Osborne) was engineered by government investment – rather than austerity – in a housing price bubble. It’s almost a return to Keynesian economics, but done in a cack-handed, amateurish way that will cause more problems in the long run.

Austerity is, therefore, a Conservative policy and one that should be abandoned if Labour ever comes to power. The fact that this Leslie person is promoting it shows his true-Blue colours. Perhaps someone should start a petition to have him ejected from the party.

Retaining austerity was described by the HuffPost as part of “Labour’s ‘radical’ policy plans”, but this is ridiculous. How can retaining a policy that is already causing uncounted harm be, in any way, radical? It’s just more of the same neoliberal Conservatism.

“George Osborne has had his five years to eradicate the deficit. I am determined that we finish that task on which he has failed,” said Leslie in the article. How does he propose to achieve that aim, if his methods are the same? The man just isn’t making sense.

Meanwhile, a former Blair aide named Nita Clarke has defended another pillar of neoliberalism – privatisation – by making the absurd claim that Labour should not criticise private firms when they fail to deliver public services.

Speaking at a conference by the right-wing thinktank Progress, she said: “We have to be really careful that we’re not always seen as attacking the private sector and celebrating their failures. How do you think that makes the staff who work there feel?”

How does Nita Clarke think British citizens feel about being let down on a regular basis by these profit-guzzling clowns, ever since Margaret Thatcher’s Conservatives first started letting them into places where they did not belong?

How does Nita Clarke think British citizens felt when neoliberal New Labour refused to push back the tide of privatisation?

How does Nita Clarke think British citizens should feel about the fact that privatisation is now threatening the welfare state, the National Health Service and even state pensions?

Only today, Vox Political reblogged an article warning that HM Revenue and Customs may be undergoing preparations for privatisation.

Like austerity, privatisation is a fundamental pillar of the current neoliberal agenda. It has no place in the Labour Party, if the Labour Party is serious about opposing the Conservatives at the next election.

There should be no place in Labour for Chris Leslie, Nita Clarke, or anybody who supports their views, either.

It’s a view that might be unpopular with the Blue suits that make up the current Labour leadership.

But it’s the only way Labour will ever come up with a really ‘radical’ – and workable – plan.

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Now the Tories want to sell your tax details to private firms

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advertiser, agencies, agency, autumn statement, BBC, benefit, Big Brother Watch, budget, Coalition, companies, company, complaint fatigue, confidential, Conservative, contract, credit rating, Customs, data, David Gauke, disabled, discrimination, Dun & Bradstreet, Emma Carr, Equifax, Experian, firm, government, hm, hmrc, identification, identify, medical record, Mike Sivier, mikesivier, multinational, NHS, out, outcry, politics, price, privacy, private, private sector, pseudonymise, public, retailer, Revenue, risk, sweetheard deal, tax, The Guardian, Tories, Tory, Treasury, Vox Political, work

[Image: The Guardian.]

Not happy with its attempt to sell your health details to private companies, the moneygrubbing Conservative-led Coalition wants to sell off your personal tax data to companies, researchers and public bodies.

The government is considering how much to charge for the information, and claims that all data accessed by third parties will be “confidential”.

But the public has already been stung once by the Coalition’s incompetent attempts to go commercial. The proposed initiative to share NHS medical records with the private sector had to be suspended after a public outcry over “pseudonymised” data – a process by which medical records were said to be anonymous but it was in fact possible to trace exactly whose they were.

The plans for HM Revenue and Customs to share its data are, apparently, being overseen by Treasury minister David Gauke, whose relaxed attitude towards private firms led him to sign off on the infamous “sweetheart deals” that allowed multinational companies to keep billions of pounds of tax that they owed to the Treasury but didn’t want to pay.

Worse still, it turns out the government has already allowed private firms access to our data.

The government has strict rules about what can be released outside HMRC, with a near total ban on data sharing unless it is beneficial for the organisation’s internal work. But according to The Guardian, despite the restrictions, HMRC has quietly launched a pilot programme that has released data about VAT registration for research purposes to three private credit ratings agencies: Experian, Equifax and Dun & Bradstreet.

To comply with the law, the private ratings agencies, which determine credit scores for millions of people and businesses, have been contracted to act on behalf of HMRC and are “therefore treated as part of the department” – giving them access to tax data about businesses that would otherwise be confidential.

The government’s plans to change the law to allow the sale of anonymised individual tax data and release of the VAT register were buried in documents as part of the autumn statement and recent budget.

An HMRC spokesman told the BBC: “HMRC would only share data where this would generate clear public benefits, and where there are robust safeguards in place.

“Last year’s consultation made it very clear that there would be a rigorous accreditation process for anyone wanting access to the data and that any access would take place in a secure environment.

“Those accessing data would be subject to the same confidentiality provisions as HMRC staff, including a criminal sanction for unlawful disclosure of taxpayer information.”

So there. Do you feel better now?

Emma Carr, deputy director of civil rights campaign group, Big Brother Watch, doesn’t. She said: “The ongoing claims about anonymous data overlook the serious risks to privacy of individual level data being vulnerable to re-identification.

“Given the huge uproar about similar plans for medical records, you would have hoped HMRC would have learned that trying to sneak plans like this under the radar is not the way to build trust or develop good policy.”

Ross Anderson, a professor of security engineering at Cambridge University, told The Guardian the information could be highly useful to credit rating agencies, advertisers, and retailers wanting to practise price discrimination.

“This is going to be a big battleground,” he said. “If they were to make HMRC information more available, there’s an awful lot of people who would like to get their hands on it. Anonymisation is something about which they lied to us over medical data … If the same thing is about to be done by HMRC, there should be a much greater public debate about this.”

It seems the Conservatives in the Coalition are determined to sell information that doesn’t belong to them, and intend to grind us down with a relentless bombardment of initiatives and plans until they succeed.

They seem to by relying on the possibility that we will get ‘complaint fatigue’ and give up any protests. This is how they have beaten disabled people into submission to the draconian system for withdrawing state benefits from them; the system for appealing is drawn-out and convoluted, and many people with illnesses are too tired or weak to go through the process.

Also, this is another way of contracting-out government work to private firms, as evidenced by the VAT “research” that has been handed over to credit ratings agencies.

You can be sure of two things: Your data is not safe in their hands, and they won’t stop trying to sell it until they have been pushed out of government.

What are you going to do?

UPDATE: Campaigner Patrick Olszowski has responded to my challenge by launching a petition on the Change.org website. Please visit and sign!

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‘Unpaid taxes’ retrieval power – good or bad?

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budget, Coalition, Conservative, Customs, George Osborne, government, hm, hmrc, Huffington Post, Mike Sivier, mikesivier, Parliament, people, politics, retrieval, retrieve, Revenue, tax, Tories, Tory, unpaid, Vox Political

Don’t you hate it when people avoid telling you things you ought to know?

George Osborne’s budget speech never mentioned the new power granted to HM Revenue and Customs, allowing it “to delve into Britons’ bank accounts for money that officials think is owed in unpaid taxes, in a move which critics have warned leave officials ‘a law unto themselves’,” according to the Huffington Post.

The trouble is, I’m not sure whether this is really a bad thing, or a useful tool in the battle against corporate and mega-rich tax avoiders/evaders.

Here’s what the HuffPost had to say:

“The Chancellor slipped details of the move out in the Budget’s Red Book, which stated that HMRC will be able to take money from people who owe officials over £1,000 in tax.

“Officials will only be able to use the power for Britons who have been asked ‘multiple times’ by debt collection officials to pay, and must leave at least £5,000 in the account.

“‘This brings the UK in line with many other tax authorities which already have the power to recover debts directly from an individual’s account, such as France and the US,’ the Budget reads.

“Once HMRC takes the money, the taxpayer will have 14 days to get in touch and set up a payment plan, otherwise officials will keep what they have taken.

“Osborne’s Budget also gave HMRC the power to take money from those they suspect of unfairly avoiding tax, with money only handed back – with interest – if the taxpayer wins a legal challenge in the courts.”

What do you think?

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Why is the DWP being so coy about the Work Programme?

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benefit, benefits, Customs, Department, DWP, employment, government, hm, hmrc, Mike Sivier, mikesivier, Pensions, people, politics, Revenue, self-employment, social security, tax credit, unemployment, Vox Political, welfare, work, Work Programme

It’s amazing how the Department for Work and Pensions will bend over backwards to make it seem one of its madcap schemes has been successful.

It’s also amazing how little evidence DWP press officers will provide to support the claim.

Today we’re being told that more than a quarter of a million people have escaped unemployment via the Work Programme. The fiddle? This is an aggregate figure, including all placements – not people – since the scheme was launched in June 2011.

To register as someone who has achieved a lasting job through the programme, one must stay in work for six months or more (three months in “hardest to help” cases). Participants cannot be re-referred within a period of 104 weeks (the support period), but this means people referred within the first nine months, who subsequently became unemployed, may have returned to the Work Programme.

Never mind. How many people – who are currently in work as a result of time on this scheme – have, in fact, been employed for six months or more (three months for the “hardest to help”), as this is the only relevant period of time that can be applied?

No comment.

The press release has nothing to say about this.

It seems 44,000 people were “helped” into work during the last three months, but that’s neither here nor there. The DWP does not measure its success that way, and neither should we.

But the figure by which we should be judging this work is conspicuous by its absence.

In a similar vein, we learned yesterday (March 19) that unemployment fell by 63,000 in the last three months. But the number of employees also fell by 60,000, while registered self-employment has risen by 211,000 in the same period.

Remember the scam in which DWP employees at job centres dupe people into pretending they are self-employed when they really aren’t, in order to claim tax credits rather than unemployment benefits?

If you are one of these ‘self-employed’ people, were you told that HM Revenue and Customs might investigate your circumstances and demand repayment of all tax credits paid to you, if investigators decide that you’re not doing the work?

No?

I’d have a little think about what might happen, if I were you.

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Delays won’t stop Universal Credit’s ‘cultural change’ – to dishonesty, lies and threats

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Atos, benefit, benefits, budgeting loan, child, Coalition, Conservative, council, cultural, Culture, Customs, death, decision maker, Department for Work and Pensions, destitution, disability, disabled, dishonesty, DWP, Employment and Support Allowance, ESA, government, Group, harass, hardship, health, health problem, hm, hmrc, housing benefit, Howard Shiplee, Iain Duncan Smith, Incapacity Benefit, Income Support, Job Centre, Jobseeker's Allowance, Liberal, Liberal Democrat, lie, maladminister, Mike Sivier, mikesivier, mishandle, people, politics, Revenue, sick, social security, support, tax credit, threat, Tories, Tory, tribunal, unemployment, Universal Credit, Vox Political, WCA, welfare, work, work capability assessment, work programme provider, work-related activity, working

Sinking Shiplee: Howard Shiplee is the man who has been hired to spread the DWP culture of dishonesty and maladministration across all the major British social security benefits.

You know a Tory policy is in serious trouble when the Daily Telegraph starts publishing articles criticising it.

Today, Universal Credit is on the Telegraph‘s naughty step – not for the first time! – with current ‘director general’ Howard Shiplee (my word, they love making up impressive names for themselves, don’t they?) admitting it has been “plagued by problems”, as the newspaper’s headline puts it.

These include:

• Technical problems in the merging of benefit office, HMRC and council IT systems
• Bureaucratic problems
• Scheduling problems as the scheme’s timetable has slipped further and further back
• Personnel problems, with Work and Pensions Secretary Iain Failure Smith claiming official let him down, forcing him to employ private sector experts to get the scheme back on track (but it still isn’t)
• Poor project management, including poor management of suppliers
• Lack of transparency, with too much attention focused on what was working and not enough on what wasn’t

The plan was to roll out Universal Credit for all new claimants from October onwards, but this has been scaled back to just six Job Centres. It began in a single Job Centre in April, where calculations have been worked out on paper.

Ministers say the final deadline, to introduce the system for all claimants by 2017, will be met – but it seems increasingly likely that – if Labour wins the 2015 election – the whole plan will be consigned to the political scrapyard where, in this writer’s opinion, it belongs.

But Mr Shiplee said he was working on introducing the “cultural” elements of the proposed scheme while awaiting the development of a new IT system, and you need to know what that means.

It means spreading the culture of dishonesty, that has been bred and nurtured in the DWP’s handling of ESA, to the five other benefits that are to be merged into UC.

They are: Income Support, income-based Jobseekers Allowance, tax credits (child and working), housing benefit and budgeting loans.

“This is about changing the way we do business – and changing people’s behaviour by ensuring there is always an incentive to be in work,” said Shiplee. Meaning: We will lie when assessing your claims; we will intentionally mishandle your claim to make it appear that you do not deserve benefit and we will maladminister any appeals; if you do receive benefit, we will harass you to take part in our silly made-up programmes when you could be doing better things; if we find a way to cut you off, or you give up in despair, we will claim that as a positive benefit outcome; and if you suffer hardship, destitution or health problems up to and including death as a result, we will not record them because we can claim it is nothing to do with us.

That is my experience of the DWP, based on Mrs Mike’s experience with ESA.

You’ll be aware that she currently has an appeal against being put into the work-related activity group, based on medical evidence and the expert opinion of a work programme provider. The current word from the DWP is that she must undergo another work capability assessment.

The reason given is that she has claimed her health has deteriorated since her original assessment in 2012 but this is nonsense.

Her appeal was made against the original decision – based on that 2012 assessment. Another WCA won’t have any bearing on that.

Instead, the matter should have gone to a tribunal, as the DWP’s own decision maker failed to make a decision when the case was considered, in April.

That hearing could have taken place by now; instead the DWP has sat on its thumbs and done nothing, waiting for the time-limited claim to come to an end in order to claim – yes – a ‘positive benefit outcome’.

There was no communication with the claimant and therefore there was no way for Mrs Mike to know what was happening until she discovered her benefit had been stopped, a couple of weeks ago.

Now imagine that situation magnified to include not only every ESA claimant, but the many millions of UK citizens who claim all the other main benefits. What do you think will happen when this “cultural” change is applied to them?

Chaos.

Do you claim any benefits? Do you know somebody who does?

If so, you’d better do something about it, before it’s too late.

Let’s make abuse of power a crime and Lord Freud the first to be prosecuted

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abuse, authorities, authority, avoidance, bedroom, benefit, bully, classify, Coalition, Conservative, council, Customs, Department for Work and Pensions, designated, DWP, government, haven, hm, hmrc, housing, inconsistency, inspector, local, Lord Freud, Mike Sivier, mikesivier, non, office, offshore, people, politics, power, re, rent, Revenue, rich, robbery, social security, subsidy, tax, Tories, Tory, Treasury, UK, Vox Political, welfare

Face of evil: Because of creatures like Lord Freud, Parliament should legislate against a new crime – abuse of power. (Picture by Black Triangle)

Lord David Fraud – sorry, Freud. That was a Freudian slip – the man who said “People who are poorer should be prepared to take the biggest risks; they’ve got least to lose”, has been at it again.

According to Inside Housing this man, whose principles allowed him to take Labour’s money and provide that government with his duff advice before running off to join the Tories as soon as it looked as though they would be in office after the 2010 election, wants to bully councils out of an entirely legal way to help their tenants avoid paying the punitive and unfair bedroom tax.

The tax, as we all should know by now, affects people living in social rented accommodation with more bedrooms – as defined by the rent agreement (if I recall correctly) – than the government last year arbitarily decided they need. The options are to give up 14 per cent of your housing benefit if you have one ‘extra’ bedroom, 25 per cent if you’ve got two – or move to smaller accommodation which does not, in the vast majority of cases, exist.

Out of 600,000 affected families, 582,000 have nowhere else to go. So this is a thinly-veiled robbery, from people who can do nothing to prevent it.

It is a tax that has offended many councillors in local authorities across the UK, and some came up with the novel idea that rooms within the properties they own may be reclassified as offices or ‘non-designated’ rooms, thereby avoiding the need to pay the tax. After all, a room is just an enclosed space within a building, right? If it doesn’t have a bed in it, why should it be classified as a bedroom?

Lord Fraud – sorry! Freud – doesn’t see it that way. He wants that cash and couldn’t care less that people in social housing need it to keep a roof over their heads. He has been spending the last month or so (since the councils started re-classifying) trying to put a stop to it and now, it seems, he thinks he has found a way.

In a letter to council chief executives yesterday (Thursday), he has said redesignating properties without reducing their rent to reflect the loss of a bedroom creates an inconsistency for housing benefit and rent purposes.

“Blanket redesignations without a clear and justifiable reason and without reductions in rent, are inappropriate and do not fall within the spirit of the policy,” his letter states [italics mine].

“If it is shown properties are being redesignated inappropriately this will be viewed very seriously.” Meaning: The DWP will commission an independent audit to “ascertain whether correct and appropriate procedures have been followed”. Redesignation without reducing rent would lead to incorrect housing benefit subsidy claims being submitted to the DWP, he stated, adding, “Where it is found that a local authority has redesignated properties without reasonable grounds and without reducing rents, my department would consider either restricting or not paying their housing benefit subsidy.”

The flaw, of course, is this: The size of these properties will have remained the same, therefore so should the rent. But a room without a bed in it is not a bedroom.

Let’s move on to another tax avoidance issue. Since we’re discussing actions that are “inappropriate and do not fall within the spirit of the policy“, what about tax avoidance schemes that are used by very rich individuals, in order to avoid paying the full amount they owe to the UK Treasury?

This has been going on for more years than any of us can remember and the total currently parked offshore, where the tax inspector can’t get at it, is estimated at £21 trillion (it might actually be dollars, but either way it’s a heckuva lot of money).

If the turncoat Lord Freud’s new Conservative friends had been quick off the mark in dealing with this aspect of tax avoidance, he might have been justified in his own hasty behaviour, but they haven’t. Even now, there is no guarantee that the Treasury will get anything back from the tax havens, despite all its posturing and sabre-rattling. There’s just no interest. And by the time anyone gets around to actually taking action, the offenders will have had plenty of opportunity to move their capital elsewhere.

But the actions of the individual taxpayers who have chosen to put their money out of HMRC’s reach is no closer to the spirit of UK tax policy than the actions of the councils who have chosen to protect their tenants.

The difference is that one set of individuals is acting in selfish self-interest, while the other is taking action to help others.

Freud, by his own actions, has shown us all exactly where his loyalties lie. He’s not against tax avoidance, as long as it’s his kind of people doing it. And he loves to bully the little people. He really gets a kick out of threatening them, and he’s not above bending – or changing – the law to do it.

That’s why I say any new government coming into office after 2015 needs to enact a law that criminalises abuse of power – being any legislation or act by a government member that unfairly punishes any named individual or group within British society.

So for example here, it could be applied because Freud wants to penalise hundreds of thousands of people with a tax they can’t pay, when there is no alternative because they have nowhere else to go (except to be thrown out onto the streets, and then the question to be asked is, who takes over the properties after they have gone?) – and is now threatening to punish any attempt legally to avoid paying that unfair tax with another unfair punishment, because others who also legally avoid paying a – fair – tax are being allowed to do so.

As a criminal offence it should involve the sternest penalties possible – stripping the guilty of any titles and privileges, and all property, alongside a lengthy prison sentence involving the hardest labour to which prisoners may be put. Anyone who is willing to deprive the defenceless of everything they own should be made to lose everything as well.

So Lord Freud, for example, would have to kiss goodbye to his luxury mansion in Kent, and everything in it. When he finally came out of clink, he’d be living in council accommodation – and if nowhere could be found that didn’t have more bedrooms than he needed, he’d have to pay his own bedroom tax which would be poetic justice.

I know. It will never happen. Politicians look after their own.

But it should – and you know it.

Let’s cut the link between politicians and tax avoidance firms

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38 degrees, capital controls, Coalition, Conservative, Customs, David Cameron, Deloitte, Ernst & Young, Exchequer, George Osborne, Gideon, government, hm, hmrc, KPMG, Margaret Thatcher, Mike Sivier, mikesivier, Parliament, politics, PricewaterhouseCoopers PwC, public accounts committee, Revenue, tax avoidance, Tories, Tory, Treasury, Vox Political

Laughing all the way to the bank: Thanks to these two grinning goons, UK tax law is now totally bent – in their favour.

Why are the ‘Big 4’ accountancy firms – the companies at the heart of every major scheme for tax avoidance – being allowed to make the law on – guess what – tax avoidance?

Could it be because our comedy Prime Minister, David Cameron, and his part-time Chancellor, Gideon George Osborne, are both either tax avoiders themselves, or have strong connections with tax avoidance? I think it could.

Cameron’s family made their fortune by establishing a tax dodging empire after Margaret Thatcher abolished capital controls in 1979.

And there was a major campaign by 38 Degrees to get Gideon to pay his taxes after Channel 4 revealed he was paying accountants to help him dodge £1.6 million in tax payments every year.

The firms implicated – PricewaterhouseCoopers PwC, Ernst & Young, KPMG and Deloitte – received a damning verdict from Parliament’s Public Accounts Committee today. An internal HMRC study estimated that these four firms “were behind almost half of all known avoidance schemes”. But that doesn’t mean their government contracts will be terminated.

Look at Robert Edwards, senior manager in international corporate tax from KPMG, who was seconded to the Treasury for 20 months to help develop policy on Controlled Foreign Companies (CFC). His speciality was advising multinationals on tax-efficient cross-border financing and restructuring.

What is the UK’s new policy on CFCs? If a British company has subsidiaries overseas, and it transfers ownership of its brands to a tax haven country like Switzerland, its profits on those brands will no longer be subject to UK tax – meaning the new system encourages firms to switch their money into tax havens. Previously, their profits would have been taxed on the difference between what they pay in the tax haven and the UK rate – a disincentive to moving the money as the amount paid in tax would be much the same.

Only UK-generated income will be taxed in the UK, while the costs of funding overseas operations remain allowable against UK profits for UK tax – in other words, the costs of overseas operations will be subtracted from company profits by HM Revenue and Customs, when it considers how much tax to charge.

This is Osborne’s economics in action – big bonuses for big businesses, and all tax-free. Alongside the huge cuts in Corporation Tax (down by a quarter since the Coalition came into office) the loss to the Treasury is expected to be around £20 billion over the lifetime of this parliament, according to its own estimates.

There is no benefit to small- and medium-sized British companies.

Look at the predatory schemes set up by these companies. The Guardian has reported that in November 2012, a tax tribunal threw out an Ernst & Young inspired scheme that enabled Iliffe News and Media to create a new asset – newspaper mastheads. This asset was created for a nominal sum of £1. It was leased back to its subsidiaries who paid the parent company over £51 million in royalties and thus reported lower profits.

PricewaterhouseCoopers devised a scheme to avoid capital gains tax on profits involving a series of circular and self-cancelling transactions resulting in the creation of assets and disposals which somehow managed to cancel out the profit. This scheme was sold to 200 entrepreneurs and, if successful, would have enabled them to avoid capital gains tax on profits of around £1 billion.

KPMG cold-called an amusement arcade company with a scheme to avoid paying VAT on its operations, using Channel Islands entities.

And Deloitte devised a scheme to enable bankers – bankers! – to avoid income tax and national insurance contributions on £91 million of bonuses.

These are just schemes that have become public knowledge. Many more are sure to exist. The predatory practices of major accountancy firms include creating sham transactions, phoney losses and phantom assets to enable their clients to dodge taxes.

But no accountancy firm has ever been disciplined, the UK Treasury has never sought to recover legal costs from the promoters of the schemes and, instead, the big accountancy firms continue to receive taxpayer-funded contracts.

Bankers, accountants, politicians – right up to the Prime Minister. If the proposal in my e-petition – to prevent MPs speaking or voting on legislation likely to make money for them – became law, either Osborne would not be Chancellor of the Exchequer or UK tax receipts would be much healthier than they are today.

Feel free to think about that while you’re signing the petition.

A few simple ideas to save the UK economy (Part One)

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avoidance, business, Coalition, council, Customs, economy, empty property, evasion, haven, hm, hmrc, income, limited liability partnership, Mike Sivier, mikesivier, national insurance, Revenue, road, small, tax, Treasury, unemployment, Vox Political, Workfare

Tax: Nobody likes paying it but progressive tax reform could be one of the fastest ways to rebalance the UK budget.

It seems I have been challenged. Commenting on my post ‘Iain Duncan Smith – what went wrong?’, a correspondent calling himself ‘Brian’ suggested I should use “a little grey matter and suggest where to cut instead”.

This is a question that has exercised my intelligence for much of the last two years, ever since it dawned on me that the current Conservative/Liberal Democrat coalition was not going to do anything at all to help the UK economy in real terms.

In fact we have seen them try to make it worse – look at Gideon George Osborne’s changes to tax laws, that make it easier for multinationals to put their profits into tax havens rather than pay the UK Treasury what it deserves; look at the way Workfare keeps unemployment artificially high; look at the proposals for a two-tier road tax system that will disproportionately affect small businesses.

In fairness, I haven’t updated my ideas over the 12 months since I have been writing the blog. What follows must stand as a document of what could have been done. I put together more than 20 ideas at the time. Some of them may be impractical now, due to the many and various incompetences of the current government. I will try to include the best.

This is looking like the first part of a series, as there is an amazing number of possibilities available. I’ll try to concentrate on just one issue at a time.

Here goes:

1. TAX

“What we need now is a deficit cutting policy aimed at increasing government income.

“There are three ways to achieve this. The first is for the government to stimulate a moribund economy by encouraging investment. This is the Keynesian solution that is proven to work. The second is to raise selective new taxes on those best able to pay them. This is possible. The third option is to tackle the tax gap.

“The tax gap has three parts. The first is tax avoidance. I estimate this to be about £25 billion a year. This arises from the exploitation of loopholes in UK tax law and between UK tax law and that of other states – especially tax havens. The second part is tax evasion – that is breaking the law. I estimate this to be £70 billion a year. H M Revenue & Customs claim it is much less, but their methodology for estimating anything but VAT evasion is very weak. Lastly, there is unpaid and late paid tax – currently according to H M Revenue & Customs at least £26 billion.

“Put these figures together and they come to more than £120 billion, or enough, at least in principle, to close the whole current government deficit.” – Richard Murphy, Director of Tax Research UK.

If we compare the estimate of the tax gap with the DWP estimate of benefit fraud, we can see that benefit fraud is less than 1 per cent of the total lost in the tax gap; tax is therefore far more important than welfare in the struggle to balance the UK budget book.

So the first measure must be to minimise personal and corporate tax avoidance by requiring tax havens to disclose information fully and changing the definition of ‘tax residence’; these two reforms are estimated minimally to yield £10 billion.

Introduce a 50 per cent Income Tax band for gross incomes above £100,000. This reform introduces a new 50 per cent band of Income Tax for taxable incomes above £94,000 per year (approximately £100,000 a year gross income). This would raise £4.7 billion compared with the 2009/10 tax system, or an extra £2.3 billion compared with introducing this band at £150,000 as proposed by the previous chancellor. (The Coalition has lowered the previously-existing 50 per cent band to 45 per cent, giving a £40,000 tax break to the richest in society when the UK economy needs the money far more than they do).

Introduce minimum tax rates. This reform introduces a lower limit to effective rates of Income Tax above certain levels of gross income. As gross income approaches each threshold, the personal allowance and other reliefs (for example, tax relief on pension contributions) are ‘clawed back’ at a high marginal rate until the average tax rate – as well as the marginal tax rate – on income above each threshold is equal to tax rates of 40 per cent and 50 per cent on incomes of above £100,000 and £150,000 respectively. Such a reform raises an additional £14.9 billion.

Introduce a special lower tax band of 10 per cent below the poverty line (below £13,500 per annum), while restoring the ‘basic rate’ to 22 per cent – in order not to hit the poorest hardest. This costs £11.5 billion, far less than the extra tax take outlined above.

Uncap National Insurance Contributions (NICs) so they are paid at 11 per cent all the way up the income scale (continuing to exempt pensioners). In 2009/10, employee NICs were payable at 11 per cent from £100 a week up to £884 per week – and at just 1 per cent above this level. Self-employed NICs have an equivalent structure based on annual profits, paid at 8 per cent up to profits of £43,875 and then at 1 per cent above this. Also, unearned income (for example, income from investments and savings) is not subject to NICs. This reform removes the upper threshold so that employee NICs are payable at 11 per cent on all earnings above £884 per week for employees and at 8 per cent on all profits above £5,715 per year for the self-employed. Additionally, all investment income above £110 per week (or the annualised equivalent) is made liable to NICs at 11 per cent. This results in further revenue of £9.1 billion; thus uncapping NICs would rake in a great deal of money. It would also turn NICs into a flat tax, making it ‘merely regressive’ rather than ‘über regressive’.

Increase the tax payable (higher multipliers) for houses in Council Tax bands E to H. This would raise a further £4.2 billion.

£5bn could be raised every year with an Empty Property Tax on vacant dwellings which exacerbate housing shortages and harm neighbourhoods.

Urge that all current small limited companies be re-registered as limited liability partnerships to simplify their administration and reduce opportunities for tax avoidance.

These measures alone are likely to bring at least £34 billion into the UK Treasury every year.