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Tuesday, April 12, 2016

The real tax problem?

Suddenly we are being inundated with details of politicians' tax affairs. Such transparency is to be welcomed of course, even if it could be classed as slightly over-zealous, but there is a danger that the real issues will be lost amongst all this sharing.

The Times picks up on these concerns. They argue that whilst the publication of individual tax returns is probably unavoidable it is also a distraction.  They say that politicians should be judged on the decisions they make, not on how much money they have, what their parents did or where they went to school:

Although the prime minister, like the chancellor, is rich, that cannot be held against him any more than a modest background should be counted against a less privileged politician. The real problem is not his personal wealth but the fact that he has too often governed as if the Conservatives are still the party of the rich. It’s not that Mr Cameron and Mr Osborne are themselves “posh boys who don’t understand the price of milk”, as Tory backbencher Nadine Dorries once memorably put it, more that they have not done enough to prove they care about those who have to count the pennies before buying every pint.

Although there have been policies designed to demonstrate a “One Nation” compassion, such as the introduction of the living wage, the prime minister and the chancellor have never shown a single-minded determination to improve the life chances of those at the bottom of society. Changes introduced to “help the poor” have always been matched, and outweighed, by others intended to benefit the better off. The top rate of tax has been cut while welfare has been squeezed. Though wealthy pensioners have been protected, the disabled have not. It’s a question of balance. As Iain Duncan Smith wrote in his resignation letter, the combination of factors undermines the government’s claim that “we are all in it together”.

Yesterday Mr Cameron announced tougher rules on transparency and tax, yet the question will be whether he follows through with a public register of beneficial ownership in Britain’s overseas territories. In his book Coalition, David Laws, the former Lib Dem minister, reports that Cameron and Osborne repeatedly blocked Lib Dem proposals to tackle corporate fraud. During one negotiation Danny Alexander, the Lib Dem chief secretary to the Treasury, demanded: “How can you oppose this stuff?” Mr Cameron mumbled: “Not popular with business,” while Mr Osborne replied, with a smile: “Not popular with our supporters.” On another occasion the chancellor is said to have suggested a coalition compromise to his Lib Dem Treasury colleague: “You give up on bashing company directors and we’ll give up on bashing the workers”. According to Mr Laws: “The Tories always look after the rich: we forced them to think of the poor.”

More transparency is needed but it is needed most in tax havens so we can see who is squirrelling away money to avoid tax and are able to judge how Ministers react to it.

I do not want to judge government on the tax affairs of its Ministers but on how it deals with those members of the super-rich who are avoiding their moral responsibilities to the nation by not paying their fair share into the Treasury's coffers. Cameron needs to step up to the plate and take action against this group of people.
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