Sunday, 18 September 2011

Wanna Cut Tax Evasion? Cut Taxes

By definition, the cost of tax evasion in terms of lost revenue to the Uk Treasury is a figure which can only be the subject of an estimated guess. What appears to be almost certain is that it runs into tens of billions of pounds, and as a result, dwarfs the relatively small-scale issue of benefit fraud, which has historically attracted a much more widespread level of stigma. Statist commentators of course have been making this point for some time, applying a sort of immoral equivalence to the two - coming at the question from a starting position of 'compulsory tax is theft', this bunny is still able to make a distinction between taking something to which one was never entitled and refusing to hand over that which they were forced to by the state.

In short, they are not issues of the same principle, and although the law of the land is what it is, I invariably find a tad more sympathy for those who bob and weave the taxman than will ever be the case for the phoney disabled and what have you. Moreover, if your activities lead you to wind up with that dreary shower of smugness Danny Alexander sermonising from the opposing corner, they would probably have to involve mass-murder for this bunny not to take your side.

The latest brainwave from Sandals and Muesli HQ is for a crack squad of 2,000 tax inspectors to seek out those who have failed to hand over a 'fair share' of their ill-gotten gains in the past, "The impetus on this was not strong enough from the previous government so we've taken a whole lot of additional measures. We'll be taking additional prosecutions against tax evasion where we identify that illegal activity; we'll be investigating when measures are set up that are designed to avoid tax and close loopholes if that is necessary." Some might playfully conjure up images of 'Elliott Ness times two thousand' in their heads. quite valid given their likelihood of success. A 'crackdown' on some of the most intelligent and creative (not to mention, most mobile) in our society will always be infinitely more difficult than catching some scrote pretending to be disabled - and the half-arsed job they've made of that hardly inspires much in the way of confidence.

The occasional Orange Booker aside, 'Liberal' Democrats have always possessed the Statist instinct that economic activity is primarily a means of raising revenue for the government. One of the many slimy characteristics of the New Labour years was the manner in which they egged on the recklessness of the financial sector, thinking first and foremost of the tax windfalls that came from it. Any suggestion that the generation of wealth and jobs are just inherently good things does not enter their vocabulary. On that note, how many jobs in the Uk are facilitated by individuals who manage to slip away from the taxman relatively unscathed, be it through creative accountancy, offshore holdings or whatever else? What are the economic side effects of these people upping sticks and moving elsewhere? And, like the 50p tax band, could this 'crackdown' simply end up being a piece of symbolic gesture politics that actually costs money?

This selective amnesia regarding how incentives drive human behaviour is thoroughly baffling. Statists place bucketloads of blind faith in the ability of green taxes in particular to bring the rest of us into line with the needs of their megalomania, while any suggestion that punitive taxation increases the scope and incentives for evasion or black economic activity simply does not compute. There is of course a very simple way to reduce tax evasion while creating an altogether fairer system - take the least well-off out of tax altogether (that rarest of things, a sound LibDem policy) with a single flat rate above the increased threshold. Naturally, we'd have to find savings to pay for all this in the short term, but laying off half of HMRC would be a start - it might also prove to be the most popular cut of all time. Take care and I'll catch you soon.


  1. Daz,

    Rather than waffling on about selective amnesia why don't you actually look at some data, you will find some interesting facts:

    1. The UK is actually a low tax country, much lower than most of our european neigbours. Total tax as a percetage of GDP is 37%, this compares to 39% Germany, 43% France, 43% Italy, 45% Belgium, 40% Holland, 48% Sweden 48% Denmark etc, etc.

    2. This may be counter-intuitive but as a general rule, the higher the tax take as a percentage of GDP, the higher the GDP per head, ergo the wealthier the popoulation.

    There are some exceptions to this rule:

    1. The Oil States, where services are paid for directly from oil revenues not through taxation.

    2. The Swiss. The Swiss economy is unique in alot of ways and I think counts as an exception.

    3. United States,Canada, Australia & New Zealand. I think these countries are the natural home of the libertarian.

  2. Databoy thanks for the laughs. Please come by again. Low tax economy..................still wiping my eyes!