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Friday, 4 January 2013

Danny Alexander's New Year's Resolutions

I picked up a copy of the London magazine Prospect. They asked some people for their New Year's resolutions. Danny Alexander, MP and George Osborne's Liberal Democrat shadow at the UK Treasury, came up with this:
Fair tax will be the top of my agenda for the next 12 months - cracking down on avoidance, and continuing to help hard working families with their tax bills through 2013 and beyond
Well, it's not Shakespeare but it does show that the air in London switches off your brain.

For the past fifty years - no doubt longer - when the UK Treasury has drawn up the government of the day's  annual Budget, it has always made sure that whether taxes go Up or taxes go Down, there are some Loopholes supplied so that high net worth individuals (previously known as The Rich) can pay less than the headline rates suggest. Thanks to this long-term help from the UK Treasury, around twenty offshore jurisdictions with the Queen on their postage stamps have thrived on the money legitimately shifted to them to avoid UK taxes. In the Channel Islands, it's been such a nice big earner that local residents don't have to pay VAT. You could look at that as the UKs subsidy to the Islands.

I'm not sure how you can "crack down on avoidance" when it is a legal art form created by HM Treasury  and crafted to perfection by a whole industry of tax specialists.

Of course, you could set yourself the New Year's task of "cracking down on the loophole-creators at HM Treasury" or "stopping George from doing quite so many favours for his chums".

But you can't crack down on avoidance. On evasion, yes, you can do that. But we've always known that evasion is different; it's the kind of thing plumbers and taxi drivers do in default of having been given any  loopholes through which to slip their cash. Avoidance is for the rich, evasion for the poor.

Quite how Mr Alexander is going to "help hard working families with their tax bills" I really don't know. Is he going to stand on the corner of Parliament Square, cap in hand, telling anyone who cares to listen that a chap from Starbucks came by the other day and dropped in £10 million and perhaps you would like to follow suit?

Actually, for Mr Alexander, hardworkingfamilies is really one word, as it is for all members of our political class. He'd prefer you didn't think too hard about it and about why, for example, he isn't going to help you if you are merely hardworking and not soldered to a spouse, 2.4 children and 1.4 dogs. The answer might have less to do with "Fair tax" and more to do with "electoral politics".

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