Cheats

One of the things I hear most when interviewing people about their ‘lot’ is an anger at cheats. Benefits fraud and illegal immigrants are blamed for making people poorer, but in a really unspecified way. I guess the main way they are blamed, is that they are taking resources (benefits, jobs) that could be spent on them.

However, one thing that rarely gets mentioned is cheating at the top. I guess it’s partly because expect it – politicians take free holidays and accept gifts, businesmen avoid taxes – that’s the way the world works. But lots of other cheating of this kind is also not mentioned. Not paying VAT to the builder, using a cleaner without paying tax or NI, and buying European fags and booze are all ‘normal’ ways of cheating. The difference is that people are usually witholding tax as opposed to claiming more, and this is psychologically different. One is not stealing, but just keeping back some of one’s hard-earned money. And the feeling is that ‘everyone is at it, so why not me’.

The amazing thing is that this costs us far more than benefits fraud. Adam Taylor in the Guardian found figures that tax evasion costs the government somewhere between £97 and £150 billion! (http://society.guardian.co.uk/publicfinances/comment/0,,1986352,00.html). Now this is money that is illegally not paid, and could be spent on benefits, the NHS and so on, without law-abiding people having to pay more tax.

Furthermore, this is just the tax that isn’t being paid illegally. I don’t even know where to start to find out how much isn’t paid in tax by using legal tax avoidance schemes. In a previous job my boss ran a £6million a year retail chain and paid no VAT on any of his sales by making sure the company made no profit (while a related company based in Jersey made lots of profit). He was small fry too. People like Easyjet’s Stelios and Phillip Green avoid 100s of millions of pounds in tax, and the corporate sector is even bigger (see http://www.taxresearch.org.uk for some examples). My guess would be £100bn per annum and upwards.

Sadly most people see these crimes (and non-crimes) as victimless. But imagine how many hospitals could be built with this money.  There’s no leadership on this issue: even a paper like the Guardian advises people to avoid tax. The people see those in charge or with influence avoiding inheritance tax, basing themselves overseas, or setting up companies to handle image rights and don’t think tax laws should be tightened up. Instead, they wonder how they can do it themselves.

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1 Comment

Filed under News, Politicians

One response to “Cheats

  1. I need to add to this. The day after writing it I found out that two of my new colleagues (Susanne Karstedt and Stephen Farrell) have looked at the everyday crime that all sections of society engage in
    (http://www.hero.ac.uk/uk/business/archives/2006/criminal_classes_Dec.cfm).
    They find that people justify it by their own victimisation by market forces. I would argue it’s not just market forces, but the system and especially the government. People buy illegal fags because they think the government is ripping them off.

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