Sunday 28 August 2011

Letter to George Osborne

This is a transcript of a reply I made to George Osborne beneath a self-congratulatory piece on tax dodging he'd contributed to the Comment is Free section of the Guardian website (I also sent this letter to his parliamentary email address).

Dear Mr Osborne,

I enjoyed reading your article about tax dodging on the Comment is Free website and really hope that you stuck around to read the below the line comments it is sure to provoke, even though I'm certain that many of the responses will be far less civil and carefully worded than my own effort.
"Tax evasion is morally repugnant. It's stealing from law-abiding people who face higher taxes to make good the lost revenue. Those who evade taxes, like benefit cheats, are leeches on society.”
I'd like to applaud your strongly worded opening statements in this piece and hope that these are words of sincerity rather than some hollow rhetoric designed to appease an angry population without actually investing a great deal of effort in clamping down on these disgustingly selfish individuals you personally refer to as “leeches”.

That several high profile Tory donors and some of the institutions of the press that overtly supported the Conservatives during the 2010 election campaign and then avoided criticism of the coalition government agreement and the lack of “true mandate” that would entail, have been shown up as prolific users of tax efficiency/evasion/avoidance/dodging scams makes me fear that this conflict of interests makes the latter seem a more plausible representation of your true stance.

The fact that you are a politician also makes suspect a degree of insincerity given the egregious abuses of the Parliamentary expenses system only a few years ago. I'm not going to dig out your record on expenses as I'm attempting to write this reply in a civil and non-partisan manner. I don't want to make my response to your statements appear as some kind of biased personal attack and I don't want to get bogged down in an angry commentary about the 2nd home flipping scam. However I'm sure that you will agree with me when I say that that the whole of politics was tainted when it was revealed that many of your Parliamentary colleagues had engaged in the same kind of dishonest pilfering of public funds that you describe as “leeching” when done by tax cheats and benefits fraudsters.

The fact is that many of your colleagues in Parliament were allowed to get away with their dishonesty by merely paying back all (or even in some cases only part) of the pilfered state funds. Because of this you must learn to forgive the presumption of political insincerity held by the public. The public can clearly see that many MPs are still in their jobs having committed expenses fraud that would have been grounds for summary dismissal for most of us that rely on “real world jobs” for our incomes.

The perceived greedy attitude of the establishment elite and the huge disparity in the ways different kinds of theft from the state are treated are some of the principle sources of public anger. Politicians that have stolen from the public get to keep their jobs and handsome pension schemes. Under your Swiss tax deal, leeching tax dodgers that have stolen money from ordinary working people get to keep their anonymity (and in many cases a hefty proportion of their pilfered fortunes). David Hartnett is allowed to sign off on multi-billion pound tax agreements that have been personally negotiated after he was expensively wined and dined by the same companies facing these huge tax bills. On the other hand Benefits fraudsters that get caught are rightly hauled before the judicial system, given long prison sentences and often find themselves named and shamed in the press.

Having witnessed the “fast tracking to justice” of suspected rioters, looters and arsonists over the last few weeks, I would like to see some concerted effort to use the same “presumption of guilt” strategy that has been used to deny bail to rioting nihilists, used to keep suspected tax dodgers in custody, to act as a very strong deterrent for other potential tax evaders and as an incentive for others to rapidly clean up their tax affairs before the police come calling.

After all, using a premeditated accountancy scam to siphon £millions out of UK jurisdiction in order to avoid paying tax, although a much less visible "crime" it is a far more economically damaging activity than the participation in a spontaneous riot, the smashing of windows, or a single act of looting low-mid value beverages or consumer goods.

Instead of reading that suspected tax evaders get to keep their anonymity and have a right to a secretive appeals process, I'd like to have read that they are to be denied bail and locked up with the longest possible sentences if they are found guilty, as a strong deterrent. You make an admission that “It's up to me as chancellor to close the loopholes down” but it is also your responsibility to liaise with your colleagues to form a robust new tax evasion law to act as the strongest possible deterrent and an indicator to a rightly angered public that the age of wanton profiteering at the expense of the state is coming to an end.

You close your piece with the statement that under the “coalition government the hiding places for tax cheats are systematically being shut down [and] we will make sure that everyone pays their fair share”. If you honestly mean to pursue a zero tolerance attitude to tax dodging you need to come up with some more seriously robust legislation.

One area that I firmly believe needs addressing immediately is corporate tax evasion and my policy suggestion would be to begin with the fairly simple process of eliminating tax avoiding companies from bidding for or receiving government funds (in the form of subsidies, government procurements, reconstruction and redevelopment projects, health contracts, care home fees, PFI contracts, interventions (bailouts) or other forms of state payment). If a company is not prepared to establish an authentic British subsidiary that pays a fair amount of tax on the profits generated in the UK and instead uses tactics like tax haven based shell companies or other tax evasion vehicles to avoid paying UK tax on their profits or to aid their employees in tax evasion, they should have no rights to access the potentially lucrative benefits of the British tax system (receipt of taxpayers' money via the state). 

A specific case I'm thinking of is the insane Mapley Steps deal, where hundreds of HM Revenue and Customs buildings were sold off to a company that is ultimately based in the British Cayman Islands for tax purposes, with the astonishing consequences that the operators of the UK tax office estate pay no UK tax on their profits and the UK government is unable to reclaim the VAT on the rent of what used to be government owned buildings.

Perhaps you could take action against the many pre existing tax rip-offs like the Mapley Steps scandal. Many of the UKs other £160-240bn hidden PFI debt legacies (introduced by your party and then massively and recklessly overused by Gordon Brown & New Labour) are riddled with creative accountancy and tax diddling schemes. It is time to give them an ultimatum to either get their houses in order or agree to rescind their contracts.

Perhaps another potentially useful strategy would be to give some of the estimated 40,000 police facing redundancy in the name of "austerity" the opportunity to retrain in criminal accountancy forensics, with the aim of adding numerous carefully trained and diligent staff to an integrated “Tax Evasion, Fraud and Corruption Inspectorate (anti-spiv squad) to orchestrate criminal proceedings against the morally bankrupt profiteers that have been exploiting a permissive system, and in doing so have been giving the general concept of capitalism a very bad name. An efficient anti-profiteering team should be easily capable of self financing through the collection of unpaid taxes and the levying of hefty fines.

As you rightly claim in the article, much of this legacy of wanton profiteering at the expense of the state was permitted and even supported by the economically neoliberal New Labour party, but this comparatively lax attitude to white collar profiteering existed long before Tony Blair came to power.

As the traditional party of the super rich economic elite and the party that introduced slavish adherence to neoliberal economic policy, I had little faith that the Conservatives would do anything much to undo the gross economic iniquities built into the British system over the last 30 years, but you must feel free to prove me wrong.

I was amazed that the trade unions that provided such a large proportion of Labour party donations let neo-Labour get away with their cosy and relaxed attitude towards the super rich and the tax evaders amongst them (after all, even you would admit that the protection of the interests of ordinary working taxpayers against the interests of the super rich landed and corporate elite that would exploit them is meant to be the core purpose of the trade unions).

Having said this about the neo-labour legacy, I'd be equally amazed if the super rich bankers and corporatists that provide your party with such a hefty proportion of their donations and the media organisations that lend such loyal support to Tory political interests would allow you to get away with a honest and genuine all out “war on tax dodging” and the imposition of severe restrictions on other forms of economic spivvery.

Yours faithfully

Thomas G Clark

Unsurprisingly, Osborne kept up the dismal record of mainstream politicians by failing to reply to this letter.