avoid, budget, Customs, David Gauke, deficit, evasion, gap, George Osborne, hm, hmrc, Mike Sivier, mikesivier, people, politics, Revenue, Richard Murphy, social security, surplus, tax, Tax Research UK, Vox Political, welfare
George Gideon Osborne. Was there ever a more foolish fellow running the Exchequer?
Probably not. Did you hear him in Prime Minister’s Questions yesterday, trying to tell us that the UK’s social security bill makes up seven per cent of welfare in the whole world, and that this is “unsustainable”? What a berk.
The first question this raises is, can he prove his “seven per cent” claim?
No – he’s wrong. The claim is based on a comment by German Chancellor Angela Merkel about EU social security being 50 per cent of that in the world, making the UK’s share 7.4 per cent of the total. Unfortunately for Thick George, she was using World Bank data that only included 96 countries and excluded large economies like Canada and Mexico, where social security makes up 18 per cent and 17 per cent of each country’s GDP.
The Guardian reckons that, if all countries were taken into account, this would not seriously affect the UK’s share of the total, suggesting that it accounts for the rounding-down to seven per cent from 7.4 – but there’s no proof either way. The article also quibbles about definitions of social security spending.
What this really shows is not that the UK spends too much, but that other countries spend too little.Mr
Nearly half of the world’s population – three billion people – must try to scrape a living on around $2.50US per day – or less. Of those, 1.3 billion are in extreme poverty, having to survive on less than $1.25 per day. That’s around 80p.
The countries in which they live – mostly developing countries – don’t have social security at all; that is the scandal.
If they did, then Gideon could not quote his “seven per cent” figure – it would be much lower.
What’s stopping these developing countries? Well, the organisation most directly responsible is probably the International Monetary Fund, whose ‘Structural Adjustment Programmes’ have put these countries into a continual cycle of debt; they can’t help their populations without breaching the IMF’s rules. This is the same IMF that wants the UK to run a debt economy, by the way.
So much for Osborne’s claim that social security spending in the UK is too large a proportion of the world’s spend. What about his “unsustainable” comment?
He said: “We can either carry on on a completely unsustainable path or we can continue to reform welfare so that work pays and we give a fair deal to those on welfare and indeed a fair deal to the people, the taxpayers of this country, who pay for it.”
Ignoring for the moment the fact that those on social security are in fact taxpayers themselves, let us consider the fact that the UK government does not collect as much tax as it could, and in fact offers extremely lucrative tax avoidance opportunities to the obscenely wealthy.
Did you know that you could fit the owners of half the world’s wealth into a double-decker bus, with space to spare? Less than 80 people own more money than the other seven billion, and you can bet that the majority of those with UK citizenship aren’t paying their full whack of tax!
A report by Tax Research UK has indicated that the amount of tax being avoided is around £122 billion every year. Compare that with the UK’s current budget deficit of £107 billion per year and you will see that – in a perfect world in which it was all collected – we would be running surpluses of at least £15 billion per year.
The Conservative government, of which Osborne is Chancellor, tells us the most effective way of tackling the deficit is by cutting the public services on which many people rely. They say it is the only option without increasing taxes.
But, with more than £100 billion in taxes going uncollected, why is the government slashing funding to the HMRC investigative branch?
Over on Tax Research UK itself, Richard Murphy has taken David Gauke, the financial secretary to the Treasury, to task over his fudged claims about the tax gap.
Gauke said: “The tax gap as a percentage has been lower in every year under us than it was in any year under the Labour Government”.
Mr Murphy replied: “Percentages are the evasive politician’s favourite tool, so I think that claim can be dismissed. What remains baffling is David Gauke’s apparent inability to see just how wrong his data might be. The government claims that the tax gap is £34 billion. And then it claims that HMRC recover £26 billion a year. Or to put it another way, £60 billion of tax abuse is attempted and 40 per cent is recovered.
“Is there anyone who thinks that remotely likely?”
He goes on to completely trash Gauke’s – and the Conservative Government’s – claims, and it is strongly recommended that you read the article for the details.
Mr Murphy says HMRC’s tax gap estimates should be subject to independent economic audit to check their credibility. He says HMRC’s claim of tax recovered should be subject to independent scrutiny to ensure that it is credible. He says a review of HMRC is overdue, with a panel of independent experts including from unions and civil society being included in the task. And he says it is time we had an Office for Tax Responsibility, reporting to the Public Accounts Committee, to ensure that this most critical department of government is held to account.
He states: “A recovery of £26 billion out of more than £100 billion I could possibly accept – except to say it could be so much better. But that rate of recovery out of anything less is absurd right now – as is HMRC’s tax gap estimate.”
So, under analysis, Gideon the Towel Folder’s claims are no more than silly attempts to confuse us.
If he bothered to collect all the taxes owed him, he would be running a budget surplus tomorrow.
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