Tony Benn: "What a world we would have created if we had listened to him"

LEAP Chair John McDonnell MP pays tribute to Tony Benn

LEAP chair John McDonnell MP spoke in Parliament yesterday (20/03/14) paying tribute to Tony Benn (click to watch via Youtube).

John, who also chairs the Socialist Campaign Group of Labour MPs (founded by Tony Benn), said:

"I want to go back not to the manifesto of 1983, but to Labour’s programme of 1982, which was the Bennite programme, and virtually all of it was written by Tony Benn. It is worth looking back at what it said. It was absolutely prophetic. It basically said, “We will create a society that is more democratic, more fair, more just and more equal.” How would we do it? Tony’s ideas in that programme were straightforward: we would undertake a fundamental, irreversible shift in the redistribution of wealth and power. How would we do that? Through a fair and just tax system, tackling tax evasion and tax avoidance, taking control of the Bank of England, preventing speculation in the City and the banks because it could be dangerous to our long-term economic health, and creating full employment. That is what he was about. That is what he inspired us to do.

"It is interesting that he said we should invest in housing, health and education; give all young people the opportunity to stay on at school with an education maintenance allowance; and make sure that they had a guarantee of an apprenticeship or training and the opportunity to go to university, not by paying a fee but on a grant. That was his programme in 1982. It was prophetic and years in advance of its time. He said that what we needed to create the wealth was an industrial strategy—a manufacturing base based on new technology and skills. Actually, I remember him talking in one of his speeches about alternative energy sources, well in advance of the debate about climate change.

"He inspired my generation and he inspired generations to come. What a world we would have created if we had listened to him. But more important, what a world we can create now if we listen to him.

"Solidarity and go well, comrade. You made a significant contribution to all of our lives. I hope we will be able to implement the lessons you taught us, when Labour next gets back into power."

The above are extracts from John's speech. Read it in full

Big business is policing tax avoidance – what could possibly go wrong?

David Heaton's resignation from an advisory panel on tax abuse exposes the perils of hiving off tax avoidance enforcement

Prem Sikka

The privatisation of Royal Mail is making headlines, but another form of privatisation is attracting less attention – of UK law enforcement in vital areas, such as organised tax avoidance. Now it is business interests that decide whether Her Majesty's Revenue and Customs (HMRC) can go after those involved in abusive tax avoidance schemes, and this includes those who are close to the tax avoidance industry.

The flaws in the privatisation of law enforcement have been highlighted by the resignation of David Heaton from the government's flagship general anti-abuse rule (Gaar) panel. The panel is supposed to tackle tax abuses but Heaton was freely giving tips for dodging taxes. Heaton is a partner in accountancy firm Baker Tilly and is also a recent chair of the Tax Faculty at the Institute of Chartered Accountants in England and Wales. Baker Tilly is no stranger to tax controversies as the firm's revenues are dependent on novel interpretations of tax laws. In January 2011, the UK government raised VAT from 17.5% to 20% and the firm urged companies to do their billing in advance and thus avoid the hike. In recent years, Baker Tilly has expanded its revenue-earning capacity by absorbing organisations chastised for designing aggressive tax-avoidance schemes.

The Gaar legislation came into effect on 1 July 2013 and is part of a trend of giving business a key role in law enforcement. Originally, it was intended to enable HMRC to challenge "aggressive" tax avoidance, but was soon diluted to focus only on the most abusive forms of tax avoidance. The flaws were noted by Lord MacGregor, chair of the House of Lords economic affairs sub-committee on the finance bill, who said that: "There is a misconception that Gaar will mean the likes of Starbucks and Amazon will be slapped with massive tax bills. This is wrong and the government needs to explain that to the public. Gaar is narrowly defined and will only impact on the most abusive of tax avoidance".

The Gaar legislation contains a "double reasonableness" test and requires HMRC to show that the tax avoidance schemes under scrutiny "cannot [reasonably] be regarded as a reasonable course of action". An avoidance scheme will be treated as abusive only if it would not be reasonable to hold such a view. So, if a dubious practice is widespread and established then it may well be considered to be reasonable.

HMRC is further shackled in that it can't easily go to the courts to enforce Gaar because it needs permission from a panel of experts on whether the arrangements in question constitute a reasonable course of action. The panel members are unpaid and this inevitably favours businesses that can bear the cost of seconding staff. In addition to Heaton, other members of the panel are Patrick Mears (chair), a senior tax partner at law firm Allen and Overy; Michael Hardwick, a consultant at law firm Linklaters; Brian Jackson, vice-president for group tax at Burberry group plc and previously tax partner at KPMG; Sue Laing, a partner at law firm Boodle Hatfield; Gary Shiels, a business consultant; and Bob Wheatcroft, a partner in accountancy firm Armstrong Watson.

There is no representation from NGOs and others who routinely expose tax avoidance. If matters reach a court, then judges need to take into account the opinion of the Gaar advisory panel given to the HMRC. The legislation says little about the public accountability of the panel.

George Osborne courted public opinion by saying that he found tax avoidance/evasion "morally repugnant", but the government's sense of morality is to appoint foxes to guard the henhouse. No doubt, members of the Gaar panel are devoted to serving the public interest, but their conception of the public interest is likely to be informed by their business and professional interests, especially as their profits and bonuses are dependent on serving clients. So who is safeguarding the interests of the ordinary people?

Neoliberals would defend the current arrangements by arguing that government needs people who know the practices and are thus best suited to be the guards. If that logic had any substance then those falling on hard times or suffering because of the bedroom tax should be deciding who can reasonably be prosecuted for, say, benefit fraud. But that is not the case. The government has mobilised the full might of the state to tackle benefit fraud estimated to be around £1.9bn a year, but the same does not apply to tax avoidance/evasion running at between £35bn and £100bn a year.

This article first appeared on Comment is Free

5 reasons why you can't take this government seriously on tax justice

At the G8, the Prime Minister, David Cameron, sought to make clamping down on tax havens the centrepiece of the summit. As Prem Sikka explains, the post-summit communique was 'high on vague promises, low on delivery'.

But even before the inevitable puncturing of Cameron's hubris, there were several reasons why this government cannot be taken seriously on tax justice* ...

1. Government minister says he wants the UK to be a tax haven

Last year, Cabinet Office minister Francis Maude said it was "a compliment" for the UK to be described as a tax haven, and added: "That is exactly what we are trying to do."

2. George Osborne slashing taxes for big business and the rich

If there's one hallmark of a tax haven, it's low or minimal tax rates. Corporation tax was slashed from 52% in 1979 to 33% by 1997. New Labour cut it further, to 28%, and Osborne has already driven it down to 23% - and aims to get it down to 20% by 2015. This is how he described it at the last Budget:

"A headline rate that is not just lower than our competitors, but dramatically lower.
18% lower than the US.
16% lower than Japan.
12% below France and 8% below Germany.
An advertisement for investment and jobs in Britain." 

Actually, it's an advertisement to for big business to pay less tax - undercutting both other nation's tax rates and shifting the tax burden onto the working poor (as we have previously shown). Of course, cutting the top rate of tax from 50% to 45%, also facilitated avoidance.

3. Many government ministers' wealth is based on tax avoidance and evasion

As Guardian investigations have proven in the case of Cameron's family fortune, and as Channel 4 Dispatches showed in the case of George Osborne, Andrew 'plebgate' Mitchell, and Phillip Hammond.

4. You can't collect taxes without the resources to do it - and this government is cutting resources

HM Revenue & Customs is the body tasked with collecting taxes owed, tackling evasion and clamping down on contrived avoidance schemes. Combined the tax gap (uncollected, evaded and avoided) is estimated at £120 billion ... every year.

Yet the government is slashing the resources available to HMRC - as this PCS infographic shows:

5. Treasury minister in charge of tackling avoidance and evasion is in denial

Treasury minister David Gauke seems to be in a constant state of denial and cover-up

• When MPs investigated and found senior HMRC bosses to close to business, Gauke described the claims as 'absurd'. The same committee also found HMRC was "too poorly resourced" (see above).
• He approved a plan to persecute an HMRC whistleblower who exposed the 'sweetheart deal' with Goldman Sachs
• He claims the UK tax gap is 'only £35 billion' (still substantial) when all serious estimates put it at £120 billion (see Richard Murphy's analysis here)

Of course Gauke did used to work for a legal firm that specialised in tax avoidance.

There's five reasons why this government cannot be taken seriously on tax justice. Please use the comments to add more!!

* For a serious look at tax justice, see the Tax Justice Network

Are Tax Dodgers the Real Scroungers?‏

Looks like an excellent event organised by Sussex LRC, a week today as part of the Brighton Festival Fringe.

Are Tax Dodgers the Real Scroungers?‏

Wednesday 22 May

7pm

Community Base, 113 Queens Road, Brighton, BN1 3XG

Speakers: Richard Murphy (Tax Justice Network), Mark Serwotka (PCS), Katy Clark MP

Sadly, it seems tickets are sold out - though contact sussexlrc@hotmail.co.uk in case of late returns. But we'll try to get a report and even video from the meeting, if possible.

In the meantime, you'll have to make do with this Class blogpost 'Who are the real scroungers?' - which should be a good teaser for the meeting.

But even more clearly - are tax dodgers the real scroungers? Look at this graphic and make up your own mind ...

A Tale of Two Frauds

In 2009, a Lancashire mother was found guilty of defrauding the state of £45,000. She claimed over £45,000 in housing benefit, council tax benefit and income support by not including her husband’s details on the claim forms.

She pleaded guilty and was jailed for 16 months.


A week ago, two men from Leeds were also found guilty of defrauding the state of £45,000. They made up false invoices and documents in order to make false VAT claims worth £45,000.

They pleaded guilty, but avoided jail. Instead they were given community sentences, and made to pay court costs.


What makes these cases interesting is that they were for exactly the same amount: £45,000 dishonestly defrauded from the state - and all defendants pleaded guilty to the charges. So why is it that benefit fraud is considered so much worse?

Why, when benefit fraud costs us £1.1 billion per year and tax evasion an estimated £70 billion, is so much more effort and opprobrium directed at benefit fraud?

Of course both crimes were wrong. But is someone who commits benefit fraud a danger to society - who needs to be locked away for over a year of their life? I don't think so.

It's the inevitable result of a society where successive governments and the tabloid media (step forward the Sun and Daily Mail) have whipped up hatred against those out of work. That prejudice is reflected in the sentences.

The same economic crime means very different time.