Sunday, December 10, 2006

Is this why Gordon's tax figures are wrong?

As I have said in previous comments on the pre budget report Gordon Brown sets his own growth target and meets them when he marks the paper. Vince Cable said as much in his response to the pre budget report in the House of Commons. However where Gordon Brown tends to fall down and can't mark his own numbers is how much he has raised in tax compared to forecast. Many other commentators have noticed as well. He almost never gets as much tax in as he thought.

The question has to be why?

Well here are two situations where tax has been avoided. There is the often covered in Private Eye Mapely Steps PFI scandal where the Treasury buildings were sold off to a PFI firm in a tax haven who laughably have pleaded poverty and lack of profit to Select Committees in the House of Commons who are now not paying large amounts of tax.

Then there is this article in the Independent on Sunday which shows that even Labour want to avoid having stamp duty paid at the full rate on the sale of it's old head quarters!

So the government and the governing party are involved in tax avoidance. No wonder tax receipts are down!

Hat tip to Mystic Moon on for pointing out the Independent article.


Timothy said...

Tax avoidance is a big issue - particularly in the city and the sort of finance companies that are doing very well out of increased public spending.

Most of the waste in public spending has been to these companies, rather then bureaucrats. It's been on IT, PFI, consultants, etc and much of it has avoided Tax, documented, as you say, by Private Eye.

Also, I get the impression that tax avoidance is more rampant than ever in the City, and they have been doing particularly well lately.

If a disproportionate amount of growth is from the City, then tax avoidance will increase more as well.

Many tax havens are beholden to the UK - shouldn't something be done about it?

Benedict White said...

yes Timothy. Personaly I am not impressed by over complex tax laws ans what seems to me special favours for some. After all David Mills said he got a gift for tax purposes which he then later said was for work done and no gift at all. He should have been taken to the cleaners for that one but won't be because of who his wife is.

However I think the tax laws would be easier to enforce if they were simpler. The bigger the rule book the more loopholes.

Timothy said...

What, simpler, as in flat! Don't make me larf!

If that's the best the Tories could come up with...

I worked at the Revenue for a few months and most of the complexity exists either to provide ways for people to avoid paying for tax, or, to prevent people not paying tax by being paid in a non-PAYE way.

When I hear Tories arguing for simpler tax laws I always worry that the laws they would "simplify" would be those that prevent tax avoidance, rather than the laws that legalise it, and subsequently get abused.

Benedict White said...

Timothy, I mean simpler as in less complex.

That said a flat tax is harder to avoid.

I note your comments about working at the revnue. So tax laws exist to allow people to avoid tax? And then they do! How nasty of them. The point is the simpler the system the less wheezes there are.