Saturday, 23 June 2012

A John Major Moment?

The most excellent David Cameron(sic), this week made a comment on the tax affairs of Jimmy Carr, comedian and satirist, he condemned his tax affairs although legal as "morally wrong".
Is this a John Major moment, the moment when John Major launched his "back to basics" campaign, a foolish wheeze to capture the moral high ground, sounds familiar?

History tells us the media then latched onto this moral crusade and buried the Major government in a tomb of sleaze, for which the Conservatives never recovered.

So what of David Cameron's wheeze on tax? The Daily Mirror immediately latched on to Conservative ministers & Conservative funders who exploit tax loopholes.

A more hostile media might ask why some celebrity tax evaders are not criticised for being morally wrong and others seem to be fair game. This says more about David Cameron than anyone else.

I suspect if the media dig they will find several years of news copy of government supporters who avoid tax through loopholes.

The battle against legal tax loopholes is a constant one, as the omnishambles of charity donations proved. However it is rich to criticise those exploit loopholes as this is the job of the treasury to close them as they are identified.

A news article in the guardian today says billions of pounds in potential revenue is tied up in tax tribunal cases because of a lack of government resources to deal with them, according to HMRC staff.

This is attributable to this governments cuts to the public sector and HMRC.

The potential funds due from more than 20,000 cases that have yet to be resolved, would take about 38 years to clear at the present rate, according to an internal estimate by HM Revenue and Customs.

Gareth Black, president of the Association of Revenue and Customs, the union representing senior tax officials at HMRC, has called for more investment in order to collect more tax and has said job losses had contributed to a failure to collect a further £1.1bn in taxes, which was also echoed in a public accounts committee report

This is a further example of the government is shooting itself in the foot, by cutting tax-gathering budgets this is grossly counterproductive, this will not save money, it will cost money.

Tax avoidence will increase and revenues will diminish. It is simply not possible to cut tax gathering resources and simultaneously pledge to close the tax gap.

The Guardian reports HMRC has a disproportionate number of senior staff close to retirement and the department's elite specialist investigations unit, which handles the most difficult avoidance cases. Staff numbers have also fallen, from nearly 100,000 in 2004-5 and likely to fall further to 55,000 by 2015. Experts have also said staff were not being properly trained and equipped for the job.

The union called for an additional investment of £260m over the next four years in key areas, including corporate tax avoidance, which would allow it to recoup an extra £6bn in currently lost tax.

So perhaps the real issue here is not Jimmy Carr, but the inability of the government/s to provide the HMRC with the resources to tackle large corporations and powerful individuals who are determined to successfully aviod tax.

As for Dave Cameron, he showed his character of being unpleasant to someone who criticises him and his friends, without seeing the bigger picture.

A John Major moment? Probably not. But if the media embarrass the Conservatives they know who to blame. Just call me Dave!

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