I was on radio today with Matthew Sinclair of the TPA. We did battle over the priorities of governments and governing. I got over that we are a rich country and need to tax properly: the billions to be recovered from tax evasion, £70 bn, tax avoidance £25 bn, and uncollected revenue (cheques in the post, etc) £25 bn.
He questioned my source for the figures for these, so I said Richard Murphy (the foremost tax researcher on these issues) and Sinclair just wrote his figures off. Sinclair then defended the need for the UK to cut even further – despite the IMF saying we’ve cut enough! So they’re really a right-wing monetarist group who want less tax and smaller public services. No surprise to learn they have rich donors. In fact they are a business with frequent donations of £5000 and the like.
So let’s see what Richard Murphy has to say about the TPA’s recent report –
The Taxpayers’ Alliance have published a report this morning in which they claim:
Over the last five financial years £27.4 bn of tax revenue has been lost by HMRC through remissions or write-offs.
That is over £1,000 per household lost in tax over the last five years, or £200 per year.
£5.9 bn was lost in 2010-11. If this money was collected, it would be possible to cut more than 1% off the standard rate of VAT.
Over the period studied, £4.4 bn has been lost in Income Tax alone. The amount of Income Tax lost in 2010-11 was 52 per cent higher than in 2006-07.
As a result they claim:
A much simpler tax system could help to avoid errors of this scale in the future, and the deficit could be reduced more quickly. The 2020 Tax Commission is exploring ways to make taxes simpler and less burdensome on families and businesses, and will be publishing its final report and recommendations in Spring 2012.
I’m discussing this on Radio 5 this morning so let’s just look at the claims.
First, almost all the remissions are on tax credits. So they’re not part of the tax code. That’s a benefit.
And 90% of the bad debt is due by companies that have gone bust. So there’s not a hope of the Revenue getting the cash. I know that because the Revenue have said so.
Which leaves not a lot left over, almost all of which is due to the fact that the Revenue haven’t got the resources to track people who move, or refuse to pay relatively small suns of tax which aren’t worth taking to court.
So how much of this is due to complexity in the tax code? About the square root of not a lot I’d say.
The TPA really do need to learn a little about tax, business, insolvency and debt collecting. In other words if only they knew just a little about the real world of business they so claim to adore they’d really be a lot wiser.
Although maybe that’s giving them just a little too much credit.