COSY CARTELS AND COURTESY

Issue 3 The Housing Times

“(Tax) policy is determined through committees and consultation processes in which the tax avoidance industry’s repre-sentatives dominate, before being nodded through by parliament without proper scrutiny. This cosy cartel urgently needs dismantling. Taxation needs to be reclaimed from the vested interests by public and parliament.”

The Great Tax Robbery by Richards Brooks

Following George Osborne’s first spending review in October 2010 a group of guys met in the Nag’s Head pub in Islington for a drink, and being Islington; they discussed the impact of the measures he had announced. The review planned to cut half a million public sector jobs and £7 billion from the welfare budget to pay for a crisis that was not of their making. A few weeks earlier Vodafone, the mobile phone company, settlement with the Inland Revenue was announced. The reason why their tax bill hit the headlines was because the offshore tax avoidance scheme it used to vastly reduce the amount of tax they paid to the government. Later that evening, “when we were all a bit tipsy”, recalled one of the group that they decided to target a Vodafone store. To attract other like minded people they chose the hash tag ‘UK Uncut’ on Twitter to announce their formation. The following week seventy people gathered at Vodafone’s Oxford Street store to highlight the inequity of the company’s tax settlement. On the following Saturday thirty Vodafone stores had to close their doors after being targeted. The group cannot have imagined that their boozy night in a pub about how unfair it was that half a million people were to lose their jobs in order to reduce the debt left by the 2008 crash was to raise questions about the body responsible for collecting the revenue to reduce the debt as well as revealing that it was actively colluding with companies like Vodafone to make that job harder.

Further enquiries were to reveal that Britain’s third biggest company had reached an agreement with the Her Majesty’s Revenue and Customs which saved the company several billion pounds over the previous decade but which potentially fell foul of British anti-tax avoidance laws. The investment bank Goldman Sachs was another high profile company, where bonuses in billions are annually shared among employees, which had reached a deal with the HMRC in settlement of a tax demand. To avoid paying millions of pounds in national insurance contributions the bonuses the bank had a scheme whereby they were paid by way of an offshore offshoot of the company. As part of the settlement reached with the HMRC the company was “excused” interest charges of around the same amount it tried to avoid – £20 million.

In December 2011 the public accounts committee published what it called a “damming indictment of HMRC and the ways its senior officials handle tax disputes with large corporations.” The report concluded “The department (HMRC) is not being even-handed in its treatment of taxpayers.” Richard Brooks in his book published the findings of a report – Being Bold, a radical approach to raising revenue and defeating the deficit, complied by the Association of Revenue Customs Officers in September 2010 which showed the imbalance in prosecutions for benefit fraud compared to fiddling your income tax return. Brooks writes there is plenty of prejudice behind the imbalance; the poor make easier targets than the rich.

A report from the Organisation for Economic Cooperation and Development on the causes of the greatest financial crisis since the 1930s listed several “tax policies as exacerbating factors” as responsible for the crash of 2008.Despite the crash that nearly collapsed the world economy, governments are still giving what Brooks calls “tax advantages to economy swamping levels of debt and bankers’ bonuses based on illusory profits that conceal sometimes cataclysmic risks. What’s more, they are being sharpened by the British government.”

Richard Brooks writes that the tax avoidance issue is a political one. Something that Gordon Brown recognised when he became Chancellor. In July 1997 he said that the government would be “committed to the proper funding of public services will not tolerate the avoidance of taxation and will be relentless in its war against tax avoidance.” Brooks comments that over time observers learned that such language merely to be an example of the usual Brown bluster. He concludes that over the last few years the British government has ripped the guts out of laws that protect the country’s corporate tax base. In doing so it has turned Britain into a corporate tax haven, inviting multinationals to shelter income offshore and encouraging them to place real business overseas. In doing so Britain has become a more unequal and meaner place to live. In recent years there have been many examples of cosy cartels between vested interests and publicly accountable bodies. Perhaps the most insidious, infamous and indefensible was the one that existed between the Metropolitan Police and Murdoch newspapers. The police also failed to live up to the standards that are expected of them in numerous cases involving vulnerable children.

Standards of courtesy also seemed to have dropped in recent years. Following the publication of the first issue of the Housing Times I sent copies to a number of newspapers and television networks. Since it was the first issue I enclosed t-shirts and mugs with the front page headline emblazoned upon them. Suffice it to say that the response has been somewhat similar to that of the parable the Good Samaritan. The editor of the Evening Standard, its chief leader writer and City Hall reporter were all given copies, mugs and t-shirts. None responded. Same outcome as regards the BBC’s Politics Programme and the BBC London’s political editor. I am still waiting for an acknowledgement from the chief executive of the Chartered Institute of Housing (now received). I left a copy and t-shirt for the editor of the Observer with the guys in the post room at the Guardian’s offices. The editor of the Morning Star is in receipt of a copy and t-shirt. It was pas de response from Paul Mason, now ex-economics editor at Channel Four. It was the same from the editor of Guardian Housing Network, Jane Dudman.

Honourable mentions go to Danny Dorling, Becky Tunstall and Anna Clarke from academia. Martin Wolf replied by email as did Susan Emmett from Savills. As in the parable of the Good Samaritan there was only one person who had the courtesy to call and thank me in person – Helen Lewis, deputy editor of the New Statesman. Now about that write-up….

Terry McGrenera

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