Tax avoidance to become a thing of the past?
The background
The UK government plans to ‘name and shame’ tax avoiders by forcing financial firms to disclose their identities.
According to the BBC, “the Treasury estimates that 14% of all unpaid tax income is due to aggressive avoidance schemes”. These schemes are not illegal, but are considered unfair as they lower the level of income gained from tax.
The proposals were announced as a new report revealed the world’s super-rich have managed to hide £13 trillion from the taxman by moving money abroad.
Comedian Jimmy Carr faced widespread outrage in June after it was revealed he had used a legal Jersey-based tax avoidance scheme. Carr later apologised for a “terrible error of judgment”, reported The Guardian.
‘Selfish’ tax avoiders should be named
Tax avoiders should certainly be named, said a Times (£) editorial; “the selfishness is especially evident when taxpayers are suffering in a time of public austerity.” Those who avoid tax under these schemes know perfectly well that they are “cheating”, whatever the legalities. According to the editorial, “the best way of conducting tax policy is that individuals should feel a sense of compunction about paying a fair share.”
Crackdown won’t help ordinary taxpayers
With these proposals, the government is trying to blur the line between tax avoidance, which is legal, and illegal tax evasion, said Ian Cowie in The Telegraph. Despite all the “propaganda” surrounding the announcement, ordinary taxpayers won’t actually benefit from these plans: “It is fanciful to suppose that the Government’s naming and shaming propaganda drive against avoidance will ease the burden on ordinary taxpayers. Substantial cuts in State spending are the only realistic hope of letting us keep more of what we earn.”
Naming and shaming is not the answer
“Rather than merely ‘shaming’ avoiders, the government needs to stop them,” wrote George Eaton on The New Statesman’s Staggers blog. Negative publicity alone won’t be enough to induce the super-rich to pay up. The government has given no sign of taking real action, so nothing will change: “As the government closes one scheme, another opens.”
