Member Article

Tax evasion is not a victimless crime

As storms continue to rage around tax evasion, artificial tax avoidance schemes and those who promote them, it’s worth asking what starts people - companies and individuals - along the road to tax crime. Three reasons present themselves.

First, unjust personal (or corporate) enrichment, aka greed. Second, unlike raiding a post office or blowing up a cash dispenser, it’s invisible so perpetrators may feel they’re less likely to be caught. Third, the illusion that countries’ tax systems are not ‘real’ victims notwithstanding that tax lost through evasion or avoidance has to be made good by the rest of us. In that sense, all honest taxpayers are victims of the tax evaders.

Honest taxpayers who pay the most tax are the same people who stand to lose the most when taxes are increased to close the tax gap, so you’d think that governments and tax authorities would enlist their help to apply peer pressure to the offenders.

Far from it. In tandem with their attack on tax evasion and artificial avoidance, UK politicians are keen to broadcast the message that high-income honest taxpayers who pay every penny due under current law are somehow not ‘paying their fair share’. As a result, high-income people are all-too-readily seen as tax offenders in the public eye, even when they’re not. By repeating and repeating the phrase ‘paying their fair share’, politicians turn honest taxpayers into fair game for the tax machine. So they are made victims for a second time. HM Treasury figures show that the top 10% of income tax payers pay more than 55% of the UK’s income tax. And in 2014 nearly300 donors among the top 1,000 in The Sunday Times Rich List gifted £2.387bn. Nobody can say that all wealthy people lack a clear commitment to social responsibility in the UK.

So why can none of the parties find it in themselves to recognise that? If taxes have to increase to achieve a balanced budget and social justice, politicians should replace malign insinuation with a clear statement of future tax rates.

This was posted in Bdaily's Members' News section by Baker Tilly .