Oh Jimmy. I really enjoy Jimmy Carr’s multiple TV appearances, presenting slots and of course stand-up performances so yesterday’s Times expose, revealing he paid about £30,000 tax despite earning a £3,300,000 fortune last year, was painfully disappointing.
The centre-right and right-wing papers have clearly enjoyed, quite rightly, laying into the hypocrisy of this man, clearly on the liberal left of things politically, committing such a heinous sin (and to be fair the Guardian is delighted that Gary Barlow OBE is now implicated in a separate tax avoidance scam) but beneath the glee that can be sourced from embarrassing a hypocrite there is genuine anger on the right and left.
Tax evasion and this kind of ‘aggressive tax avoidance’ angers traditional Tory voters, the kind who want out of Europe, want no immigration etc., just as much as it does the kind of lefty who holds a sit-in in a state-owned bank. That’s why David Cameron is so confident in being able to attack Carr on this issue. As Cameron himself says, it is an affront to the vast majority who pay every penny of tax they owe at the full rate (often grudgingly for Tory voters who think taxes should be lower) and then have to fork out £30 of their disposable income to see Carr or Barlow et al only to see them earn extraordinary sums and then pay less in tax - proportionately, over a year - than they do in a monthly pay packet.
Yet much as the Tories trumpet their planned General Anti-Tax Avoidance law I simply can’t believe they will really be able to deal with the problem. Legal but ‘aggressive’ tax avoidance measures cost the country £7bn according to the Times – that’s a whole lot of cuts not needed any more, in fact its more than all the cuts the Coalition made in their first year in power. If they can make it all back despite the significant reduction in HMRC staff that they are making, I’ll buy a hat, pay the 20% VAT, and eat it.
More importantly and less likely to be tackled is corporate tax avoidance and illegal personal/corporate tax evasion. Tax campaigners often cite the figure £40bn for the amount of tax they believe is being evaded by corporations, combine that with the £7bn personal, ‘aggressive’ tax avoidance that’s over half of the cuts being made by the Government not needed. Yet the Conservatives won’t tackle this for two reasons. Firstly, 25% of those who make up the Times Rich List are Tory Party donors, there’s little doubt that many of these protect their fortune through ‘aggressive’ avoidance and illegal evasion. Many of these will have worked in the City of London, the UK’s dark tax-haven secret. I’ve just finished Nicholas Shaxson’s book Treasure Islands: Tax havens and the men who stole the world, it is essential reading for anyone who cares about people not paying their tax and some of it's most startling revelations revolve around the lobbying power of the City of London and the City’s cosy relationship with Britain’s Overseas Territories – Jersey, Isle of Man, the Cayman Islands etc. – that are the epicentre of the off-shore, dark web of tax evasion. If these men, its mostly men, have such a hold on the Conservative Party then they can never seriously challenge the status quo, of course their biggest donor Lord Ashcroft was a non-dom who paid only £30,000 a year to the British tax man despite his considerable donations to the Conservatives.
The second reason the Conservatives will never challenge is less seedy but just as depressing: its really, really difficult to stop tax evasion. Shaxson highlights the way in which the global super-rich shift their money around the various, often centuries-old tax havens to minimise their contribution to our public services to just a smidgen. To be fair to the Tories even if they took a radical ideological shift to the left and began re-shaping our tax system and investing in more tax inspectors to catch tax evaders they might make inroads into ensuring tax due to Britain is paid but they still wouldn’t be able to do it without concerted global effort. If Cameron is serious about tax evasion he should use forums like the G20 and the UN to create a UN convention on taxation, ideally setting out globally agreed minimum rates of taxation on profits, incomes and wealth but at the very least setting out an agreed global framework for taxation across borders and back this up with a UN tax unit dedicated to investigating and charging tax evaders under international law.
I’m pretty sure this Jimmy Carr stuff will blow over within a month or two, hardly likely to permanently damage his career but what the Times have done, publicly humiliating tax avoiders and evaders is the right way to go. That said, we won’t get anywhere just restricting our ire for individuals, the press must do more to reveal and confront the fundamental problems posed by tax havens. Tax havens, including those within the UK’s direct sphere of influence, are not only the host to money avoiding the clutches of the taxman, they are home also to the dirty money of serious organised criminals and dictators. Tackling tax havens would deliver a huge net gain not just for our Treasury but for the governments in the developing world, who’s less technically proficient tax systems are regularly screwed over by large companies and dodgy politicians thus stunting their growth and making them dependent on aid. We would also strike a serious blow to organised crime, indeed a 'war on tax havens' would do far more to win the ‘war on drugs’ than anything the Mexican army struggling to do right now.
The party leader who stands up and makes the point about the pernicious effect such havens have on the lives of the 99% worldwide would be brave but would surely also gain great warmth and credit from voters. As the quality of public services, the cost of public transport and the reductions in benefits really begin to bite the public are only going to get more angry about those who don’t pay their fair share, lest us forget the Government’s most unpopular move since taking power has been the cut to the 50p tax rate. So which politician is going to stand up to the ultimate vested interest? As that loveable fictional dodgy Brit Del Boy used to say: 'He who dares wins'.