Tax incentives and tax avoidance


As politicians and some in the media work the country into a frenzy against tax dodgers, please spare a thought for all those politicians and commentators arguing for more tax breaks to promote good works, more gr0wth and healthy lifestyles. One man’s tax dodger is another man’s prudent individual taking advantage of strongly recommended tax breaks which have been carefully honed by government.

Some people pay less tax because they give generously to charity, some because they are making accelerated savings for retirement so they will not depend on benefits and taxpayers in their old age, some because they are investing in places and causes approved by politicians, some because they are lending their money to the government to spend on public services. Most people take action to avoid tax. If you have to drive into central London, if you do so before 7 am you avoid the Congestion Charge. I do not have a tv in my London flat in order to avoid having to pay a second BBC licence fee. If you do not smoke or drink spirits you avoid large amounts of tax on alcohol and tobacco. If you do not move home in recent years, you avoided the large Stamp duties now imposed. Tax is taxing. Tax has a direct and visible impact on what you can and cannot do. Tax is often designed to stop you doing things. In other words many taxes are designed to encourage you to avoid them.

The UK’s problem is not that we pay too little tax. It is that the country produces too little for its ambitious plans for public spending. We need to produce more to make our current level of spending affordable. The problem is our current level of tax gets in the way of growing the economy faster. As a country moves to taxing too much, as the UK is doing, so governments have to find more and more ways of getting more and more money out of the same people and companies . There is always the danger that more tax will put people off earning so much, or drive them to live or work in another country.

In the UK the motorist is one of the favoured groups to pillory. Many politicians make motorists out to be some kind of special group of planet wreckers and anti social people to start with. Out of taxed income a motorist now has to pay tax to buy a car, tax to keep the car on the road, special taxes to drive in London or over certain bridges in the national network, tax on the fuel in the vehicle, and car park charges in state owned car parks and to park on the state provided highway which he or she has already paid for.

If the government wants to stop people avoiding tax there is an easy answer. They should legislate for simple flat taxes, and abolish all allowances and tax breaks. Out should go the exemptions for charity, for pensions saving, for prime residences, for certain kinds of investment, for National Savings and all the rest. In should come lower tax rates that apply to us all however we choose to spend our money.

I doubt the government would want to do this, as each tax break is defended by armies of supporters and media commentators. In which case, isn’t there a danger in all these witch hunts against people who are just good at using the large number of legal loopholes and taxbreaks to pay less tax?


  1. colliemum
    December 4, 2012

    You wrote, in regard to (hopefully – oh please make it happen!) instituting the flat rate tax:
    ” I doubt the government would want to do this, as each tax break is defended by armies of supporters and media commentators. “
    Yes, we know a politician would need a spine of titanium to get this through, but I’d have thought he’d find a sufficient number of supporters. Regarding the ‘armies of supporters’, or rather the special interests: why shouldn’t they, for once, been ridden roughshod over? After all, that’s what is happening to us ordinary tax payers, who don’t have enough money so that spending on charities would make much difference, nor are the other avoidance schemes open to us. So why not disregard them? Society has changed, and such special interests are fast becoming odious.
    But that leads straight to the ‘media commentators’. It’s strange, isn’t it, that the shifting climate of soft socialism and gentle class war, with all the cries of taxing “The Rich”, is blinding the commentariat to the efficiency and fairness of a flat tax. It’s blinding them so much that they disregard the advantages to those whose interests they profess to defend – i.e. us plebs.
    It would be great if the Tory party would find it in their hearts to stare down those two ‘dragons’, the special interest groups and the media.
    Elections are not lost by those who show spine, cojones and principles – they are lost by those who shilly-shally and who are perceived to cave in on all sides to special interests.

    1. uanime5
      December 4, 2012

      Well if a flat tax results in little benefit to the average person and huge benefits to the wealthy expect the average people to oppose it whether the politicians have a spine of titanium or not.

      1. Edward
        December 4, 2012

        The result of a flat tax could be a larger overall tax take with the rich paying more than they do now, but I presume gesture politics and headlines of high percentage rates is more important to you.

        1. Bazman
          December 5, 2012

          Flat taxes would result in lower taxes for the rich and the poor, but higher for the middle without maybe a lower tax take. They are normally used in cases where tax evasion is rampant like East European countries.

          1. Edward
            December 5, 2012

            Sounds like flat taxes could be useful here in the UK very soon then, Bazman.
            When another million or two people from Eastern European countries come here.

  2. Mike Stallard
    December 4, 2012

    Tax and national bankruptcy!
    What a combination!
    Think of France 1789; think of the Boston Tea Party; think of Russia 1917.
    Tyrants can get away with it: Mugabe. Hitler. Stalin.
    If only we had politicians with enough guts to simplify the system before the crash brings us all into chaotic poverty like Greece, like much of Africa and like my beloved Spain!
    Some hope!

    1. Lord Blagger
      December 4, 2012

      Look at MPs.

      Lets spend on infrastructure such as high speed rail. Lets build lots of houses.

      Hmmm, Spain must be booming. They’ve been doing that.

      1. A Different Simon
        December 4, 2012

        What is wrong with building lots of houses ?

        High priced accommodation is little more than a sop to landowners and banks which seek to chain someone in debt for their whole life .

        Accommodation costs end up getting socialised via higher housing benefit and old age benefits because all peoples money has gone on accommodation and they haven’t been able to save anything for old age .

        It’s a direct transfer from the people in the middle to the people at the top via the people at the bottom .

        The net effect is that people from the middle move to the bottom and the middle gets ever smaller until the whole thing collapses – which will be impossible to hide within the next 10 years .

        Time to generate a surplus of housing so the next generation can generate a surplus to save for their old age and pay our generations pay as you go pensions .

        1. Mark
          December 4, 2012

          We don’t need lots of empty houses (that would be very wasteful). We just need lower, sensible house prices. That means getting the banks to sort out their mortgage books, rather than continually subsidising them from charges to other customers and from BoE subsidised interest rates.

          1. APL
            December 5, 2012

            Mark: “We just need lower, sensible house prices. ”

            And of course, one aim of QE was to frustrate that goal.

        2. sm
          December 4, 2012

          Housing financed by our presently private debt creating ponzi banking system as evidenced over the last decades – no thankyou.

          Some interest only mortgages are effectively long term rents from the bank (albeit with some security of tenure). As house prices were elevated due to the creation of money out of thin air by private banks , so the interest extracted increased.

          Same reason we have the BTL sector, the landlords are also trying to make a margin, but i suspect its the banks that are laughing.

          We need lower sensible house prices agreed but how from where we are, without building more,reducing immigration, or allowing interest rates to rise.

          Thats why i like Steve Keens idea of QE for the public to paydown debt – the banksters fiat debt made out of thin air.

          Bank income would fall, they would need to downsize,ex-politicians seem to do well in banks etc, hence the political problem!

        3. Leslie Singleton
          December 5, 2012

          Different Simon–What is wrong, since you ask, is that today’s house building is being forced upon us by the ghastly self-serving immigration policies of the last Labour government, and the EU, policies themselves forced upon us, not to mention that modern housing is repetitive and ugly and built on flood plains in our green and pleasant land, an island getting too crowded by the minute.

          1. A Different Simon
            December 7, 2012

            I completely agree that importing people we don’t need and encouraging the reproduce as fast as possible is wrong – a crime against the British people .

            There are no signs that the slide will be halted .

            How many million (more Eastern Europeans) will come here to undercut Briton’s wages over the next 10 years ?

            Worse still the people we need to keep are leaving .

            Our politicians only seem to think it is a problem when those folk from the financial services industry with their overinflated sense of self worth threaten to leave . They don’t seem to notice when small company proprietors , engineers , scientist , software developers leave .

  3. lifelogic
    December 4, 2012

    It is ironic that politicians, who at both Westminster and EU have made rather a personal speciality of tax avoidance, even to the extend having special rules/laws just for politicians over the years, should now have now have decided whip people into into a frenzy against such tax dodgers.

    The point is that they cannot keep spending (largely wasting) nearly 50% of GDP as they simply cannot raise it without killing the private sector. Unless, that is, they are going to fully enslave the people, prevent then from withdrawing their labour or moving abroad. They need to forget it and start firing half the state sector. There is no shortage of pointless jobs to start with. It seems the coalition clearly prefers the enslavement route to the smaller state and uplifting vision that would actually work.

    I am glad I have already left and taken my taxes with me. There are few more moral actions, with such a dismal, over tax and endless waste government, than legally avoiding taxes. It is ones moral duty to do so. Just make sure you put the money to better use than the state would have done – this is hardly difficult!

    1. Single Acts
      December 4, 2012

      If you think about it, 50% of GDP is the very most you can spend as a government without seeing diminshing returns. If the government is 50% of the economy and the private sector the other half, then the government takes the entire proceeds of the private economy in year 1 and spends it in year 2, etc.

      1. Edward
        December 4, 2012

        Actually single acts its worse than you say because the state is spending all tax revenues plus £120 billion in borrowings

      2. lifelogic
        December 4, 2012

        20% would be about the right level of the services that are actually needed and everyone, apart from a few over paid parasitic sections of the state sector, would be far better off as a result.

        1. Bazman
          December 5, 2012

          Would the ‘parasitic’ sector include the private sector funded by the state. A private company with no other customer but the state. Organisations providing care and maintenance contracts for state services. Should these be describes as parasitic? Where do you get 20% from?

          1. lifelogic
            December 6, 2012

            20% of GDP is roughly what many of the far more successful countries spend.

            You are right much of the private sector funded by the state sector is indeed parasitic too. Most the parking cash cow machinery and much of the legal profession with their endless pointless multi million pound inquiries. Much of the rail industry and almost all of quack “renewable” energy industry too. There is no shortage of parasitic activities in both the state sector and the state funded private sector.

    2. lifelogic
      December 4, 2012

      Can I have got this right? Osborne now wants to “invest” £1B on new school buildings to help the economy? Since when has the quality of education improved by new (usually rather flimsy) school buildings (with too narrow corridors I say reported to save cash) ?

      Even if it did work this seems rather a long term plan, say 20 years or so until the school is build and the children even start to make any sort of pay back on the building – then only if they do magically become clever by some osmosis from the new building.

      Other than this slim chance of magic he might as well just dig holes and fill them in again. How did the heir apparent to the Osborne baronetcy (of Ballentaylor, in County Tipperary, and Ballylemon, in County Waterford) get a place at university, let alone a 2.1 at Oxford in Modern History? A shame he did not do something rather more numerate at Cambridge.

      Meanwhile his banks, mainly RBS/Natwest, are clawing back more funds from real and perfectly sound businesses who really need it (and have useful things to do with it) every single day.

      With Osborne, Cameron, Clegg we might as well just have Labour now, we will anyway in 30 months.

      1. Mark
        December 4, 2012

        It was Ed Balls who wanted to rebuild every school in the country in just over a decade. Fortunately, Gove put a stop to that waste. However, rising birth rates and immigration mean that school rolls will be increasing over the next few years, which will require extra space. Also not helping is the unjustified commitment to raise the school leaving age to 18. We would do better to let those who really won’t benefit academically to start earning a living instead.

        1. zorro
          December 5, 2012

          This is all to do with the need to accommodate uncontrolled immigration as is the requirement to concrete over new bits of the green belt. Doubtless they will build on flood plains too…..


        2. APL
          December 5, 2012

          Mark: “However, rising birth rates and immigration mean that school rolls will be increasing over the next few years, ”

          Mark, would be interested to see the statistics on the rising birth rates?

          I suspect there is a declining birth rate in one sector of the population, a result of abortion, birth control and so on.

          Quite a few of the new mothers may also be taking advantage of the free childbirth facilities of the NHS, which they very possibly haven’t contributed to through taxes & so on.

          1. zorro
            December 5, 2012

            There is plenty of evidence available already to support those assertions……Migrationwatch has lots of stuff on it, and Philip Hollobone mentioned some interesting stats in the House the other day which show the effect of immigration on infrastructure needs…… ‘A local government Minister has said:

            “The fact is, 43 per cent of the new households which want a home, is accounted for by immigration”…so we will see swathes of our countryside built over to accommodate the millions of new arrivals from the European Union, over whom we seemingly have little control.’….


      2. Bob
        December 4, 2012


        The age of the building is pretty much irrelevant. It’s what goes on inside that matters. The age of the building is a typical socialist excuse for poor performance.

        Some of the best schools in the country are housed in buildings of well over 100 years old.

        1. lifelogic
          December 4, 2012


        2. Bazman
          December 5, 2012

          Rotting schools with leaks, no heating and other facilities do not have any bearing on learning. I bet the state subsided independent schools do not agree with that. I take it you both do not have children? A pertinent point so don’t pull the ‘personal’ on me.

        3. sm
          December 7, 2012

          more children = more schools. It’s an unavoidable consequence, hence the spin lest it is linked back to policies set with no input from the public (our democracy in action).

      3. Credible
        December 4, 2012

        If I remember correctly, the Tories stopped the school building programme when they came into government (maybe I remember wrongly). Now they want to start it again. Next they’ll stop it then they’ll start it.

        1. APL
          December 5, 2012

          Credible: “If I remember correctly, the Tories stopped the school building programme .. ”

          Here is an interesting aside. Just down the road from me there is what was once a charity home. It was the sort of substantial stone brick building of a certain era.

          I have no doubt that much was made of its obscelescence and the cost of maintaining the building and justifications based on these costs for selling the property off to developers.

          That building is now very desirable flats, fully occupied and fully maintained.

          Giving the lie to the oft heard calumny that a building is too expensive to maintain just because it is old.

  4. Pete the Bike
    December 4, 2012

    No, the problem is that politicians think that they know best what the country needs. This goes against all accumulated evidence for the last 100 years. Britain was richest and most successful when it had least government interference. The free market is always the best, most efficient and fastest route to improvements in peoples living standard. Government has never invented anything that has led to greater wealth or happiness. Instead it diverts wealth from the productive to it’s own fads and fashions, placing money where it sees a chance of gaining a vote or bailing out it’s friends. It is irrational to think that bureaucrats and politicians can spend your money better than you can, they can’t even stop themselves fiddling expenses so what chance is there that they can act like everybody’s benevolent parent?

    1. Lord Blagger
      December 4, 2012

      The extent of the rip off is unbelieveable.

      I did the calculations for a median wage earner – 26K a year. What would they have had if they had been allowed to invest their NI contributions into the FTSE?

      40 years ago they would have been on 700 a year. Invest the NI into the FTSE. At the end of they year, you make or lose on the capital, plus get some dividends. Next year you wages change in line with average wages, you add to the fund your NI, make or lose, plus get some dividends. Repeat for 40 years

      At the end your fund would come to 550,000 pounds.

      The state pension costs 130,000 pounds, and they are going to default on that.

      So 420,000 pounds taken off a 26K a year earner, to ‘pay for the welfare state’.

      Would people opt into that sort of insurance if they were aware? Nope.

      So MPs try and keep it secret. In particular that they won’t pay the state pension as promised.

      Reply It’s no secret. I have always pointed out the basic state pension is unfunded. So is the NHS unfunded.

      1. A Different Simon
        December 4, 2012

        The catastrophe is that the basic state pension is only half the assistance due an old person when they are no longer able to work .

        They will need housing benefit and every other old age benefit because they will have been unable to save anything during their life because all their money has gone on ridiculously high accommodation costs .

      2. forthurst
        December 4, 2012

        A rose by any other name would smell as sweet – NHI is a redistributive tax.

    2. uanime5
      December 4, 2012

      Pete your claims have no basis in reality.

      100 years ago (1912) the British Empire cover a quarter of the world so it’s little surprise that Britain was the richest country. However in 2012 there isn’t a British empire so any comparison is essentially meaningless.

      Just because the market is making money doesn’t mean it’s benefiting the UK. In the past poor health and safety meant that thousands of people were maimed and killed, something that was stopped by politicians not the free market.

      The free market needs to be fettered in order to ensure that people no longer have to work in sweat shops to so that the economy can make more money.

      1. Bazman
        December 4, 2012

        Wages have been falling since 2004. The wealth has certainly not and is not being distributed to the general population despite the claims and fantasies by many that if companies make large profits we will somehow all get a pay rise. Lean manufacturing and services mean leanness for the workforce and blatant gluttony for the managers and shareholders. This idea that if the market is allowed to plunder the country without putting anything back in the form of taxation or wages and is for the greater good is for the birds. The greater good of whom?

        1. Bernard Juby
          December 5, 2012

          But again you are talking about less than 5% of ALL UK businesses. Please don’t tar us all with the same brush.

  5. alan jutson
    December 4, 2012

    Your post sums up the real situation we find ourselves in.

    The government wants to spend too much of our money, on things they think we like, rather than things which we can choose to use, and purchase on an individual basis.

    Perhaps it is time for a complete rethink as to what a government should and should not provide.

    One thing is for sure.
    We cannot afford to allow government spending to keep on increasing as it has for the past few decades.

    The problem you have John, is that now the Brown plan of making the majority reliant on the State for some or all of their income, would make election of a spendthrift Government very difficult.

    1. Lord Blagger
      December 4, 2012

      The problem you have John, is that now the Brown plan of making the majority reliant on the State for some or all of their income, would make election of a spendthrift Government very difficult.


      That’s the problem. They are reliant on the state because the state has taken their retirement money and spent it.

      Now the state has that massive debt to pay, and it can’t afford it.

      So for those reliant on the state, the poor, the retired, and public sector workers, they are going to be absolutely shafted.

      Ever wonder why MPs have a fully funded invested pension scheme and aren’t in the civil service scheme? Yep, they know they are going to default.

      1. uanime5
        December 4, 2012

        Well if people were paid more money they’d need less in benefits. Odd that the Conservatives never try to introduce minimum wage to reduce the number of people claiming benefits.

        reply The minimum wage was never high enough to do away with income related benefits.

        1. Bazman
          December 4, 2012

          It has taken some burden off the state. This idea, held unofficially by many companies and their managers, that benefits are part of workers wages is fundamentally wrong and need challenging. They are in addition to benefits not to subsidies the wage bill. Parasitic companies paying little or no tax in addition to bleeding the benefits and health system.

        2. Bob
          December 4, 2012


          You should lead by example.

          Set up your own business and employ lots of people on big wages.

          Report back when done (not before).

          1. Bazman
            December 6, 2012

            Should I set up my own Tesco and pay higher wages? Would it be possible to do that even if I had the talent and ability. You laughably think that these large companies wages are set by market forces. They are set by themselves. The small company argument is a red herring.

          2. Edward
            December 6, 2012

            I can see it now Bazco PLC
            A possible future threat to Tesco PLC, only probem is if you don’t agree with Baz you would be banned for life from coming in.
            Also, as you would only be allowed a few free small bags, in order to pack your purchases in them, you would have to…….ram it

          3. Bazman
            December 8, 2012

            It would be Open All Hours.

      2. sm
        December 4, 2012

        more detail? on the fully funded scheme please, who is the manager , where is it invested etc ?

  6. Caterpillar
    December 4, 2012

    (1) “Out should go the exemptions for charity, for pensions saving, for prime residences, for certain kinds of investment, for National Savings and all the rest. In should come lower tax rates that apply to us all however we choose to spend our money.”

    … though when the Chancellor tried to make a start with a charity donations cap there was outrage. I mostly agree but I do think there is a case for carefully considering both stocks (wealth) and flows (income).

    (2) “legislate for simple flat taxes” , a UKIP policy? What would be the specific JR flat tax regime in terms of corparation, income, capital gains, consumption/VAT, NI, luxury/bad …

    (Also some expenditure could be cut … privatise the NHS and all post-primay education?)

  7. Leslie Singleton
    December 4, 2012

    It seems to me that, by definition, there is literally no such thing as Tax Avoidance. If whatever is being impugned cannot be described as Tax Evasion then it simply doesn’t exist. It is entirely typical of this appalling third rate Conservative leadership that they of all people should be squawking about this and as usual they induce a search for a bucket. If they cannot come up with a suitable law to achieve what they want they should simply shut up.

  8. Brian Tomkinson
    December 4, 2012

    JR: ” We need to produce more to make our current level of spending affordable.”
    How about spending less? Or have you thrown in the towel too? What a powerful drug our money is to you politicians.

    Reply: You know my views on this – I was setting out the position as seen by the main political parties.

    1. lifelogic
      December 4, 2012

      First stop all the things that are pointless, all the indoctrination and PR spin, all the sill PR job schemes, or “green” initiatives and all the things that just inconvenience or fine the public, the transfers to endlessly augment the feckless and the EU/pigis nonsense.

      The state sector is halved already with no real loss of services what so ever and few inconveniences for the public too.

      I Osborne is attacking pensions again it should be the state sector ones this time.

      1. Bazman
        December 4, 2012

        The state sector is halved already with no real loss of services what so ever and few inconveniences for the public too? Where did you get this latest totally unfounded and ludicrous idea from? Oh yes! Your blind religious beliefs and facts that have little to do with the real world. That’s where.

        1. Lindsay McDougall
          December 6, 2012

          The State sector has not halved but there have been two private sector jobs created for every one public sector job lost. The fact that the economy has been able to afford this may have something to do with the fact that the new private sector jobs are more lowly paid.

          Contrast this with Europe, e.g. France, where public sector employee rights are much more firmly entrenched and the unemployment rates are much higher than in UK. We have hope because we have a more flexible, dynamic economy.

          1. Bazman
            December 6, 2012

            Where do you get this two state workers fantasy from? A large number of state jobs have been lost and many of the new jobs created are part time zero hour contract ones. You could employ everyone if they would work for next to nothing. Which is in fact what I am thinking of doing. There is a local scheme where you can exchange hours. work for one hour for someone and someone else works for you for one hour. Big jobs are banked in hours. Desk jockey work for labouring. All hours are equal. Something to do whilst I wait for the rich to spend some money as Osbourne has promised they will do. Yeah… Right.

    2. Brian Tomkinson
      December 4, 2012

      Reply to reply,
      By so doing you are cofirming to us why none of them is up to the job and why they have lost our votes.

  9. Alte Fritz
    December 4, 2012

    What I find objectionable is the assumption by the state that it has a moral right to a prior charge on everyone’s income and assets and that the individual is entitled only to what the state chooses to leave. Wasn’t all that supposed to go the same way as the Berlin Wall?

  10. Lord Blagger
    December 4, 2012

    The UK’s problem is not that we pay too little tax. It is that the country produces too little for its ambitious plans for public spending. We need to produce more to make our current level of spending affordable.


    Spin Spin and more Spin.

    The only way to afford current levels of spending is to tax more. You’re running a deficit.

    “Produces too little” Ho hum. What you really mean is that we don’t produce enough so you can tax it.

    Whenever a MP talks about growth, its spin. What you really mean is growth in taxes. Growth in the amount of money you take off us.

    Ah, but I can hear it now. If we get people back to work, we don’t pay benefits and they pay tax. That means the rest won’t be taxed more.

    That’s complete twaddle.

    Get 1 million back to work without spending any money on mad back to work schemes [1] and what will you get? Lets say 12K each in benefits not paid, and 3K a year in tax (a tad over min wage). That’s 15K each. Times a million is 15 billion

    The deficit is 150 bn. So that’s 135 bn to be extracted from the rest of us via growth in taxes.

    Can you get that out of us without making the UK completely uneconomic as a place to do business? Nope, you can’t.

    On top of the deficit is the growth in debts. 4.7 trillion on the state pensions, growing at the max of inflation, wages, or 2.5%. Hmm pretty complex derivative that you’re offering there. I thought the government was anti derivatives, or is it that its OK for you to dabble?

    So add the growth onto the deficit and its more frightening.

  11. Disaffected
    December 4, 2012

    You are correct JR. There is much merit in what you say, but they will not listen to you.

    The EU want a rise of between 5-6.8% in their budget from our taxes. How is Cameron’s negotiation for a cut coming along to save the taxpayers some money? How many billions does the EU receive already to make millions of people unemployed for a political dream or to ruin industries that are required for our very existence, like farmers? We need to produce more food from arable land not build sprawling urban cities, stop mass immigration, now, we do not have the resources or infrastructure to cope. There is trade deficit perhaps contributions should based on what countries get out of the scheme rather than a socialist approach of levelling each country to the bottom denominator.

    How about Cameron’s idea of enshrining overseas aid into law to the tune of £13 billion to help Oxbridge consultants, corrupt regimes and despots. We are told only £1 in every £3 pounds reach the poor. Any update on the aid to Rwanda that Mr Mitchell authorised?

    The Energy Bill appeared to be sneaked out the other day. Economic madness that will cost every household a fortune, and business will flea the country for cheaper and reliable sources of energy. They cannot run a business hoping, with their fingers crossed, that it might be windy or not too windy!! £2.3 billion increased to £7.8 billion of taxpayers’ money to help build wind farms. The public should use this example alone to vote against the Tory led Coalition.

    You forgot to mention that other alternative that it does not pay to work. Why have the anxiety to make ends meet, let the state pay for it. Hundreds of thousands come to the UK for that sole purpose.

    Why work for less than the government takes in tax to waste on things like HS2 and PFI deals that Osborne is reported is ready to start again, has he really lost the plot?

    The first scrutiny ought be be in the House of Commons ahead of the rest of the country before we hear the hypocrisy about fairness. How about starting with the tax exemption politicians awarded themselves on expenses?

    Messrs Osborne and Alexander act like a modern day Dennis Healy. Squeeze the middle until their pips squeak. We are taxed up to the hilt. Stop spending and make the cuts that were promised.

  12. Andy
    December 4, 2012

    As a country moves to taxing too much, as the UK is doing, so governments have to find more and more ways of getting more and more money out of the same people and companies .

    I am very concerned that the next step will be to come after our private pensions. Much as I would like to make use of the tax breaks that apply when paying into a pension, what are the guarantees that the whole lot will not be whipped away, or taxed by a future government?

    As an alternative I guess I could buy a second home and rent it out, but the same thing applies, what are the guarantees that rent controls, or wealth tax on second (or even first) homes will not be put in place?

    I never thought that at age 38, on a good but not excessive income, I would have to be considering buying gold and silver and keeping money offshore, but it has come to that point.

    With our total debt now at 900% of the economy when interest rates go up even a couple of percent the government will be coming for our wealth, they will have no choice.

    1. JimF
      December 4, 2012

      Yes private pensions will be a target.

      People who have saved will be slated as hoarders.

      Just think how the allowances have changed from around £260’000 a year in 2006 to possibly £30’000 now, under our tax-loving Tories? From an index-linked £1.8 million total maximum to a non-index-linked £1.5 million. It’s called hitting the middle-income earner, and it’s gone about as far as it can without removing significant freedoms in what you do with your hard-earned pension money.

      I am looking at options for our employees of buying gold coins instead of the NEST scam set up by this government.

  13. English Pensioner
    December 4, 2012

    Are these companies breaking the law? If not, the problem is the tax law, not the companies.
    Politicians should remember that they (or their predecessors) made the law and that they are now complaining that it doesn’t work.
    Seems par for the course for most recent legislation.
    If we had simple straightforward tax laws without all the special exemptions and special allowances there wouldn’t be this problem.
    And as for those claiming that this is a moral issue, rubbish. No one in his right mind knowingly pays more tax than the law requires and everyone is entitled to arrange his affairs to minimise taxation.

  14. drjohngalan
    December 4, 2012

    Having been away for few days I have come back to the much-repeated story (at least on the BBC) of how big companies are not paying enough tax in the UK. The faux irritation of the MPs on this topic is beyond belief. Who is responsible for setting the tax legislation in the first place? Who says tax law is far too complex when in opposition and then proceeds to complicate it further once in government?

    There is never a mention of how companies are meant to justify to their shareholders that their accountants should decide to overlook a perfectly legal means to avoid paying tax in order to keep MPs and the public happy. The only time this would be justified from the company’s point of view is when it starts to affect their sales.

    The objective needs to be clear: the tax system should be to raise enough money for the government to provide essential public services. This should be done in the most efficient and transparent manner having the minimum possible impact on the wealth-producing part of the economy.

  15. Denis Cooper
    December 4, 2012

    Provided they act within the law I see no reason why individuals or companies should not take steps to minimise the tax they have to pay. If a particular outcome seems absurd or it seems “immoral” that somebody has made full use of the opportunities offered by the law to minimise the tax they pay then the law is at fault and should be changed.

    After all the whole point of taxation is that it does not invite voluntary donations but instead compels payment by force of law; just like a charity a government can ask for voluntary donations, and that is sometimes done particularly in a time of crisis, but that is not taxation.

    My only caveat is that as far as possible the opportunities to avoid tax should be equally available to the whole population, irrespective of their personal resources, and should not be restricted to those who can afford to hire ingenious accountants and lawyers to work out how to exploit loopholes in the system. It can become absurd when somebody on a low income ends up paying more tax than somebody on a much higher income who can afford the costs of setting up some complex tax avoidance scheme.

    In fact even when the government introduces a scheme specifically to allow individuals people to shelter their personal savings from tax and so encourage saving the scheme may be too complex and restrictive for many people of limited means.

    1. forthurst
      December 4, 2012

      Spot on.

      On last night there was a feature referring to a report by CARE which claims that the marginal tax rate on proper families (words left out), with a single earner on below average wages, was higher in the UK at 75% than elsewhere by a considerable margin:

      I pay tax on ‘unearned’ income. If only a forebear had been a bankster, able to squirrel away large sums beyond the reach of the taxman like a senior politician’s, my income would even more more qualify as ‘unearned’, but even less suffer the depradations of the taxman.

    2. a-tracy
      December 4, 2012

      I agree Denis, I wonder how politicians will square the proposal to take away the tax allowance on large contributions to private pension pots when there is no equivalent in the public sector, when they bung their pension provider an extra quarter to half a million from the local rates for example they aren’t personnally affected by the tax claw back that is proposed in the private sector stopping that pot from growing to half the level that the average public sector worker expecting a pension of £15,000 pa can expect future taxpayers will honour. Some of these public sector pensions would need £1 million pound pots and when large earners in the private sector cotton on to the falling expectations of their pots and realise the hopeless inequality of retirement provisions they won’t want to continue to fund the gravy train for everyone else.

  16. John B
    December 4, 2012

    ” The UK’s problem is not that we pay too little tax. It is that the country produces too little for its ambitious plans for public spending. We need to produce more to make our current level of spending affordable.”

    The junky’s charter then, rather than kick the habit, encourage others to earn more so you can nick more of their money to fund it.

    The problem is that just about the entire political class believes that free market capitalism can fund Socialsim – this they call Social Democracy or Social Justice becaue calling it Socialism is not fashionable, this having had a bad press in recent decades.

    The evidence from observation – the current situation – shows not.

    The reason why the root cause is not being tackled is precisely because of what you are saying, Mr Redwood, that the economy needs to produce more wealth to pay for the prolific spending of the self-serving political elite in charge, and those in charge believe it will, if only they just ‘keep calm and carry on’, play with the tax system and pawn our prosperity.

    In short, it is the principle. Borrow now no matter how hideous the cost, fingers crossed we will win the lottery.

    The general principle by which we all live is that the value we get out has to exceed the value put in, efficiency, otherwise their is no point in the activity.

    So much of what is being done by the State, NHS, education, pensions, the railways, is done and accepted by the population because of the assertion the value out is great than the value put in.

    Yet in the absence of any free market and price system it is impossible to know whether this is true, just like if there were just one brand of baked beans priced at £1 in every shop, nobody could say whether baked beans were value for money.

    We do know that nowhere in the World, at any time in history has a Sate run anything been efficient.

    Whilst it may be necessary to socialise cost of, say, health care for some, that does not mean it is cost effective to provide it for all.

    The NHS did not build its first hospital until 1964, so where did all the hospitals, doctors and nurses comes from in 1948? Clearly there were hospitals, doctors and nurses with sufficient patients to make them viable, so how did people pay for health care before 1948?

    Well of course there was the National Insurance Act of 1911, but before that people got cover via mutuals run by the likes of their Trades Unions, professional groups, employers.

    If you and other MPs really want to find a satisfactory resolution, rather than just find ways to prop up the status quo, then get Government off our backs, get its nose out of our business and get its sticky fingers out of our pockets.

    1. D K McGregor
      December 4, 2012

      Well said , sir!

  17. Electro-Kevin
    December 4, 2012

    Strong attack on Starbucks – I cannot verify the allegations – it needs evidence and reporting properly

    1. Electro-Kevin
      December 4, 2012

      “The union accused Starbucks of “avoiding” paying the Living Wage, which has been set at £8.55 an hour in London and £7.45 outside the capital, compared with the national minimum wage of £6.19 for adults.”

      The London Evening Standard today regarding action being brought by the GMB Union on behalf of Starbucks workers.

      What I was attempting to say was that Starbucks benefits from depressed UK wages which are subsidised at huge cost to the taxpayer through our lax benefits and immigration systems.

      Indiginous coffee entrepreneurs (who would pay full tax dutifully) are priced out of the competition precisely because they are exposed to full taxation.

      The very least we can ask of Starbucks is to pay a decent amount to Revenue. And our workers a living wage would be respectful too. They could also put more coffee in their cups too.

      At least we can now see on what level mass immigration works. Not for the UK taxpayer’s benefit of course.

    2. Lindsay McDougall
      December 6, 2012

      Just ask yourself the question that Margaret Hodge posed. Why are Starbucks still here if they have made no profits in 15 years?

      It is not necessary to say that Starbucks have behaved criminally. It is legitimate to ask why the UK tax authorities have made such crass misjudgements as to what constitute legitimate inter-country internal prices within multi-nationals.

  18. Martyn
    December 4, 2012

    When it was announced yesterday that the HMRC was going to ‘investigate’ over 1 million people to see if they were avoiding or evading tax contributions, I was not too surprised to hear the BBC announcers seemingly unable to differentiate between legal tax avoidance and illegal evasion. From where does the BBC get its so-called experts, one wonders?

    The taxation systems are now so complex that not even the HMRC seem able to understand it all and tax-take is now following the old law of diminishing returns – much like motoring speed camera income which has noticeably reduced because drivers are being more careful. So as the HMRC seeks to grab more tax they are taking the same route as that being used in speeding cases – out of the window goes the ACPO guidance of, say, fining drivers in a 30mph zone only if their speed is +10% +2mph (i.e. 34mph) and traffic enforcers now resort to summonsing drivers for 31mph in a 30 zone to raise money to justify their continued existence. That is not to say I condone speeding or speed cameras per se, but the way they are positioned or used is too often for no other reason than to raise money. It won’t work in the longer term and neither, I suspect will the HMRC plans to investigate 1 or more million people seeking to increase tax-take. It smacks of desperation to me….

  19. Geoff Stanfield
    December 4, 2012

    Feeling a bit of a fool after reading your article. I always donate to charity from taxed income. I saved as much as I could from taxed income when working to try and avoid benefits in old age . Unfortuantely this Gov seems to hate savers just look at the interest rates they have encouraged. More savers than mortgage holders.
    I cannot believe petrol and diesel prices are causing hardship, just take note of the number of people sitting in supermarket car parks with their engines running just to keep warm.

  20. Bob
    December 4, 2012

    Agree wholeheartedly with your article Mr R.

    Far more attention needs to be paid to the way government squander our money, instead of constantly dreaming up new ways to tax us.

    What a disgusting spectacle to see MPs criticising businesses for organising their tax affairs efficiently and within the law and in accordance with their legal duty to shareholders, when you consider what went before with the MP’s expenses scandal, and the fact that The Speaker is already trying to neuter the Independent Parliamentary Standards Authority set up to monitor their expense claims (remember Elizabeth Filkin? slightly too efficient for the MP’s liking eh?).

    Morally repugnant?
    Another 154 million pounds spent on extra tax inspectors?
    Perhaps (some critics of tax dodgers ) should be looking closer to home.

  21. waramess
    December 4, 2012

    Just spend less and accept that the spending of governments is little different to the spending of the unemployed: it’s someone else’s productivity and it is recessionary. Eventually there will be no other choice so the bullet might as well be bitten now.

  22. Alison
    December 4, 2012

    Do any of these paragons have ISAs, I wonder?

    And now they’ve started on VAT avoidance – a problem which has been around for decades due to the difficulties presented by cross border transactions with private individuals who cannot pay the tax on behalf of the supplier. Perhaps every business should register everywhere to enable it to pay tax. That should work.

    The quality of comment on the BBC and elsewhere is lamentable.

    1. JimF
      December 4, 2012

      Yes no mention of the business person who travels abroad on behalf of his/her UK VAT registered business and is unable to claim back the VAT on his expenses without resorting to expensive middlemen. The same of course on overseas businessmen travelling here.
      Perhaps the government should spend money on inspectors to ensure compliance with this particular aspect of taxation?

  23. Mungojerry
    December 4, 2012

    The BBC doesn’t pay Corporation Tax and it ensures that its high paid ’employees’ are treated as self employed avoiding tax and NI contributions.

    All credits and benefits should be taxable like old age pensions. The personal allowance should be increased so that no-one on minimum earnings has to pay tax and NI. This would have avoided the argument over capping as any one in receipt of benefits and income would have been taxed at their highest rate.

    1. Bob
      December 4, 2012

      Tax the BBC? That would be a good start!
      Say 30% of License Fee revenue.
      It could be used to offset some of the £12 billion annual overseas aid donation (up from 8 billion the previous year).

      There’s another thing, if the BBC stopped advertising jobs in the Guardian, they could save another £250,000 a year which could be sent to the third world.

      1. John Doran
        December 9, 2012

        The BBC should be made subscription only immediately. That would bring this communist front organisation, which shelters child-abusing monsters for sake of it’s “popularity” & ratings figures, right down to size.

        It wont happen, of course.

        The BBC is set on bankrupting this country, as it’s communist EU masters wish. It is succeeding, along with compliant politicians.

        We live in interesting times.

  24. Denis Cooper
    December 4, 2012

    Off-topic, from Boris Johnson:

    “I don’t understand why we continually urge the eurozone countries to go forward with this fiscal and political union, when we know in our hearts that it is anti-democratic and therefore intellectually and morally wrong”

    He could have added “and directly opposed to our vital long term national interests”.

    1. Lindsay McDougall
      December 5, 2012

      Dead right. As I have often said on this very site, the UK should be actively encouraging Member States to leave the Euro zone, particularly countries like Greece. Converting their debts from Euros to reinstated local currencies is the way to go, agreeing a rate of inflation that would limit the extent of the partial default.

  25. HJ
    December 4, 2012

    John Redwood: “…car park charges in state owned car parks…”

    John, car park charges should not be conflated with taxes. They are simply charges. In fact, you could reduce taxes (a little!) if the state were to sell off car parks and to put the revenue raised in the bank, earning interest. The new car park owner would then levy charges, just the same.

    1. Bob
      December 4, 2012

      “sell off car parks and to put the revenue raised in the bank”

      On current interest and inflation rates, it would devalue year on year.

      We could always use it to fund foreign aid payments (a quarter of which is currently funded from borrowings).

  26. Lindsay McDougall
    December 4, 2012

    I am thoroughly tired of all these tax breaks to make people behave differently. It simply puts up taxes for the rest of us. I would like to bet that there is a considerable amount of business masquerading as charity. I also object – as do most people – to multinationals getting away with murder.(Attacks a named company for paying too little tax – if a company is doing that then please send the evidence to HMRC. Ohehr wise a company is innocent until proven guilty)

    Another thing that is totally unacceptable is the level of current public expenditure, particularly welfare and the cost of the public sector pay roll. These payments have gone up more than the private sector wages and salaries and it is high time this was reversed. If you’re spending too much, spend less. What’s the problem?

    1. Lindsay McDougall
      December 5, 2012

      The anonymous named mului-national company has paid little or no UK tax for 15 years.

  27. Conrad Jones (Cheam)
    December 4, 2012

    “The UK’s problem is not that we pay too little tax. It is that the country produces too little for its ambitious plans for public spending.”

    Taxes – as you say; seem to be partially designed to affect our behaviour and the things we do.

    In that case, why can’t we abolish Income Tax (A Tax on people for productive work) and lay this Tax burden on Specualtive Activity. Why should Property Investors be allowed to gain on increased property values? Profits they “earn” while they sleep.

    The problem is that we do not produce enough, very true as many Production Lines have been out sourced to China and India.

    What do you think we could do to help the Financial Sector play it’s part, given that only 8% of Bank Lending goes into productive enterprise, the other 92% goes into specualtive investment and consumerism, buying the Goods that are produced overseas.

    If we produced more of the Goods we buy, and made them to a better Quality; we would preserve resources and reduce the Trade Deficit.

    How can we alter the behaviour of Banks to lend more to productive businesses ? That is the question you should be posing in Parliament.

    If the Government is quite happy to create and direct Taxes at altering the Public Behaviour, why are they not more involved in affecting the behaviour of the Financial Sector – which has a far greater affect on where money is directed?

    Why does the government back away from the question of the City of London; that State within a State. Campaign Funding perhaps?

    1. Bob
      December 4, 2012

      @Conrad Jones
      “Why should Property Investors be allowed to gain on increased property values? “
      >You mean like a capital gains tax?

      ” they “earn” while they sleep.”
      >You mean like benefits cheats?

      1. Conrad Jones (Cheam)
        December 4, 2012

        Hi Bob,

        It is true to say that CGT on some investments does bring in taxes on speculative investments – such as housing, but not nearly enough.

        Benefit Cheats are another side of the same problem and just as big. although Housing Benefits are meant to help people in dire circumstances, my personal experience of people who get Housing Benefits is that they do not deserve them – just like the Bank Bailouts, it serves to reduce personal responsibility and creates irresponsible behaviour.

        Many people who receive housing Benefits have little regard for the property they are renting or the owners of that property. They might contribute a small fraction of the monthly rent and none of the deposit, so they have little incentive to leave the property in a reasonable condition. They choose to avoid heating the property properly to reduce their costs even more. When vacating the property – they will leave the Front Door wide open, not even bothering to shut it. After months of not cleaning, heating or any other type of maintenance, mould and dirt is rampant.

        Beware the Housing Benefit People, people who rent out their properties; they could not care less about you or your property.

        Just think of the money the Government would save in Housing Benefits if Properties were sensibily priced. People are much more reluctant to trash their own property when they are paying the full costs.

        Instead of the government propping up the Housing Market with First Time Buy Schemes and Housing Benefits for people who soon realise that they having nothing to lose if they let the property fall into disrepair, why not direct that money into Public works – injecting capital directly into the Economy instead of the “around the houses” route through the reserve accounts of private banks at the central bank.

        Margaret Thatcher was right to inspire a Property Owning Society, but she didn’t understand the affect of massive Private Bank created credit on House Prices. It would be interesting to ask her opinion now on the subject but unfortunately she is not as well as she use to be.

  28. Arunas
    December 4, 2012

    Tax evasion within the country is by design and is welcome.
    Importing costs from other countries to avoid paying taxes in the host country is free-riding and such should be punishable if not by law, then by mob lynch.
    Multinationals engaged in such behaviour are sucking the lifeblood of the country by unfairly competing with local business that do not exercise cost transfers, exploiting our healthcare, law enforcement, road network, bureaucracy without contributing to their up-keeping.
    They should be excised as malicious tumours are, lawful or not. They bring no benefits, only exploitation.

  29. Iain Gill
    December 4, 2012

    Come on john

    What is there to defend about companies like (named company operating from offshore) …. their primary operating entity in the uk is actually registered (abroad) meaning they don’t have to make their accounts public, and they don’t have to pay uk corporation taxes, and many other follow on manipulations of the system. To say nothing of the other widespread abuses they get up to. There is absolutely nothing to admire about this (sort of) company, there really are lowest common denominator world capitalism at its worst. There is no way they should be operating in the UK as they do. On your other theme the relevant regulators should be all over them like a rash, the tax man, the immigration people, the information commissioner, the fraud investigators, the employment regulators and so on. How they get away with so many widespread abuses is beyond me, its clear there is collusion from the political classes running the country as they seem to be immune from all the rules the rest of us follow.

    Bend one set of rules the probability is the organisation is bending other rules, the regulators need to be a lot more joined up and cynical and impartial.

    reply I have removed the name of the company. If you have evidence of a particular company’s wrong doing you should send it to the UK authorities.

    1. Conrad Jones (Cheam)
      December 5, 2012

      The problem with sending in evidence is that it is very hard to get apart from the circumstantial evidence of a Company earning disproportionately large profits in relation to how much tax it pays in the UK.

      Nominee Companies may have a legitimate purpose – if someone wishes to hide their assets from potential criminals; but UK Companies – especially Financial Firms, invest time and money into hiding there earnings from the UK Inland Revenue.

      Government departments are often “out gunned” by Corporate teams of very well paid Lawyers who specialise in Tax Issues. Government Resources are insufficient to investigate many Corporation Financial arrangements given the current freedoms that Offshore Companies are allowed. Tracing the ownership of money through Subsidiary Companies and Nominee Companies spread around the various Tax Haven locations around the World, is beyond the Time and Financial constraints of the Tax Office, especially when Secrecy Laws in various Financial centres prevent the key information being located.

      Why do some large UK Companies – some well known High Street names, get away with paying so little tax?

      Why did the last Government and now the present Government cutting Funding to agencies such as the Serious Fraud Office?

      More about this from a Tax Inspector in my next comment…

    2. Conrad Jones (Cheam)
      December 5, 2012

      A Tax Inspector’s account of working in London:

      “I used to be a tax inspector and worked in what was then called Special Office investigating offshore tax avoidance and evasion. Curiously very little specialist training was given on the complex laws and powers available to combat these issues. It was all learned from the experience of colleagues and my own experience.
      . . . .
      Working in London it was amazing to see how blatantly the city banks peddle massive tax haven arrangements to multinationals, many of them relying on the tiniest veneer of legality. Big 4 accountants and city lawyers were also selling such schemes but not quite in the same league as the banks.

      I was particularly taken with your account of the role of the banks in running the city. So I did a little research of my own and was surprised with what I found. The banks control the City Corporation. The City Corporation controls the City of London police. The City of London police state their purpose is “to protect the UK from economic crime” and they take the lead role on that for UK policing.

      So is it any wonder that the banks can get away with so much when they effectively control their own policing? Why haven’t we seen more criminal investigations of banks and bankers following the events of 2008?”

      This is an interesting email as it points to one very important aspect of policing the financial centre of London, namely; that the Banks control the City of London Authority (at least heavily influence it), and the City of London Corporation control the Police. There is an obvious conflict of interests which is why I would like to see a proposal that the Metropolitan Police take overall control away from the City of London Corporation and that they are publicly funded from an increased Met Police Budget. We need a new style – independent from City Interests, Government Funded Flying Squad to investigate the Financial dealings of some of these Organisations.

      This was in an email sent to the author of a Book which focuses on Tax havens.
      If Mr Redwood wants me to name the Book and the Author, I will be happy to do so.

      The name of the person who sent the email was not disclosed as the writer of the email did not give his permission to disclose his/her name.

      Reply: The City of London police are an independent force who can make their own decisions about which crimes to pursue and who to charge. The City Corporaiton is not controlled by big banks, but elected ion the usual way by electors.

      1. Conrad Jones (Cheam)
        December 5, 2012

        And just to clarify why I think the City of London Corporation is controlled by private companies located in the City is that local residents have 9,000 votes where as, the private businesses (mostly financial) have 32,000 votes of block voting rights. That means that a few men at the top levels of these companies controls tens of thousands of votes – their employees do not have any. Residents are disregarded as less important and irrelevant.

      2. Conrad Jones (Cheam)
        December 6, 2012

        This is from the City of London Corporation Website:

        “Why does the City have a different voting system?”

        “The City comprises just over one square mile but within that area the City of London Corporation serves around 9,000 residents and 340,000 workers. The City is the only area in the country in which the number of workers significantly outnumbers the residents and therefore, to be truly representative of its population, offers a vote to City organisations so they can have their say on the way the City is run.”

        From the Horses mouth – as it were.

      3. sm
        December 7, 2012

        CJ’s points are persuasive.

        Independence from what?

        Other regulators an agencies have disappointed the public , what conditions exist which would prevent this from occurring in the City of London?

    3. Iain Gill
      December 6, 2012

      Reply to Johns Reply:

      1 being registered in mauritius and paying most of your corporation tax there is legal as far as I can tell. the only thing stopping many other companies doing the same is decency. the law makers need to change the rules to comprehensively clamp down on such practises.

      2 abuse of data protection rules with sensitive data being held outside the EC against the law is routine every single day and is public knowledge and has been reported to the regulator repeatedly

      3 immigration rule breaking especially in regard to ICT visas and indefinite leave to remain is an open secret and has been reported repeatedly

      the problem is not decent citizens not reporting these matters, but the law makers and regulators doing nothing

  30. forthurst
    December 4, 2012

    “The UK’s problem is not that we pay too little tax. It is that the country produces too little for its ambitious plans for public spending.”

    This is obviously a reference to the huge sums of taxpayers’ money being used to bolster those businesses, which according to JR create huge added value, which gambled and lost a large fortune, namely the banks, and in which much of the losses were pre-paid as bonuses to banksters on ‘profits’ which they may wisely have squirelled away beyond the reach of the taxman so that their contribution to clearing up the mess that they themselves created is zilch.

  31. Bernard Juby
    December 4, 2012

    ” governments have to find more and more ways of getting more and more money out of the same people and companies”

    Not necessarily! By increasing the employment base and the number of businesses you actually improve the amount of revenue taken by the Exchequer. Otherwise you are faced by the law of diminishing returns.
    As in physics you cannot get more from a system than you put in (or is already there). Perpetual motion doesn’t exist.
    You have already written about this aspect John so why include the above comment?

  32. Conrad Jones (Cheam)
    December 4, 2012

    “The UK’s problem is not that we pay too little tax. It is that the country produces too little for its ambitious plans for public spending.”

    I think you are referring to “Public Borrowing”, the most expensive – “off balance sheet” variety being PFI.

    Good to see the Government recognising PFI (especially the ones created by New Labour).

    Hopefully no new PFI contracts will be signed on behalf of the Tax Payers as the whole purpose of PFI was to hide the increased debt by moving it off balance sheet. The PFI were a very costly way of borrowing money and proves how fraudulant the previous Labour Government was. ~In order to implement their “Guns and Butter” policy, they had to pretend that the Private Sector was somehow funding Schools and the NHS – this was false; Private Investors were lending money to Schools and Primary Care Trusts, And they weren’t doing it for cahirtable purposes; they wanted the money back with interest – the Interest Payments are one the Reasons why many Health Authorities are now struggling.

    PFI was a Politicians way of borrowing money – makes him look good (i.e. Tony Blair), but increases long term costs for the Tax Payers.

    So now that we’ve worked out what the PFI schemes actually cost – thanks to reports of struggling NHS Trusts, Tony Blair has safely got away and is benefiting from a well paid part time Job at J P Morgan. Ruth Kelly went straight into HSBC, etc etc
    The Government should ban PFI altogether as it is a Fraudulant and expensive way to mislead the Public on the costs of certain Public Services. There should also be an enquiry as to the circumstances around how these PFI contracts were negotiated.

    Why is it seen as perfectly legitimate to create £375 billion out of thin Air and provide this for the use of Private Bank Reserves in exchange for Government Debt, but we must rigidgly NOT print money to save our Hospitals and Education System from ill conceived long term debt agreements, allowing Private Investors to take a slice of Funding intended for Public Services.

    Surrey Police were due to privatise some parts of their activities in Partnership with G4S. Luckily, the Olympics G4S Fiasco changed opinions.

    How far are we to in-debt the Public with off balance sheet schemes to pretend that we aren’t really spending as much on Public Services, as we actually are.

    1. Denis Cooper
      December 4, 2012

      Oh, but we’re told that the new generation of PFI schemes will be different:

    2. forthurst
      December 4, 2012

      Why does the goverment wish to pay a higher rate of interest on capital projects than if it raised the money directly in the markets, or simply printed it? Has the Chancellor found a new supply of PFI spivs or will he be recycling the last lot?

  33. The PrangWizard
    December 4, 2012

    Am in complete support of your solutions. It is becoming a national disaster that the broadcast media does not explore these viewpoints dispassionately.

    All the more important that we all use and nurture this remaining free medium, it may be the only one left soon, and spread the word, as it is all too well known that the BBC in particular holds a deep abiding bias and and campaigns against many issues of freedom of the individual. As you have written Mr Redwood it does not offer equal access to all points of view.

    We have such a complicated society that we need revolutionary change, amendments are no longer effective in any meaningful way, indeed simply serve to complicate things further. As you are pointing out this is an aspect that needs such treatment. We shall see tomorrow if there is to be any change in government’s economics policies. Will there be any real cuts I wonder?

    There was a time, long ago, when we could look to the US to show some example of a small government appoach but having just returned from there I fear those days are gone. The US is moving rapidly further to the Left now under Obama, in his divisive language, vilifying the rich etc. (another delight for the media and commentators here, and there too in large measure, with the honourable exception of Fox News) so we will have to rely on ourselves and look to other countries which have had the courage and foresight to follow this path.

    I hope you and your like minded parliamentary colleagues will step up your opposition if there is no move to smaller government. Outright unwavering oppostion is needed. When the Whips see they are no longer feared as has been seen recently, victory will be there for the taking.

  34. Simon Jones
    December 4, 2012

    I have read in several newspapers in recent days that we are now the highest taxed country in the world at 74%. Many of the comments on these stories reckon that is low and I would tend to agree and the real figure is probably around 80-90% which is just obscene. The main country that seems to be contrasted with us is Germany on 40% so we need to cut 34% just to get on a par with them. I used to live there and you certainly seem to get more bang for your 40% than we do for 74% with decent roads and railways, hospitals and education. What we seem to get are millions of spy cameras, corruption, fines for everything, authority everywhere and overpaid public sector workers who make life even more difficult as they enforce petty laws and regulations. A German Doctor gets £50k, ours get £110. There are similar discrepancies across the board, their highest paid civil servant is on £100,000 some of ours are on close to £1,000,000. Complete madness and it makes life worse but there seems to be no will to curb these grotesque excesses.

  35. Martyn
    December 4, 2012

    I note that Mr C and his Chancellor are going to declare a successor to Mr Brown’s Public Finance Initiative (PFI) which will be known as PF2. The mind boggles at a Conservative government following Mr Brown’s ‘it’s OK to load PFI debt unto the next 2 generations because we can’t and don’t have to ask them if they agree’.

    PFI was and is a hugely expensive mistake committing our children’s children to repaying obscene amounts of money long after the hospital or school built via PFI have passed their sell-by date. And now an allegedly Conservative government wants to borrow more money for the next 2 or even 3 generations to repay. Surely this is no more than socialist madness, utter madness?

    1. JimF
      December 4, 2012

      Many are starting to twig that this is a socialist government. It is working in the Brown way – spend non-existent money on the masses in the hope that the masses turn out to re-elect you. The only two ways out of this are a/collapse of the system or b/electing an entirely different, sustainable money system which is where UKIP come through the door.

  36. uanime5
    December 4, 2012

    Why should giving generously to charity entitle someone to pay less tax? Surely people should give money to charities to help others, not for financial reasons?

    Given that Starbucks paid no tax for several years I think the UK’s problem is that some people pay too little tax.

    Given how inflexible most people are it’s not credible to claim that large numbers of people will leave the UK because of high taxes. They didn’t leave when the tax rate was 90% and they definitely won’t leave if it’s 50%.

    All flat taxes do is give a huge tax break to the wealthy and nothing to anyone else. They may even make the poorest in society worse off if benefits are cut in order to give the wealthy lower taxes.

    In other news it seems that the UK would be £20 billion better off if we used offshore wind farms rather than gas:

    Also the economy was meant to grow by 2.8% this year and 2.9% next year. In reality we will be lucky to have 0% growth rather than a triple dip recession.

    1. forthurst
      December 4, 2012

      “In other news it seems that the UK would be £20 billion better off if we used offshore wind farms rather than gas”

      One cost which tends to be overlooked by windies is that of converting churches and the clergy to the worship of Aeolus; this will become essential to achieve 24×7 delivery.

    2. JimF
      December 4, 2012

      What are you trying to say?
      Are you saying that a person paying a flat tax of 20% on 100k instead of 50% will burn the money, or might he employ people who themselves would be taxed less? Would the person then employed prefer to be on the dole, supported by the 100k guy’s extra 30k tax rather than employed by him?
      Have a re-think.

    3. JimF
      December 4, 2012

      Also it isn’t the person who normally reclaims the tax, it’s the charity on the taxpayer’s behalf.
      Clearly that’s news to you.

    4. Bob
      December 4, 2012

      ” They didn’t leave when the tax rate was 90%”

      Your sources of information are very revealing.
      The pieces are beginning to fall into place now!

      1. Bazman
        December 5, 2012

        Some need to leave we can’t afford their ‘talent’ as the banking crisis proved.

        1. Edward
          December 5, 2012

          Yes but…we could do with their taxes.

          1. Bazman
            December 6, 2012

            But not their incompetence which far outweighs any tax gained. If they ‘choose’ to pay any that is.

          2. sm
            December 7, 2012

            Their income is derived from the public as directly seen at present in subsidies never mind the other many ways excess profit is extracted from productive enterprize.

            They charge interest on money created out of thin air? this creates profits which then are maybe subject to tax and then again maybe not?

        2. APL
          December 6, 2012

          Bazman: ” we can’t afford their ‘talent’ ”

          The ‘talent’ we can’t afford is those folk who arrive here and without contributing to our tax revenue, immediately are accommodated and fed at tax payers expense, indefinitely.

          1. Bazman
            December 7, 2012

            Is that the non Doms or newborns?

  37. Antisthenes
    December 4, 2012

    The UK has become a nation of knee jerker’s, band wagon jumpers and hypocrites. All forget that for every action there is an opposite and equal reaction. Bonus bashing has lead to a drop of income tax revenue and legitimate corporation tax avoidance bashing will lead to a loss of tax revenue from the workers and shareholders. Press bashing if legislation is used to statutorily control journalists will lead to further erosion of our civil liberties. The list is endless as there is so much legislation already in existence or in contemplation that have unintended consequences that are so bad that they defeat the original purpose. No one appears to want to know all the facts before they make outrageous claims and demands. Often those very same people are acting in exactly the same way as that which they are decrying. A left wing newspaper that decry offshore havens and a have property owned by an offshore trust, an influential left wing MP whose family business uses the same tax avoidance rules , those paying by cash to avoid VAT just to name a few. No one mentions the elephant in the room the politburo in Brussels that effects UK legislation so much and more often than not disastrously. Corporation tax and and the positioning of companies in lower tax areas are enshrined in the EU treaty of the common market. Why is it not mentioned is it because of ignorance or deceit.

    1. APL
      December 5, 2012

      Antisthenes: “Bonus bashing has lead to a drop of income tax revenue and legitimate ”

      No, I doubt it. What has led to a drop in bonuses – if such has happened – is a drop in the profitability of the banks. That in turn, a result of a failure of regulation and reckless incompetence at the top of those organizations.

      Antisthenes: ” corporation tax avoidance bashing will lead to a loss of tax revenue from the workers and shareholders.”

      There is no need for this to occur either, as long as the law is observed and the companies comply with the law, there ain’t much the government or grand-standers in Parliamentary public accounts committee can do.

      Especially, as the law that allows Starbucks et al to domicile their head offices in Luxembourge, for example was agreed by these self same ‘ Parliamentarians’.

      Antisthenes: “The UK has become a nation of knee jerker’s, band wagon jumpers and hypocrites.”

      No dispute there!

  38. Jon
    December 4, 2012

    I can’t see politicians agreeing to a flat tax either, its a major lever of power and influence as they see it.

    There are plenty of turkeys voting for Christmas when it comes to taxation. The tax on transport, then cigarettes, then booze, they are out campaigning for a fat tax or tax on food. After that they will want to tax leisure activities, they cause accidents. Its not as if its a small number of people who want this either.

    Stealth taxes have not been a good thing, taxes on products just encourage a black market.

    It would be good to get a report on a flat tax, pitty they spent the resources on Mr Heseletine’s I think Mr Redwood doing one would have given much more to chew over.

  39. Credible
    December 4, 2012

    John, I can understand the growth argument, but I’m really struggling to understand how an introduction of more tax breaks is going to lead to an outbreak of good works !
    How will tax breaks lead to healthier lifestyles?

    “Some people pay less tax because they give generously to charity”
    The biggest avoiders of tax are the richest. Numerous studies have shown that the richest are, on average, the least generous at giving.

    Your second paragraph contains some of the most trite examples of tax avoidance I’ve ever heard. Can you really not afford a second license fee? Wow, politicians must be badly paid these days, even with all those other incomes on the side!

    There’s always someone else to blame isn’t there. I was forced to because the system is so unfair …….

    1. sm
      December 4, 2012

      Yes terms of reference.
      Tax evasion illegal. Tax avoidance -legal until the loophole is challenged and closed.

      Avoidance could be categorised between contrived artificial legal steps have been taken to reduce taxes but have not altered substantially the underlying economic activity or reality of the transaction. (except of course the tax saving).

      Compliance avoidance – you comply with the publicly disclosed intention and laws of parliament.
      -stop watching tv in 2nd home -save a license fee – no underlying economic activity to tax. (If you used a slingbox with your home tv to your internet laptop it might be legal (im not sure), the point being your economic activity did not really change but you avoided the tax.

      -stop drinking alcohol and save tax- no underlying economic activity to tax, go on a booze cruise or buy duty free you have avoided tax.

      A simpler flatter tax is the way to go, but we do need a subsistence citizens income (or negative tax) and a small low-non tax band, before hitting the flat rate.

      A land value tax would also be useful as would a wealth tax.

      We could also move to 100% reserve banking , where only the state creates debt free ‘our’ money to spend subject to purchasing power constraints and aim for near zero inflation.

      1. Conrad Jones (Cheam)
        December 6, 2012

        “We could also move to 100% reserve banking , where only the state creates debt free ‘our’ money to spend subject to purchasing power constraints and aim for near zero inflation.”

        The savings in Bankster Bailouts would help us out of the recession and allow new Banks into the market. The ICB WAS made up of Bankers – so how can we trust there recomendations?

        Income Tax could be abolished and the Economy would finally spark into life.

        The fuse that is currently buring (that has not been altered hardly at all) is the increasing Debt Mountain. The Deficit has not redcued and Public Spending has increased (as Mr Redwood has pointed out on a number of occasions).

        This fuse is continuing to get closer to a Debt Bomb that will explode in the next few years. George Osborne and Ed Balls entertain us with a political Punch & Judy Show on our TVs but neither has a clue what they are doing – or at least believe that the Deficit is ever going to decrease. Both are in favour of Banker Bailouts and Perpetual Wars.

        Ed Balls think we should get into Massive Debt more Quickly, while George Osborne tihnks that we should get into Massive Debt on a more long term basis – hoping that Massive inflation will make the Debt look less bad.

        At present, Austerity is an Illusion as public spending is increasing. It must appear that George Osborne is doing sometihng so he pretends to cut the Budget. I don’t believe he should cut the Budget but some benefits for non- deserving ppeople should be cut. He is making minor modifications – attempting to make it look like he has now got a grip on the Financial Debt Mountain – which neither he or Ed Balls has. We elect Amateurs who are advised by Financial Priests who “Believe” they know how Money works, but do not have a clue.

        The people who do understand how the system works are often afraid the break ranks and stand out for fear of been Humiliated by the Corporate Controlled Media – like Adair Turner.

        Adair Turner headed the FSA and was the Agency responsible for bringing the LIBOR Rigging Fraud to light. The SFO was crippled with yearly cuts to it’s Budget.

        What does it say about our Society when we prefer to appoint an Ex Employee of one of the most dishonest and disgusting Companies on Earth, who suck the life blood out of the work of others and contribut NOTHING, a foreign National to the post of BoE Governor, while ridiculing Adair Turner (A FELLOW NATIONAL) who correctly described the Source of the Financial Crisis.

        Strikes of a Globalist Appointment – saying to us; the UK is not important – the World is now in charge.

        Hopefully Mark Carney will be offered a job at the World Bank or IMF, and we can get somebody as Governor who might actually help improve things rather than keep the scam going.

        If Mark Carney does take the Job and makes the slightest mistake, there will be no pulling punches. Afterall, a Man with this much “talent” does not make mistakes which would lead us to accept that whatever he does he intends to happen.

  40. Edward
    December 4, 2012

    In years gone by the traditional route for a Chancellor faced with high levels of unemployment and low demand was to reduce taxes on individuals to give people a little more spare cash to spend and to reduce purchase taxes to encourage the sales of goods and services.
    Confidence is very low. Even after a long period of record low interest rates savings are stubbornly high.
    The solution cannot be higher taxes on individuals and business nor higher purchase taxes nor increased Government spending.
    The cycle needs breaking with decisive action before we drift further downwards.

  41. Acorn
    December 4, 2012

    Love the “flat tax” idea, even better when allied with Land Value Tax. Alister already has a plan at . The hard bit will be selling the aggregating of Income Tax and National insurance; assuming that is the way we want to go, that would be my choice cos I don’t like politicians trying to con me.

    Employee compensation is about £815 billion out of the tax base of £1500 billion(i.e. Tax Base = GDP). Income tax raises £153 b. NI raises £102 b. So, it becomes terribly obvious when a quick calc’ shows that with a tax free rate of around £14000 per year, (the “living wage”) the flat rate (Income Tax plus NI), becomes about 60% on all income above that tax free amount. Alternatively, we could all pay 31% on every bit of income, from any source. (These numbers are off the top of my head; need checking; it’s late and I am on my third glass already. It’s a hard life being a number cruncher.)

    Even the “flat taxers” forget just how big National Insurance Tax has become. Governments are very pleased that the plebs are too thick to understand when they are being ripped off.

  42. Richard1
    December 4, 2012

    Starbucks is not a person, its a company. Managers of a company have no obligation – and no right, since they are spending their shareholders’ money – to pay any more tax to the UK government than the law requires. If Margaret Hodge and other politicians want companies to pay more tax then they need to change the rules, not engage in sanctimonious posturing to the TV cameras. You have no evidence to say people didn’t leave when tax was 90%. the 1970s in the UK was a terrible time for entrepreneurship and business formation in the UK because of high taxes. Huge numbers of wealthy French are now making plans to leave due to M Hollande’s absurd 75% tax and general anti-business attitude. It is quite obvious that high taxes deter successful people from living in the UK, and more insiduously, deter capable people from wealth-creation activities (as happened in the 70s).

  43. Mark B
    December 4, 2012

     JR: “As politicians and some in the media work the country into a frenzy against tax dodgers, please spare a thought for all those politicians and commentators arguing for more tax breaks to promote good works,  more gr0wth and healthy lifestyles”

    I do not think we need to be lectured on ‘morals’ of any sort, and how we should live our lives from those in politics and the media right now.

    JR: “The UK’s problem is not that we pay too little tax. It is that the country produces too little for its ambitious plans for public spending.”

    WRONG . You only spend that which you have. And then on only things that you need.

    If you do not have enough money, then you cut spending. Simple. No really, it is that simple.

    If the UK was run like a Public/Private Limited Company, it would have been wound-up long ago and its board members imprisoned on a whole range of charges. But alas we are not, and ‘our’ money (you don’t think its yours do you) gets spent on foreign aid to countries that do not want it and to be members of organizations that create legislation that stifles business, free-enterprise and taxes (VAT is an EU tax) the hell out of us.

    No sir. The more you want, the more you take. The more you take, the less we have. And the more you have, the greater your waste.

    And to be clear, that is not you personally, that is you, the ‘Establishment’ collectively that I refer too.

    You will need to learn as we have had to to learn. And that is to make what little you have go further, and make better use of it.


  44. Max Dunbar
    December 4, 2012

    Mr Redwood, its very disappointing to read that you would rather find more petrol to pour into the grossly inefficient old engine rather than doing more with less. Is this how you would advise that private companies be run as well?

  45. Robert Taggart
    December 5, 2012

    The Autumn Statement has just cut us scroungers a hole in our pockets ! – annual uprating for the next three years will be to the tune of only 1%.
    No mention was made of uprating the threshold up to which we can hold savings (currently 6K) without penalty (-£1.00 a week for every £250.00 over 6K). Alas, this will only encourage us to ‘squirrel away’ our ‘surplus’ – ‘under the bed’ !

  46. Barbara
    December 6, 2012

    Most people if they are honest hate paying tax, but it has to be paid for the country to function properly. We have a problem how that tax is spent by our so called democratic governments. I didn’t mind paying tax when I worked, and still pay it but in smaller amounts now retired, its a fact of life you have to. What I strongly don’t like is when a Chancellor, like yesterday, told the nation ‘we have a moral duty to spend 7% of GDP on foreign aid’, who decided this? Why have we become the world’s benefactor, while people here, the poorest including children, are on the breadline? Why is it, the poorest, again, are told they have to have the least because they don’t work, while foreign shores take our money? Who gave MPs of any party the right to put foriegn people and countries before their own citizens? Their ‘moral duty’ is for the citizens who elected them, and to the citizens who provide the money via taxes no one else. I don’t pay tax to help foreigners or countries, many who should provide for themselves, like this government is asking the poorest to do. I resent being told we have a moral duty to these countries; we have no such thing, and any politician is wrong to put others before his own. Most of these countries are pursuing buying arms, missiles, and expantion of navies, at our expense; I object strongly. Foreign aid should cease altogether until our own house is in order, and the ‘moral duty’ to our own is met. Obviously, many MPs have not seen the poverty many are now reduced to and living in the London bubble they won’t. When you see working families having to beg at food banks, something is very wrong, yet, continuing to give our money away appears OK, well it isn’t and won’t be forgotten come voting time. Many in this country think only of themselves first till they find themselves in the same boat. Merry Christmas everyone, but remember, who’s next for the food bank.

    Reply: Feelings against so much overseas aid are strong – it is however 0.7% not 7%

Comments are closed.