No Thanks, Sweetheart

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In the wake of recent revelations about so-called ‘sweetheart tax deals’ with large corporations by the tax office, the defence offered by a Downing Street spokesman reeks of guilt and evasiveness.

Allegations were made in December by a whistle-blower that Vodafone, alongside Goldman Sachs, had negotiated tax breaks of a good £8 billion with HMRC.  This comes in a time when the tax office is cracking down hard on payment of tax by individuals and small businesses.

In 2010, problems implementing the PAYE system led to £4 billion of tax going unpaid on the pay slips of ordinary workers—a situation that was, of course, swiftly and mercilessly dealt with by HMRC by demanding repayment from 1.4 million people.

However it seems there is a double standard, as top HMRC officials such as the outgoing head Dave Hartnett dine with tax advisers from large corporations once a week for two years, and the state’s coffers miss out on £25 billion per year.

This amount dwarfs the £6 billion earmarked for public service cuts at the beginning of the coalition’s tenure.

The statement issued in response from the office of the prime minister spends much more time praising the taxman’s achievements than addressing the issue at hand.  It eventually gets round to claiming that ‘HMRC treats all taxpayers even-handedly’, a philosophy that, even if it were true, seems grossly unfair.

Surely, in a time of financial crisis, HMRC should be prioritising; targeting first of all the profitable corporations which could bring in the largest amount of tax revenue?

Yes, this is a naïve position to take—the bigger the company, the more adept its tax lawyers, the more options it has to store capital overseas, and to exploit legal loopholes.  And such companies dedicate entire divisions to planning tax avoidance strategies.  Set this against the claim by Margaret Hodge, head of the Public Accounts Committee, alleging that ‘only one of the four people who are so-called tax commissioners—those are the top executives in HMRC—has knowledge of tax affairs’.  If it weren’t such a worrying state of affairs, you might almost feel pity for the floundering body, which now faces legal action from pressure group UK Uncut over the Goldman Sachs case.

To an extent, it must be accepted that companies at the top of the capitalist system will always evade taxes, and that some leeway needs to be given for fear that they move operations overseas, and thus harm the British economy.  However, to have the true impotence of HMRC laid bare so suddenly, and to see the stark truth that the shortfall could offset the cuts four times over if only it were recovered, represents one of the most frightening imbalances of power in the UK economy today.

And it would be reassuring to know that at least HMRC is on the public’s side with thisbut the supposedly defensive statement will only serve to deepen the perception that this is far from true.

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