Jeff Salway: Disabled are easier target for Tories than tax avoiders

Published on 23/06/2012 14:29

WHEN rock band U2 headlined Glastonbury a year ago this weekend, activists inflated a huge banner bearing the legend “U pay tax 2?”

The protest by Art Uncut, part of direct action group UK Uncut, was quickly tackled by security staff, but the ensuing coverage brought attention to the Irish band’s tax avoidance activities.

This week we heard comedian Jimmy Carr apologise for using a Jersey tax scheme to shelter more than £3 million. The scheme isn’t illegal – it’s avoidance as opposed to evasion, for a start – and Carr insists his mistake was to allow himself to be badly advised.

Bono doesn’t appear to have such scruples. The Irish singer, dubbed “Saint Bono” in reference to his charity work, attracted unwelcome headlines when the band moved its publishing facilities offshore in 2006 after the Irish authorities capped tax exemptions on royalties.

The band claims it is merely tax-efficient and points out that as most of its money is made internationally, it doesn’t need to pay all of its taxes in Ireland. That they are effectively depriving Ireland of millions of euros in tax at a time of acute financial crisis that is stretching people to breaking point doesn’t appear to be an issue for the famous anti-poverty campaigner.

No-one likes paying tax, but we know, regardless of whether we agree with the government of the day, that tax revenues pay for our roads, schools, hospitals and other essential services.

Carr, Bono, Ken Livingstone and Bob Geldof are just some of the high-profile public figures to have been outed as so-called tax dodgers in recent times. The moral indignation has deepened as the financial squeeze on households has tightened. Prime Minister David Cameron probably thought he was riding the right moral high horse when publicly castigating Carr this week. Wrong.

Cameron’s administration has talked tough on tax – Chancellor George Osborne said he regards “tax evasion and indeed aggressive tax avoidance as morally repugnant” – and looked into a new general anti-avoidance rule (GAAR).

As so often with this government, however, all is not what it seems. As Richard Murphy at Tax Research UK has pointed out, the GAAR proposals are based on suggestions by Graham Aaranson, QC, in a review commissioned by Osborne two years ago.

What Aaranson actually put forward was not a genuine GAAR, however, but a moderate rule targeting only the most flagrant tax abuse schemes. In other words, schemes like that used by Carr would probably be quite safe under the government’s proposed rules.

Indeed, the Chartered Institute of Taxation this week warned that most of the tax dodging examples highlighted by the media would be left untouched by any so-called anti-avoidance rule.

For all its tough talk, it’s clear that the Tory-led government will resist implementing anything that might prove unpopular with friends in high places.

MEANWHILE, the crackdown on benefit fraud gathers pace. Disabled people and carers have suffered a collective cut of £500m in the last two years, the Demos thinktank has estimated, leaving many at risk of deeper poverty and declining health.

Shockingly, disabled people are being hit disproportionately hard by an austerity programme that has only just begun, with incomes being eroded by benefit cuts, costs rising and support services slashed.

The Demos report, published in conjunction with disability charity Scope, warned that many disabled people are mired in a “struggle for survival”. A growing number are falling victim to abuse and crime, a depressingly inevitable consequence of the government-led demonisation of benefits recipients.

Benefit fraud totalled some £1.2 billion last year. When this figure was published earlier this year, one red-top paper urged readers to “be patriotic and report any cheats” by calling the National Fraud Benefit hotline.

Let’s look at that figure again. It’s a lot of money, yet it accounts for just 0.8 per cent of benefit spending, according to the government’s estimates. Disability living allowance fraud is estimated at just 0.5 per cent and incapacity benefit fraud at 0.3 per cent.

It’s paltry next to the £13bn or so lost to tax avoidance by individuals. Tax evasion in total is estimated at around £70bn.

Yet our government, which claims to be hell bent on reducing the deficit, has little interest in tackling the larger figure. It’s just too easy to target the most vulnerable in our society.