My Lord Oakshott is talking bollocks

It wasn’t always like this. “Our feral economy,” as Murphy calls it, started going wild in the late Eighties. The trigger, according to Matthew Oakeshott, the former Liberal Democrat treasury spokesman in the House of Lords, was the deregulation of the City in 1986; the so-called “Big Bang”.

Suddenly, greed was good. Before then, he says, tax dodging was “a shameful activity indulged in by a spivvy minority”, but then there was “a gradual moral collapse. Tax dodging is now a highly organised, aggressive, abusive business – a deep-seated, pervasive, pernicious disease that infects our body politic and eats away at society.”

So this is talking about Ritchie\’s report into tax evasion: yes, evasion, the grey economy. So let us go and look at Ritchie\’s source document, from the World Bank. This one.

On page 26 you will see that the size of that grey economy (which is what Ritchie uses, multiplying it by likely tax revenues if it was all legally declared to get tax \”lost\”) has been falling. Yes, even in the UK is has been falling.

Or as they say in their introduction:

The authors find a clear negative trend in
the size of the shadow economy: The unweighted average
of the 162 countries in 1999 was 34.0 percent and in
2007 31.0 percent; hence a reduction of 3 percentage
points!

So M\’Lord Oakshott is spouting bollocks then. Sadly, not unusual among those who read a Ritchie report but don\’t bother to check his sources.

More amusement from Ritchie\’s source document as well:

The driving forces of the shadow economy are an
increased burden of taxation (both direct and indirect),
combined with labor market regulations and the quality
of public goods and services, as well as the state of the
“official” economy.

That is, the World Bank says that we can reduce the grey economy, thus reducing tax evatsion, by lowering tax rates and reducing labour market regulation.

Strangely, that\’s not the course of action that Ritchie ever recommends, is it?

 

4 comments on “My Lord Oakshott is talking bollocks

  1. Matthew has always been, (I’ve known him for about 30 years), one of those who you cannot argue with beyond a certain point as information that is contra to his position does not seem to register.

  2. “Before [1986] tax dodging was a shameful activity indulged in by a spivvy minority”

    Not a nice way to describe the Duke of Westminster (tax dodging case 1936).

  3. Lord O :”Tax dodging is now a highly organised, aggressive, abusive business – a deep-seated, pervasive, pernicious disease that infects our body politic and eats away at society.”

    No, Lord O, all the above stem from TAXING, not dodging.

    I had HMRC investigating a past tax year of mine for about 2 years. Not ONE point I made about other sources of revenue was accepted – I could not PROVE it, you see. I had known to account for income, but did not know I also had to triply account for my NON-income receipts.

    I was hammered for £ 26,000, which I did NOT owe, but could not prove. This was not a tax investigation, it was gouging, Bill Sykes with a switchblade and me up against a wall. Then the charm dept of HMRC took over and helpfully made me pay, but said regrettably as I had signed an agreement (under duress) sorry, there was nothing they could do.

    During this 2 years I progressively became quite unable to work or create anything – what’s the point, they will only take it from you. And I do NOT do apathy, but they got me there.

    The only decent man was my accountant, who waived his fee for £ 3000 worth of work.

    Alan Douglas

  4. Did you just take an average change in evasion over 162 countries in eight years and use it to prove UK evasion hasn’t risen over the last 25?

    Tim adds: No, I looked at the UK specific numbers. The grey economy is smaller now than it was. Thus, given that the grey economy is by definition the tax evading one, tax evasion has fallen.

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